The overall production authorization starts with a
D. production plan
Which of the following is not recognized by GAAP as appropriate for determining inventory cost?
C. Standard costs
The source of authorization for preparation of materials requisitions is
A. bill of materials
Comparing material usage reports to raw material stores issue slips is a control to help insure which ASB transaction assertion?
Responsibility for the physical count lies with the
Client's inventory instructions should include all the following except
A. instructions for auditors' test counts
Tracing a test count to the inventory compilations provides evidence for which ASB balance assertions?
Hiring and firing employees is a function that should be performed by
The record where the employee's income taxes payable are recorded is the
A. payroll register
Which of the following is an internal control weakness for a company whose inventory of supplies consists of a large number of individual items?
C. the warehouse manager is responsible for maintance of perpetual inventory records
Which of the following procedures would best detect the theft of valuable items from an inventory that consists of hundreds of different items selling for $1 to $10 and a few items selling for hundreds of dollars?
C. have separate warehouse space for the more valuable items with
frequent periodic physical counts and comparison to perpetual inventory
An auditor will usually trace the details of the best counts made during the observation of the physical inventory taking to a final inventory compilation. The audit procedure is undertaken to provide evidence that items physically present and observed by the auditor at the time of the physical inventory count are:
D. included in the final inventory schedule
They physical count of inventory of a retailer was higher than shown by the perpetual records. Which of the following could expain the difference?
C. credit memos for several items returned by customers had not been recorded
From the auditor's point of view, inventory counts are not more acceptable prior to the year end when:
B. accurate perpetual inventory records are maintained
Which of the following client internal control procedures most likely addresses the completeness assertion for inventory?
A. receiving reports are pre numbered and the numbering sequence is checked periodically
When auditing inventories, and auditor would least likely verify that:
C. all inventory owned by the client is on hand at the time of the count
A client maintains perpetual inventory records in quantities and in dollars. If the assessed level of control risk is high, an auditor would propably:
B. request the client to schedule the physical inventory count at the end of the year
An auditor selected items for test counts while observing a client's physical inventory. The auditor then traced the test counts to the client's inventory listing. This procedure most likely obtained evidence concerning management's assertion of:
Which of the following audit procedures propably would provide the most reliable evidence concerning the entity's assertion of rights and obligations related to inventories?
A. inspect agreements to determine whether any inventory is pledged as collateral or subject to any liens
An auditor most likey would analyze inventory turnover rates to obtain evidence concerning management's assertions about:
Effective internal control over the payroll function should include procedures that segregate the duties of making salary payments to employees and:
D. hiring new employees
During the year, a bookkeeper perpetrated a theft by preparing erroneous W-2 forms. The bookkeeper's FICA withheld was overstated by $500, and the FICA withheld from all other employees was understated. Which of the following is an audit procedure that would detect such a fraud?
B. multiplication of the applicable FICA rate by the individual gross taxable earnings
A common audit procedure in the audit of payroll transactions involves vouching selected items from the payroll journal to employee time cards that have been approved by supervisory personnel. This procedure is designed to provide evidence in support of the audit proposition that:
C. all employees worked the number of hours for which their pay was computed
The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the:
B. authroization of transactions from the custody of related assets
Which of the following deparments most likely would approve changes in pay rates and deductions from employee salaries?
A large retail enterprise has established a policy the requires the paymaster to deliver all unclaimed payroll checks to the internal audit department at the end of each payroll distribution day. This policy was most likely adopted to:
D. detect any fictitious employee who may have been placed on the payroll