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Exam 11: Audit of Acquisition and Payment Cycle and Inventory

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Question 41

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The acquisition and payment cycle typically begins with the cash disbursement for requested raw materials.

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Question 42

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When auditing accounts payable,the auditor would most likely review a sample of cash disbursements throughout the year end to determine whether disbursements for goods and services are applicable to the subsequent year.

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Question 43

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In testing for the completeness of accounts payable at year-end the auditor examines a sample of paid voucher packets

The auditor may observe the counting of physical inventory throughout the year under audit if perpetual inventory is used.

Analytical review of related expense accounts when auditing accounts payable would be used when control risk is assessed as low.

The use of analytical review procedures applied to related expense accounts would not be used to determine if accounts payable were understated.

Sources of information regarding a client's inventory obsolescence can be partially noted during the inventory observation.

Inventory is complex and typically considered a high-risk area in audits of service firms.

Proper internal control over the inventory account would require that inventory items should be reviewed for obsolescence and proper accounting treatment.

Many frauds are committed by overstating inventory accounts.

Automation in the acquisition cycle (comprehensive) As the acquisition of materials,equipment and services continues to be facilitated by automation,certain benefits and controls result.Discuss the use of computerized processes and specific controls that should be implemented in the electronic acquisition cycle.

Which of the following is an example of the type of analytics that an auditor would use for inventory?

When a check has been cut for payment to a vendor,the underlying documentation and the check should be sent to which of the following for signature and cancellation?

Audits of payables and related cash disbursements provide indirect evidence about the correctness of expense accounts.

The auditor's primary concern with accounts payable is that of existence.

Cost accounting systems When auditing a manufacturing concern,what major inquiries might be made by the auditor about the cost accounting system?

Which of the following procedures will usually be performed by the auditor to actively determine obsolete inventory?

Which one of the following control procedures would not apply to the automated receipt of goods?

Variations of the traditional purchase order include all of the following except

Inventory controls What are some of the important controls that are expected to be included in a well-conceived inventory control system?