Kiem 2

Customer billing is a critical process which auditors must understand.
What are the most important aspects of billing and what are the
1
related objectives?
Discuss the key internal controls that should be present in the

2 receiving goods and services function in the acquisitions and
payment cycle.
Discuss the procedures involved in, and the purpose of a surprise

3 payroll payoff.
Describe how the auditor tests the accuracy objective for accounts
4
receivable.
State the six functions that make up the inventory and warehousing
cycle and, for each function, identify the related documents that
5
would be used by a manufacturing company.
You are part of the audit team that is auditing Hillsburg Hardware Co.
and you have been assigned to the sales and collection cycle. You are
testing whether the cash receipts are deposited and recorded at the
6 amounts received (accuracy objective). List two tests of controls and
one test of transactions that you would do to satisfy yourself
regarding the accuracy objective.
Assuming the client's internal controls are effective, describe how the
7 auditor can verify proper cutoff of sales transactions.
Discuss each of the following documents and records used in the

timekeeping and payroll preparation function in the payroll and
8 personnel cycle: time record, job time ticket, payroll transaction file,
payroll journal and payroll master file.
What is one audit procedure that may be used to test for proper
9 handling of terminated employees?
The audit of the inventory and warehousing cycle consists of five

parts. State the five parts and, for each part, identify the cycle in
10
which that part is tested by the auditor.
Explain what lapping means, and discuss the internal control

deficiency that allows it to occur. Also discuss the procedures the
11 auditor can perform to detect lapping.
Describe the audit procedures typically used to test for out-of-period
liabilities (also referred to as the search for unrecorded accounts
12
payable).
Describe three audit procedures an auditor would use to test for the
realizable value balance-related audit objective
13
Answer: Audit procedures would include:
Briefly describe the circumstances in which it is acceptable to use

14 negative confirmation requests.
In testing for the transaction-related audit objective of occurrence,

an auditor is verifying that the recorded payroll payments are for
15 work actually performed by existing employees. List three key
internal controls that a company should have in place in this area.
Discuss the circumstances in which it is desirable to send

16 confirmation requests to the client's vendors.
Cutoff misstatements can occur for sales, sales returns, and cash
17 receipts. List below the threefold approach an auditor performs for
each account above to determine the reasonableness of the cutoff.
Discuss each of the following primary documents and records used in

the personnel and employment function in the payroll and personnel
18
cycle: human resource records, deduction authorization form, and
the rate authorization form.
• to make sure that all shipments made have been billed (completeness)
• that no shipment has been billed more than once (occurrence)
• that each shipment is billed for the proper amount (accuracy)
For good internal control over the receiving goods and services function, the receiving
department initiate a receiving report as evidence of the receipt and examination of the
goods.
One copy of the report is sent to the raw materials storeroom and another to the
accounts payable department for their information needs.
To prevent theft and misuse, it is important that the goods be physically controlled from
the time of their receipt until their disposal.
The personnel in the receiving department should be independent of the storeroom

personnel and the accounting department.
The accounting records should transfer responsibility for the goods as they are
transferred from receiving to storage and from storage to manufacturing.
A surprise payroll pay off is a procedure in which each employee must pick up and sign
for his or her check in the presence of a supervisor and the auditor. Any checks that are
not claimed are subject to an extensive investigation to determine whether an unclaimed
check is fraudulent. The purpose is to test for nonexistent employees; that is, the
issuance of payroll checks to individuals who do not work for the company.
Confirmation of accounts selected from the trial balance is the most common test of
details of balances for the accuracy of accounts receivable. When customers do not
respond to confirmation requests, auditors examine supporting documents to verify
shipment of goods and evidence of subsequent cash receipts to determine whether the
accounts were collected. Auditors perform tests of the debits and credits to individual
customers' balances by examining supporting documentation for shipments and cash
receipts.
• Process purchase orders. Related documents are the purchase requisition and the
purchase order.
• Receive raw materials. Related documents are the receiving report and the vendor's
invoice.
• Store raw materials. Related record is the raw materials perpetual inventory master file.
• Process the goods. Related documents and records are the raw materials requisition
and the cost accounting records.
• Store finished goods. Related records are the finished goods perpetual inventory
master file and the cost accounting records.
• Ship finished goods. Related documents and records are the shipping document, the
finished goods perpetual inventory master file, and the cost accounting records.
Control Tests:
1. Observe whether the accountant reconciles the bank account.
2. Examine file of batch totals for initials of data control clerk.
3. Observe whether monthly statements are sent.
Transaction Tests:
1. Obtain prelisting of cash receipts and trace amounts to the cash receipts journal,
testing for names, amounts, and dates.
2. Prepare proof of cash receipts.
Assuming the client's internal controls are effective, the auditor can verify proper cutoff of
sales transactions by obtaining the shipping document number for the last shipment
made at the end of the period and comparing this number with current and subsequent
period recorded sales.
A procedure that tests for proper handling of terminated employees is to select several
files from the human resource records for employees who were terminated in the current
year to determine whether each received termination pay consistent with company
policy.
• Acquire and record RM, labor and OH→ Acquisition and payroll and personnel
• Internal transfer assets and costs→ Inventory and warehousing
• Ship goods and record revenues and costs→sales and collection
• Physically observe inventory→inventory and warehousing
• Price and compile inventory→ inventory and warehousing
Lapping, which is a common type of embezzlement, is the postponement of entries for

the collection of receivables to conceal an existing cash shortage. The embezzlement is
perpetrated by a person who handles cash receipts and then enters them into the
computer system. He or she defers recording the cash receipts from one customer and
covers the shortages with subsequent receipts of another. These in turn are covered
from the receipts of a third customer a few days later. The employee must continue to
cover the shortage through repeated lapping, replace the stolen money, or find another
way to conceal the shortage.
The embezzlement can be easily prevented by separation of duties and a mandatory

