acct 241 ch 8

A "voucher" is a
A. document received from the vendor to request payment
B. an authorization to prepare a purchase order
C. a check that has been prepared and fowarded for signing
D. none of the above

A "blind purchase order" is a
A. purchase order with the quantity deleted to be used as a receiving report
B. an automatic purchase performed using electronic data interchange
C. a blanket purchase order for goods to be received throughout the year
D. none of the above

Which of the following accounts is not included in the acquisition and expenditure cycle?
A. cash
B. sales returns and allowance
C. inventory
D. frieght in

Canceling invoices with a "paid" stamp after payment is a control that relates to which assertion?
A. valuation or allocation
B. completeness
C. rights and obligationss
D. existence or occurance

Which of the following is not a steop in the search for unrecorded liabilities?
A. examine the open purchase order file
B. examine disbursements for the period immediately before the end of the period
C. examine the unmatched receiving reports
D. all of the above are steps in the search

Which of the following fraud signs could be detected by CAAT?
A. look for vendor's invoices submitted in numerical order
B. look for invoices always slightly lower than a review threshold
C. look for vendors with only post office box addresses
D. all of the above

Which of the following control questions relates to the existence and occurrence objective in purchasing and accounts payable?
A. does the accounting department check invoices for mathematical accuracy?
B. are recieving reports prepared for each item received?
C. does the chart of accounts and accounting manual give instructions for classifying debit entries?
D. are the purchase order forms prenumbered and the numerical sequence checked for missing documents?

Auditors usually focus on which assertion when auditing current liabilities?
A. occurence
B. acccuracy
C. classification
D. completeness

If goods ordered under a binding purchase commitment permanently decline in value below the agreed on purchase prices, a company should.
A. disclose the terms of the commitment in the financial statements
B. record a loss for items received
C. record a loss for items not yet received
D. none of the above

The purchasing department
A. should obtain competive bids from vendors
B. should inspect incoming goods and forward them to the recieving department
C. should inspect vendor invoices and forward them to the accounting department
D. all of the above

Which of the following would not overstate current period net income?
A. capitalizing an expenditure that should be expensed
B. failing to record a liability for an expenditure
C. failing to record a check paying an item in Vouchers Payable
D. all of the above would overstate net income

A client's purchasing system ends with the recording of a liability and its eventual payment. Which of the following best describes the auditor's primary concern with respect to liabilities resulting from the purchasing system?
A. authority to incur liabilities is restricted to one designated person
B. acquisition of materials is not made from one vendor or one group of vendors
C. accounts payable are not materially understated
D. commitments for all purchases are made only after established competitive bidding procedures are followed

Which of the following is an internal control activity that could prevent a paid disbursement voucher from being presented for payment a second time?
A. vouchers should be prepared by individuals who are responsible for signing disbursement checks
B. the date on a disbursement voucher should be within a few days of the date the voucher is presented for payment
C. the official signing the check should compare the check with the voucher and should stamp "paid" on the vourcher documents
D. disbursement vouchers should be approved by at leaset 2 responsible management officials

Budd, the purchasing agent of Lake Hardware Wholesalers, has a relative who owns a retail hardware store. Budd arranged for hardware to be delivered by manufacturers to the retail store on a COD basis, thereby enabling his relative to buy at Lake's wholesale prices. Budd was probably able to accomplish this because of Lake's poor internal control over:
A. purchase orders
B. perpetual inventory records
C. purchase requisitions
D. cash receipts

Which of the following is the best audit procedure for determining the existence of unrecorded liabilities?
A. examine a sample of invoices a few days prior to and subsequent to the year-end to ascertain whether they have been properly recorded
B. examine confirmation requests returned by creditors whose accounts appear on a subsidiary trail balance of accounts payable
C. examine a sample of cash disbursements in the period subsequent to year-end
D. examine unusual relationships between monthly accounts payable and recorded purchases

Which of the following procedures is least likely to be performed before the balance sheet date?
A. confirmation of receivables
B. search for unrecorded liabilities
C. observation of inventory
D. review of internal control over cash disbursements

To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population for this test consists of all:
A. canceled checks
B. vendors' invoices
C. receiving reports
D. purhcase orders

When verifying debits to the perpetual inventory records of a non-manufacturing company, an auditor would be most interested in examining a sample of purhcase:
A. approvals
B. requisitions
C. orders
D. invoices

In auditing accounts payable, an auditor's procedures most likely would focus primarily on management's assertion of:
A. presentation and disclosure
B. completeness
C. valuation or allocation
D. existence or occurence

Before expressing an opinion concerning the auditor of income and expenses, the auditor would best proceed with the audit of the income statement by:
A. analyzing the beginning and ending balance sheet inventory amounts
B. auditing income statement accounts concurrently withthe related balance sheet accounts
C. making net income comparisons to published industry trends and ratios
D. applying a rigid measurement standard designed to test for understatement of net income