vacation policy for employees who handle cash and enter cash receipts into the system.
It can be detected by comparing the name, amount, and dates shown on remittance
advices with cash receipts journal entries and related duplicate deposit slips. Because
this procedure is relatively time-consuming, it is ordinarily performed only when specific
concerns with embezzlement exist because of a deficiency in internal control.
1) Examine documentation for subsequent cash payments.
2) Examine documentation for bills not paid several weeks after the year end.
3) Trace receiving reports issued before year end to vendor invoices.
4) Trace vendor statements that show a balance due to the accounts payable trial
balance.
5) Send confirmations to vendors.
It is acceptable to use negative confirmation requests only when all of the following
circumstances are present:
• The auditor has assessed the risk of material misstatements as low and has obtained
sufficient appropriate evidence regarding the design and operating effectiveness of
controls relevant to the assertion being tested by the confirmation procedures.
• The population of items subject to negative confirmation procedures is made up of a
large number of small, homogeneous account balances, transactions, or other items.
• The auditor expects a low exception rate.
• The auditor reasonably believes that recipients of negative confirmation requests will
give the request adequate consideration.
It is desirable to send confirmation requests to the client's vendors when the client's
internal controls are weak, when vendors' statements are not available, or when the
auditor questions the client's integrity.
1. Decide on the appropriate criteria for cutoff.
2. Evaluate whether the client has established adequate procedures to ensure a

reasonable cutoff.
3. Test whether the cutoff was correct.

"• để đảm bảo rằng tất cả các lô hàng được thực hiện đã được
lập hóa đơn (tính đầy đủ)
• không có lô hàng nào được lập hóa đơn nhiều hơn một lần
(lần xuất hiện)
• mỗi lô hàng được lập hóa đơn với số tiền thích hợp (độ chính
xác) "
"" Kiểm tra Kiểm soát:
1. Quan sát xem kế toán có đối chiếu tài khoản ngân hàng hay
không.
2. Kiểm tra tệp tổng số lô để biết chữ cái đầu của thư ký kiểm
soát dữ liệu.
3. Quan sát xem các báo cáo hàng tháng có được gửi đi không.
Kiểm tra giao dịch:

1. Lấy trước các biên lai thu tiền và số tiền theo dõi vào sổ nhật
ký thu chi tiền mặt, kiểm tra tên, số tiền và ngày tháng.
2. Lập chứng từ thu tiền mặt. "
Column1 Column2 Column3
In the flow of inventory and costs, when work-in-progress is credited,

________ is (are) debited.
A) raw materials
B) cost of goods sold
C) finished goods
D) direct labor
1 C
For a firm that practices good internal controls in the sales and collections
cycle, the function of indicating credit approval should be recorded on which
of the following documents?
A) sales order
B) sales invoice
C) customer order
D) remittance advice
2 A
Who is generally responsible for opening receipts when a company uses a

lockbox to speed the handling of cash receipts?
A) company personnel
B) temporary employees in the town where the lockbox is located
C) bank employees
D) company controller
3 C
The overall objective in the audit of the acquisition and payment cycle is
A) to ensure the reliability of the affected accounts.
B) to ensure the accuracy of the affected accounts.
C) to evaluate whether the affected accounts are fairly presented in
accordance with accounting standards.
D) to evaluate whether fraudulent payments were made.
4 C
The acceptable risk of overreliance

A) is the risk that the auditor will erroneously conclude that the controls are
less effective than they actually are.
B) is less of a concern to the auditors than the risk of underreliance.
C) represents the auditor's measure of sampling risk.
D) is determined by a statistical formula, and not by professional judgment.
5 C
In searching for unrecorded liabilities the purpose of the audit procedure to
"examine underlying documentation for subsequent cash disbursements" is
to
A) uncover liabilities on the balance sheet which should not have been
recorded until a subsequent period.
B) find the documentation relating to a cash disbursement.
C) uncover payments made in a subsequent accounting period for liabilities
that existed at the balance sheet date.
D) uncover cash disbursements recorded in a subsequent accounting period
which should be recorded in this period.
6 C
The most reliable evidence from confirmations is obtained when they are
sent
A) as close to the balance sheet date as possible.
B) at various times throughout the year to different segments of the sample,
so that the entire sample is representative of account balances scattered
throughout the year.
C) several months before the year-end, so the auditor will have adequate
time to perform alternate procedures if they are required.
D) at various times throughout the year to the same group in the sample, so
that the sample will not have a time bias.
7 A
To test for cutoff errors which overstate liabilities, the auditor should trace
the receiving reports issued ________ to vendors' invoices.
A) after year-end
B) before year-end
C) the last day of the fiscal year
D) both before and after year-end
8 A
When labor is a material factor in inventory valuation, the auditor should

place special emphasis on testing the internal controls concerning
A) fictitious employees.
B) authorization of wage rates.
C) proper classification of payroll transactions.
D) completeness of recorded transactions.
9 C
The test of transactions which requires one to "reconcile recorded cash

disbursements with the cash disbursements on the bank statement" satisfies
the objective of
A) occurrence.
B) completeness.
C) accuracy.
D) posting and summarization.
10 B
The document used to indicate to the customer the amount of a sale and
payment due date is the
A) sales invoice.
B) bill of lading.
C) purchase order.
D) sales order
11 A
Auditors are especially concerned with three aspects of internal control for
the sales and collection cycle. Which of the following is not one of their
major concerns?
A) controls over cutoff
B) controls that prevent or detect embezzlements
C) controls over sales discounts
D) controls related to the allowance for uncollectible accounts
12 C
What critical event must take place before goods can be shipped in order to
assure payment can be reasonably expected?
A) determination of correct delivery address
B) credit approval
C) matching of shipping document with sales invoice
D) receipt of sales order from the customer
13 B
A liability is properly accounted for as an account payable if

A) the amount is known and owed as of the balance sheet date.
B) the amount can be estimated and is owed at the balance sheet date.
C) the amount is known at the balance sheet date and owed by the end of
the next fiscal year.
D) the amount is estimated and owed within 90 days of the balance sheet
date.
14 A
An inventory acquisition is received late in the afternoon of December 31

after the physical inventory is completed. If the acquisition is included in
accounts payable and purchases, but excluded from inventory, the result
A) is an understatement of net earnings.
B) is an overstatement of net earnings.
C) is an overstatement of working capital.
D) is an overstatement of owner's equity.
15 A
When testing for fraudulent hours or fraudulent expense reports
A) it is easy for the auditor to discover fraudulent hours because of the
abundance of available evidence.
B) it is difficult to prevent fraud in these two areas with adequate internal
controls.
C) management falsification of expense reports can be an indicator of
disregard for internal controls and the potential for fraud in other areas.
D) examining payroll records for approval is an important substantive tests
of transactions to uncover fraudulent hours.
16 C
Which one of the following substantive analytical procedures would be most

useful in alerting the auditor to the possibility of obsolete inventory?
A) Compare gross margin percentage with that of previous years.
B) Compare unit costs of inventory with previous years.
C) Compare inventory turnover ratio with previous years.
D) Compare current year manufacturing costs with previous years.
17 C
A document sent to each customer showing his or her beginning accounts

receivable balance and the amount and date of each sale, cash payment
received, any debit or credit memo issued, and the ending balance is the
A) accounts receivable subsidiary ledger.
B) monthly statement.
C) remittance advice.
D) sales invoice.
18 B
When dealing with the processing and recording of cash receipts,

A) the most important concern is the theft of cash.
B) theft can only occur before the receipts are entered into the records.
C) cash receipts should be deposited at least monthly.
D) the monthly statement is used to prepare the cash receipts journal
19 A
Which accounts are involved in the sales class of transactions?

A) accounts receivable and sales returns and allowances
B) cash and allowance for uncollectible accounts
C) sales allowances and accounts receivable
D) accounts receivable and sales
20 D
An imprest petty cash fund

A) is a bank account.
B) is used for large, unusual purchases.
C) is usually reimbursed at least once a week for good internal control.
D) is being replaced by pre-approved purchase cards in many companies.
21 D
Which of the following is an accurate statement relating to separation of
duties?
A) Management should deny cash access to anyone responsible for entering
sales and cash receipts transaction information into the computer.
B) All disagreements on the monthly statements should be directed to a
designated person who has no responsibility for handling cash or recording
sales or accounts receivable.
C) The credit granting function should be separate from the sales function.
D) All of the above are accurate statements.
22 D
Cutoff information for inventory acquisitions should be obtained during

A) the interim period prior to year-end.
B) the interim period immediately following year-end.
C) the physical observation of inventory.
D) either the interim period prior to or immediately following year-end.
23 C
For a firm that practices good internal controls in the sales and collections
cycle, the function of indicating credit approval should be recorded on which
of the following documents?
A) sales order
B) sales invoice
C) customer order
D) remittance advice
24 A
An effective procedure to test for unfilled shipments is to trace from the

A) sales journal to the shipping documents.
B) shipping documents to the sales journal.
C) sales journal to the accounts receivable ledger.
D) sales journal to the general ledger sales account.
25 B
Which of the following is a correct statement regarding block sampling?

A) It is acceptable to use block sampling only if a reasonable number of
blocks are used.
B) Block sampling uses sampling with replacement.
C) Block sampling is a probabilistic sampling method.
D) There is considerable cost and time involved when block sampling is used.
26 A
To determine that sales are accurately recorded, the unit prices on the
duplicate sales invoices are normally compared with
A) the original invoices.
B) an approved master price list.
C) the amounts recorded in the sales journal for that transaction.
D) the amounts posted to the customer's account in the accounts receivable
master file.
27 B
Prenumbered documents will only be useful for control purposes if
A) a different numerical sequence is used for each company.
B) the sequence is accounted for periodically.
C) employees are allowed to use documents out of numerical sequence.
D) the same numerical sequence is used each accounting period.
28 B
The inventory and warehousing cycle can be thought of as having two

separate but closely related systems, one involving the actual physical flow
of goods, and the other the
A) related costs.
B) storage of the goods.
C) internal control over those goods.
D) prevention of waste, obsolescence, and theft.
29 A
You are auditing the inventory account and are concerned about the
possibility of an inventory overstatement. What is the best audit procedure
to detect damaged inventory?
A) Observe the condition of inventory during the client's physical count.
B) Compare the condition of inventory from the previous year's count to the
current year.
C) Compare inventory turnover from the previous year's inventory to the
current year's inventory.
D) Reconcile the inventory counts to the cost accounting records.
30 A
Which of the following is the risk that audit tests will not uncover existing
exceptions in a sample?
A) sampling risk
B) nonsampling risk
C) audit risk
D) detection risk
31 B
It would be appropriate for the payroll department to be responsible for

which of the following functions?
A) approval of employee time records
B) maintain records of employment, firings, and raises
C) temporary retention of unclaimed employee paychecks
D) preparation of governmental reports as to employees' earnings and
withholding taxes
32 D
A ________ indicates a reduction in the amount due from a customer

because of returned goods or an allowance.
A) bill of lading
B) sales invoice
C) credit memo
D) monthly statement
33 C
Which of the following is a business function related to sales returns and
allowances?
A) processing customer orders
B) writing off uncollectible accounts
C) processing and recording credit memos
D) granting credit
34 C
Which of the following is an accurate statement regarding cash?

A) The amount of cash flowing into and out of the cash account is often
larger than that for any other account in the financial statements.
B) The susceptibility of cash to embezzlement is greater than that for other
types of assets.
C) Auditors must verify whether recorded cash in the general ledger
correctly reflects all cash transactions that took place during the year.
D) All of the above are accurate statements
35 D
The payroll and personnel cycle ends with which of the following events?
A) interviewing job candidates
B) hiring a new employee
C) existing employees submitting requests for payment for work performed
D) issuance of paychecks
36 D
Which of the following is not a term related to evaluating results in audit

sampling until after a sample is tested and evaluated?
A) sample exception rate
B) estimated population exception rate
C) computed upper exception rate
D) exception
37 B
Which one of the following best describes the auditors responsibilities

regarding appropriate authorizations in the sales/collections cycle?
A) Credit must be authorized before the sale.
B) Goods must be shipped after the authorization
C) Prices must be authorized.
D) All of the above should be of concern to the auditor.
38 D
Which of the following statements is most correct with respect to the

evaluation of nonprobabilistic sample results?
A) It is acceptable to make nonprobabilistic evaluations only when
probabilistic sample selection is used.
B) It is acceptable to make nonprobabilistic evaluations only if the auditor
cannot quantify sampling risk.
C) It is never acceptable to evaluate a nonprobabilistic sample using
statistical methods.
D) All of the above are correct.
39 C
Which substantive analytical procedure would help determine if there are
unrecorded or nonexistent accounts?
A) Review the list of accounts payable for unusual items.
B) Compare acquisition-related expense account balances with prior years.
C) Calculate ratios, such as accounts payable divided by current liabilities.
D) Calculate ratios, such as sales divided by gross profit.
40 C
Financial instruments
A) include debt securities and money market funds.
B) such as derivatives can be used as a way of hedging.
C) must be classified as held-to-maturity securities.
41 B
When analyzing exceptions, the auditor should keep in mind that

A) all exceptions must be reported to management.
B) they should determine the breakdown in the internal controls that
allowed the exceptions to occur.
C) the nature of an exception and its causes have no effect on the qualitative
evaluation of the system.
D) exceptions do not need to be analyzed if it is too costly.
42 B
Which of the following is the best way for an auditor to determine that
every name on a company's payroll for the Rodgers factory is that of a bona
fide employee presently on the job?
A) Examine personnel records for accuracy and completeness.
B) Examine employees' names listed on payroll tax returns for agreement
with payroll accounting records.
C) Make a surprise observation of the company's regular distribution of
paychecks.
D) Visit the working areas and confirm with employees their badge or
identification numbers.
43 C
Failure to record the acquisition of goods is a violation of which audit

objective?
A) accuracy
B) occurrence
C) authorization
D) completeness
44 D
A ________ is a list prepared when cash is received by someone who has no
responsibility for recording sales, accounts receivable, or cash, and who has
no access to the accounting records.
A) prelisting of cash receipts.
B) sales invoice.
C) packing ticket.
D) vendor invoice.
45 A
Which document or record is used in the write-off of uncollectible accounts

classes of transactions?
A) general journal
B) remittance advice
C) sales transaction file
D) sales order
46 A
When designing audit procedures, tracing of source documents to the

customers subsidiary ledger and subsequently to the general ledger is done
to satisfy what assertion?
A) valuation
B) cutoff
C) completeness
D) classification
47 C
Which of the following is an account that is not affected by the sales and
collection cycle?
A) cash
B) accounts receivable
C) allowance for doubtful accounts
D) accounts payable
48 D
The auditor's objectives for the sales and cash collections activities when the
client is primarily an e-commerce business as compared to a "brick and
mortar" business are
A) unchanged.
B) expanded.
C) mitigated.
D) decreased.
49 A
What critical event must take place before goods can be shipped in order to
assure payment can be reasonably expected?
B) credit approval
50 B
Which of the following is a substantive test of transactions?
A) Review personnel policies.
B) Account for a sequence of payroll checks.
C) Reconcile the disbursements in the payroll journal with the
disbursements on the payroll bank statement.
D) Examine printouts of transactions rejected by the computer as having
invalid employee IDs.
51 C
Smith Manufacturing Company's accounts receivable clerk has a friend who

is also a customer of Smith Manufacturing. The accounts receivable clerk has
issued fictitious credit memos to his friend for goods supposedly returned.
The most effective procedure for preventing this activity is to
A) prenumber and account for all credit memorandums.
B) require receiving reports that provide evidence of returned inventory
items to support all credit memorandums before they are approved.
C) have independent sales and accounts receivable departments.
D) mail monthly statements to customers.
52 B
When dealing with the processing and recording of cash receipts,

A) the most important concern is the theft of cash.
B) theft can only occur before the receipts are entered into the records.
C) cash receipts should be deposited at least monthly.
D) the monthly statement is used to prepare the cash receipts journal
53 A
Which of the following is not a business function within the "Sales" class of
transactions?
B) granting credit
C) processing and recording sales returns and allowances
D) shipping goods
54 C
In many audits, no substantive tests of transactions are made for the

________ assertion on the grounds that understatement of sales is not a
concern.
A) accuracy
B) existence
C) completeness
D) none of the above
55 C
An auditor is comparing the write-off of uncollectible accounts as a

percentage of total accounts receivable with previous years. A possible
misstatement this procedure could uncover is
A) overstatement or understatement of sales.
B) overstatement or understatement of accounts receivable.
C) overstatement or understatement of bad debt expense.
D) overstatement or understatement of sales returns and allowances.
56 C
To test for recorded sales for which there were no actual shipments, the
auditor vouches from the
A) bill of lading to the sales journal.
B) sales journal to the shipping documents.
C) sales journal to the accounts receivable subsidiary ledger.
D) bill of lading to the supporting customer order and sales order.
57 B
________ is a balance-related audit objective that is not applicable to

liabilities.
A) Existence
B) Accuracy
C) Detail tie-in
D) Realizable value
58 D
Which one of the following best describes the auditors responsibilities

regarding appropriate authorizations in the sales/collections cycle?
A) Credit must be authorized before the sale.
B) Goods must be shipped after the authorization
C) Prices must be authorized.
D) All of the above should be of concern to the auditor.
59 D
Which of the following is one of the main differences between attributes

sampling and nonstatistical sampling?
A) the number of steps involved
B) the calculation of the initial sample sizes
C) determining the objectives of the audit test
D) defining the population
60 B
Which of the following is not a "cash equivalent"?

A) time deposits
B) certificates of deposit
C) money market funds
D) marketable securities
61 D
Auditors who prefer statistical to nonstatistical sampling believe that the

principal advantage of statistical sampling flows from its ability to
A) quantify sampling risk.
B) promote a more legally defensible procedural approach.
C) define the precision required to provide audit satisfaction.
D) establish conclusive audit evidence with decreased audit effort.
62 A
Most companies recognize sales revenue when

A) sales are invoiced.
B) payment is received from the customer.
C) goods are shipped.
D) the customer's order is received.
63 C
Which of the following is not a business function within the "Sales" class of
transactions?
B) granting credit
C) processing and recording sales returns and allowances
D) shipping goods
64 C
The computer-generated file which records acquisitions, disbursements and

allowances for each vendor is the
A) accounts payable master file.
B) cash disbursements file.
C) acquisitions transaction file.
D) purchase approval file.
65 A
An auditor is vouching a sample of hourly employees from the payroll

master file to approved time clock or time sheet data in order to provide
evidence that
A) employees work the number of hours for which they are paid.
B) payments are made at the contractual rate.
C) product cost information is accurate.
D) segregation of duties is present between the payroll function and the
payment function for cash disbursements.
66 A
Which accounts are involved in the sales class of transactions?

A) accounts receivable and sales returns and allowances
B) cash and allowance for uncollectible accounts
C) sales allowances and accounts receivable
D) accounts receivable and sales
67 D
An auditor should perform alternative procedures to substantiate the

existence of accounts receivable when
A) no reply to a positive confirmation request is received.
B) no reply to a negative confirmation request is received.
C) collectibility of the receivables is in doubt.
D) pledging of the receivables is probable.
68 A
The auditor is performing substantive tests of balances for accounts payable.

What documentation would provide the best evidence for the ending
balance?
A) vendors' invoices
B) vendors' statements
C) receiving reports
D) purchase orders
69 B
Which of the following is not one of the five classes of transactions included
in the sales and collection cycle?
A) sales returns and allowances
B) write-off of uncollectible accounts
C) bad debt expense
D) interest income
70 D
A ________ is a document for communicating the description, quantity, and

related information for goods ordered by a customer.
A) sales order
B) customer order
C) vendor invoice
D) sales invoice
71 A
As a test of control, the auditor examines sales invoices for supporting

documents. The relevant transaction-related audit objective is
A) accuracy.
B) occurrence.
C) classification.
72 D) timing. A
The audit tests to verify that the client is using an inventory method which is
generally accepted and to verify that physical counts were correctly
summarized are performed during the audit of the
A) acquisition and payments cycle.
B) payroll and personnel cycle.
C) inventory and warehousing cycle.
D) sales and collection cycle.
73 C
A surprise payroll payoff in which employees must pick-up and sign for their
pay check is one means of
A) identifying employees who do not have proper work credentials.
B) establishing a tightly controlled, fraud-free work environment.
C) testing for nonexistent employees.
D) identifying employees who have not submitted proper W-2 forms.
74 C

75 B
Which of the following would normally be discovered as part of the audit of
the bank reconciliation?
A) failure to bill a customer
B) failure to include a deposit in transit on the bank reconciliation
C) duplicate payment of a vendor's invoice
D) payment to an employee for more hours than she worked
76 B
A document indicating a reduction in the amount owed to a vendor because

of returned goods is
A) a debit memo.
B) a credit memo.
C) a receiving report.
D) a contractual adjustment form.
77 A
You are performing the audit of Jenkins and Company. Your tests of controls
and tests of transactions for accounts payable demonstrate that the controls
are operating effectively. This would normally allow you to
A) eliminate the need for substantive testing of balances for accounts
payable.
B) reduce the need for substantive testing of balances for accounts payable.
C) reduce control tests in other transactions cycles.
D) increase the need for substantive testing of balances for accounts
payable.
78 B
A major difficulty in the verification of inventory cost records for the

purpose of inventory valuation is in determining the reasonableness of the
A) direct labor costs.
B) raw material costs.
C) manufacturing overhead costs.
D) period costs.
79 C
What event initiates a transaction in the sales and collection cycle?

A) receipt of cash
B) delivery of product to a customer
C) identification of a new customer
D) customer request for goods or services
80 D
Which of the following audit procedures would be the most effective in

testing for nonexistent employees?
A) Trace transactions recorded in the payroll journal to the human resources
department to determine employment status.
B) Examine cancelled checks for proper endorsement.
C) Recalculate net pay.
D) Reconcile the disbursements in the payroll journal with the
disbursements on the payroll bank statement.
81 A
One type of shipping document is the ________, which is a written contract
between the carrier and the seller of the receipt and shipment of goods.
A) sales order
B) bill of lading
C) sales invoice
D) customer order
82 B
Which of the following is not an important aspect of billing?

A) All shipments made have been billed.
B) No shipment has been billed more than once.
C) Each customer is billed for the proper amount.
D) Credit is approved to customers for sales on account
83 D
Audit procedures designed to uncover credit sales made after the client's
fiscal year-end that relate to the current year being audited provide
evidence for which of the following audit objectives?
A) realizable value
B) accuracy
C) cutoff
D) existence
84 C
Many audits have a ________ risk of misstatement for the payroll cycle.
A) high
B) low
C) moderate
D) zero
85 B
Which of the following is not one of the five classes of transactions included
in the sales and collection cycle?
A) sales returns and allowances
B) write-off of uncollectible accounts
C) bad debt expense
D) interest income
86 D
The most serious shortcoming of the haphazard sample selection method is

A) it is not subject to statistical sampling methods.
B) it is time consuming to use.
C) it is costly to use.
D) it is difficult to remain completely unbiased in the selection.
87 D
An imprest petty cash fund would least likely be used to pay for which of
the following items?
A) minor office supplies
B) monthly interest expense
C) stamps for small mailings
D) small contributions to a local charity
88 B
The sample exception rate equals

A) the number of exceptions in the population divided by the sample size.
B) the number of items in the population multiplied by the number of
exceptions in the sample.
C) the number of exceptions in the sample divided by the sample size.
D) the number of exceptions in the population divided by the population
size.
89 C
The total of the individual account balances in the accounts receivable

master file should equal the
A) total sales for the period.
B) balance of the sales account in the general ledger.
C) total sales less the total cash received for the period.
D) balance of the accounts receivable account in the general ledger.
90 D
When planning the audit sample,

A) one objective of the tests of controls is to test the effectiveness of the
controls.
B) audit sampling applies to analytical procedures.
C) audit sampling generally applies to automated controls.
D) the auditor must generalize from the sample to the population.
91 A
Which of the following is a correct statement regarding the shipment of

goods?
A) The shipping document must be in paper form.
B) The shipping document is used to update the perpetual inventory
records.
C) Only one copy of the shipping document is needed.
D) All of the above are correct statements.
92 B
Which one the following procedures performed for the billing function
provides evidence for the completeness assertion?
A) making sure that all shipments have been billed
B) making sure that no shipment has been billed more than twice
C) making sure that each shipment is billed at the correct amount
D) making sure that each shipment is billed to the proper customer
93 A
The careful and timely preparation of all payroll tax returns is necessary to
avoid penalties and criminal charges. The most important control in the
timely preparation of these returns is
A) computerized preparation of tax returns.
B) a well-defined set of policies that indicate when each form must be filed.
C) independent verification of computer output by a competent individual.
D) the use of an outside payroll service.
94 B
Which type of misstatement is always a fraud?

A) sales included in the journals for which no shipment was made
B) sales to related parties, such as officers and subsidiaries
C) shipments made to nonexistent customers and recorded as sales
D) sales recorded more than once.
95 C
The total of the individual account balances in the accounts receivable

master file should equal the
A) total sales for the period.
B) balance of the sales account in the general ledger.
C) total sales less the total cash received for the period.
D) balance of the accounts receivable account in the general ledger.
96 D
Auditors test the quantity of materials charged to work-in-process by tracing

these quantities to
A) cost ledgers.
B) perpetual inventory records.
C) receiving reports.
D) material requisitions.
97 D
Cutoff procedures for inventory purchased should be designed by

companies to assure that
A) inventory owned by the company has been received.
B) inventory included in the year-end inventory count has been paid.
C) inventory received before year-end was recorded before year-end.
D) inventory was correctly valued at year-end.
98 C
Which one of the following statements is true? In deciding on substantive
tests of transactions
A) some procedures are commonly employed on every audit regardless of
the circumstances.
B) all procedures are dependent on the adequacy of the controls and the
results of the tests of controls.
C) results obtained in the prior year's audit will not affect the procedures
used this year.
D) the materiality of the item will not influence the choice of procedures
used.
99 A
Whenever auditors use sampling, they risk making incorrect conclusions

about the population. The risk that the auditor concludes that controls are
more effective than they actually are is known as the
A) risk of overreliance.
B) risk of underreliance.
C) risk that the sample is not representative of the population.
D) risk that the sample conclusions cannot be useful because of
nonprobability sampling.
100 A
A substantive tests of transactions for acquisitions that would be used to

provide evidence regarding the occurrence assertion would be to
A) compare the classification with the chart of accounts by referring to
vendors' invoices.
B) recompute the clerical accuracy on the vendors' invoice.
C) review the acquisitions journal for large or unusual amounts.
D) trace from a file of receiving reports to the acquisition journal.
101 C
Which of the following is likely to be determined first when performing tests

of details for accounts receivable?
A) Recorded accounts receivable exist.
B) Accounts receivable in the aged trial balance agree with related master
file amounts, and the total is correctly added and agrees with the general
ledger.
C) The client has a right to the accounts receivable.
D) Existing accounts receivable are included.
102 B
Which of the following cycles does not affect cash in bank?

A) capital acquisitions cycle
B) inventory and warehousing
C) payroll and personnel cycle
D) acquisitions and disbursements
103 B
As the auditor, you are assessing the proper sample size to use in testing
controls. When using attributes sampling, which of the following is most
correct?
A) A 10% change in population size will have the least effect on sample size.
B) A 10% change in the tolerable deviation rate will have the least effect on
sample size.
C) A 10% change in the expected deviation rate will have the least effect on
sample size.
D) A 10% change in the tolerable will have the least effect on sample size.
104 A
When sales invoices are automatically calculated and posted by a computer,

the auditor may be able to reduce substantive tests of transactions for
which, if any, assertion?
A) accuracy
B) existence
C) completeness
D) none of the above
105 A
Which of the following occurrences would be least likely to warrant further

audit attention for the auditor?
A) deviations from client's established control procedures
B) deviations from client's budgeted values
C) monetary misstatements in populations of transaction data
D) monetary misstatements in populations of account balance details
106 B
What event initiates a transaction in the sales and collection cycle?

A) receipt of cash
B) delivery of product to a customer
C) identification of a new customer
D) customer request for goods or services
107 D
Which of the following is an account that is not affected by the sales and
collection cycle?
A) cash
B) accounts receivable
C) allowance for doubtful accounts
D) accounts payable
108 D
When designing audit procedures, tracing of source documents to the

customers subsidiary ledger and subsequently to the general ledger is done
to satisfy what assertion?
A) valuation
B) cutoff
C) completeness
D) classification
109 C
A CPA learns that his client has paid a vendor twice for the same shipment,
once based upon the original invoice and once based upon the monthly
statement. A control procedure that should have prevented this duplicate
payment is
A) attachment of the receiving report to the disbursement report.
B) prenumbering of disbursement vouchers.
C) use of a limit or reasonableness test.
D) prenumbering of receiving reports.
110 A
In using sampling distribution for attributes, which one of the following must
be known to evaluate the sample results?
A) estimated dollar value of the population
B) standard exception of the values in the population
C) actual exception rate of the attribute in the population
D) sample size
111 D
________ accumulate costs by individual jobs as material is issued into

production and labor costs are incurred.
A) Just-in-time production systems
B) Job cost systems
C) Process cost systems
D) Manufacturing systems
112 B
Which of the following best describes effective internal control over payroll?
A) The preparation of the payroll must be under the control of the personnel
department.
B) The confidentiality of employee payroll data should be carefully protected
to prevent fraud.
C) The duties of hiring, payroll computation, and payment to employees
should be segregated.
D) The payment of cash to employees should be replaced with payment by
checks.
113 C
Before goods are shipped on account, a properly authorized person must

A) prepare the sales invoice.
B) approve the journal entry.
C) approve the customer's credit.
D) verify that the unit price is accurate.
114 C
When auditing inventory cost accounting, the auditor is concerned with all
of the following except for
A) net realizable value.
B) unit cost records.
C) physical controls over inventory.
D) documents and records for transferring inventory.
115 A
116 B
The document that accompanies the customer's payment is the

A) credit memo.
B) remittance advice.
C) vendor invoice.
117 B
________ tests are for omitted transactions, while ________ tests are for
nonexistent transactions.
A) Tracing; vouching
B) Vouching; tracing
C) Verifying; tracking
D) Tracking; verifying
118 A
Which of the following best describes the systems of internal control for
payroll for large companies?
A) loosely structured but well controlled
B) loosely structured and loosely controlled
C) highly structured and well controlled
D) highly structured but loosely controlled
119 C
Which of the following is most correct when using audit sampling for
exception rates?
A) The auditor is concerned with the lowest rate.
B) The auditor is concerned with the highest rate.
C) The auditor is concerned with the average on previous audits.
D) The auditor is not concerned with the exception rate for audits of
nonpublic companies.
120 B
The audit procedure that provides the auditor with the most appropriate
evidence when performing test of details of balances for accounts
receivable is
A) confirmations.
B) recalculation of the aged receivables and uncollectible accounts.
C) tracing credit memos for returned merchandise to receiving room
reports.
D) tracing from shipping documents to journals to the accounts receivable
ledger.
121 A
Which department should be authorized to add and delete employees from
the payroll or change pay rates and deductions?
A) the supervising department
B) the accounting department
C) the human resources department
D) the treasurer's department
122 C
Which of the following is not a key control for sales and cash receipts?
A) active board of directors
B) adequate separation of duties
C) internal verification procedures
D) adequate documents and records
123 A
Because of the importance of tests of controls and substantive tests of

transactions for acquisitions and cash disbursements, it is common in this
audit area to use
A) block sampling.
B) variables sampling.
C) attributes sampling.
D) probability proportional to size sampling.
124 C
Which of the following is not a typical audit procedure performed as part of

the out-of-period liability tests?
A) Examine underlying documentation for cash disbursements made during
the last month of the year.
B) Examine underlying documentation for bills not paid several weeks after
the year-end.
C) Trace receiving reports issued before year-end to related vendors'
invoices.
125 A
A ________ is a document that indicates a request for merchandise by a

customer.
A) sales invoice
B) vendor invoice
C) customer order
D) sales order
126 C
In the accounts receivable master file, the length of time the account has
been due can be useful to the client and the auditor in preparing the
A) trial balance.
B) working trial balance.
C) accounts receivable trial balance.
D) aged accounts receivable trial balance.
127 D
The reliability of perpetual inventory master files affects the timing and
________ of the auditor's physical examination of inventory.
A) cutoff
B) accuracy
C) nature
D) extent
128 D
Cash receipts from sales on account have been misappropriated. Which of

the following acts would conceal this fraud and be least likely to be detected
by an auditor?
A) understating the sales journal by not recording cash sales
B) overstating the accounts receivable control account by intentionally
misstating prices charged for goods sold
C) overstating the accounts receivable subsidiary ledger by not recording
payments made by customers
D) understating the cash receipts journal by purposely recording incorrect
amounts
129 A
When auditing the payroll and personnel cycle, the auditor should keep in
mind that
A) since payroll transactions are typically uniform, all companies have the
same internal controls over payroll.
B) the substantive tests of transactions for the payroll cycle are the same for
all audit clients.
C) controls the auditor intends to rely on to reduce assessed control risk
must be tested with tests of controls.
D) the tests of controls and the substantive tests of transactions for payroll
cannot be combined.
130 C
The auditor traces items from the source documents to the journals in order
to accumulate audit evidence that will satisfy the
A) existence objective.
B) completeness objective.
C) ownership objective.
D) valuation objective.
131 B
Which one of the following would the auditor consider to be an

incompatible operation if the cashier receives remittances from the mail
room?
A) The cashier prepares the daily deposit.
B) The cashier makes the daily deposit at a local bank.
C) The cashier posts the receipts to the accounts receivable subsidiary ledger
cards.
D) The cashier endorses the checks.
132 C
________ is not a transaction-related audit objective for the classes of
transactions underlying the payroll cycle.
A) Classification
B) Existence
C) Timing
D) Completeness
133 B
The most significant effect of the results of the tests of controls and
substantive tests of transactions in the sales and collection cycle is on
A) bad debt expense.
B) the analytical tests to be performed.
C) the confirmation of accounts receivable.
D) the impact of processing cash receipts.
134 C
The audit of cost accounting begins with the internal transfer of assets from
raw materials to work-in-process to
A) manufacturing overhead.
B) finished goods inventory.
C) the perpetual inventory master files.
D) retail sales.
135 B
The main focus taken by the auditor in verifying liability balances is on the
discovery of
I. understated liabilities.
II. omitted liabilities.
A) I only
B) II only
C) both I and II
D) neither I nor II
136 C

A) credit memo.
C) vendor invoice.
137 B
At what point in the acquisition and payment cycle do most companies first
recognize the acquisition and related liability on their records?
A) when the purchase requisition is received by the accounting department
B) when the purchase order is prepared
C) when the company receives the invoice from the vendor
D) when the company receives the goods or services from the vendor
138 D
Before goods are shipped on account, a properly authorized person must
A) prepare the sales invoice.
B) approve the journal entry.
C) approve the customer's credit.
D) verify that the unit price is accurate.
139 C
The auditor's objectives for the sales and cash collections activities when the
client is primarily an e-commerce business as compared to a "brick and
mortar" business are
A) unchanged.
B) expanded.
C) mitigated.
D) decreased.
140 A
The total of the individual employee earnings in the payroll master file
should equal the total
A) balance of gross payroll in general ledger accounts.
B) of the checks drawn to employees for payroll.
C) gross payroll plus the total contributed by the employer for payroll taxes.
D) gross pay for the current week's payroll.
141 A
Auditors usually test cost accounting records as part of the

A) acquisition tests.
B) payroll tests.
C) sales tests.
142 D
Which one of the following statements is true? In deciding on substantive

tests of transactions
A) some procedures are commonly employed on every audit regardless of
the circumstances.
B) all procedures are dependent on the adequacy of the controls and the
results of the tests of controls.
C) results obtained in the prior year's audit will not affect the procedures
used this year.
D) the materiality of the item will not influence the choice of procedures
used.
143 A
Some companies have customers send payments directly to an address

maintained by a bank. This is called a(n) ________ system.
A) direct deposit
B) funds transfer
C) lockbox
D) interbank transfer
144 C
Peprah Company pays its accounts payable 45 days after receipt of the
goods or services. In this case, which audit procedure should be used to
detect any unrecorded liabilities?
A) Examine cash disbursements for several weeks after the balance sheet
date.
B) Reconcile purchase orders to requisition orders.
C) Reconcile purchase orders to receiving reports.
D) Reconcile purchase orders to vendor invoices.
145 A

146
An auditor is gathering evidence on the completeness assertion. To do so,

she performs a test to verify that all goods received by the company have
been recorded properly. The document population for this test would
consist of all
A) vendor invoices.
B) purchase orders.
C) receiving reports.
D) cash disbursements for accounts payable.
147 C
For most audits, a proper cash receipts cutoff is less important than the sales
cutoff because the improper cutoff of cash
A) is detected and correct when cash is separately audited.
B) is unlikely to have a material impact on the balance sheet or the income
statement.
C) affects items on the balance sheet but does not affect net income.
D) rarely occurs given the control consciousness of most entities.
148 C
Confirmation of accounts receivable provide evidence related to the

________ objectives.
A) existence
B) accuracy
C) cutoff
D) all if the above
149 A
When assessing planned control risk for sales,

A) the key internal controls and deficiencies for sales will be the same for
every company.
B) the audit objectives for sales will differ from company to company.
C) a flowchart is required to help assess control risk for sales.
D) assessing control risk for sales is a highly subjective decision
150 D
Which audit procedure would the auditor use to test for the cutoff balance-
related audit objective?
A) Review minutes of the board of directors meetings.
B) Review the accounts receivable trial balance for large items.
C) Use audit software to foot and cross-foot the aged trial balance.
D) Select the last 20 sales transaction from the current year's sales journal
and the first 20 from the subsequent year's and trace each to the related
shipping documents.
151 D
If material, all of the following are required to be separately disclosed in the

financial statements except for
A) accounts receivable from officers.
B) accounts receivable from affiliates.
C) sales and assets for different business segments.
D) sales for the last ten days of the fiscal year.
152 D
A principal advantage of statistical methods of attributes sampling over

nonstatistical methods is that they provide a quantifiable basis for
establishing the
A) risk of assessing control risk too low.
B) tolerable exception rate.
C) expected population exception rate.
D) sample size
153 D
A ________ indicates a reduction in the amount due from a customer

because of returned goods or an allowance.
A) bill of lading
B) sales invoice
C) credit memo
154 C
Which of the following statements is correct when dealing with sampling for
exception rates?
A) The term exception refers to both deviations from the client's control
procedures and amounts that are not monetarily correct.
B) When used with sampling, the term deviation is synonymous with the
term exception.
C) The actual population exception rate is the same as the sample exception
rate.
D) In using audit sampling for exception rates, the auditor is most concerned
with the confidence interval.
155 A
When an auditor tests to determine if all existing accounts receivable are
included in the aged trial balance,
A) they cannot rely on the self-balancing nature of the accounts receivable
master file.
B) if all sales to a customer are omitted from the sales journal, it is easy to
uncover the understatement of accounts receivable by tests of details of
balances.
C) auditors rarely send accounts receivable confirmations to customers with
zero balances.
D) unrecorded sales to a new customer are easy to identify for confirmation
because that customer is included in the accounts receivable master file.
156 C
Which of the following is not a key control for sales and cash receipts?
A) active board of directors
B) adequate separation of duties
C) internal verification procedures
D) adequate documents and records
157 A
In the accounts receivable master file, the length of time the account has
been due can be useful to the client and the auditor in preparing the
A) trial balance.
B) working trial balance.
C) accounts receivable trial balance.
D) aged accounts receivable trial balance.
158 D
In performing a review of a client's cash disbursements, an auditor uses

systematic sample selection with a random start. The primary disadvantage
of this technique is population items
A) may occur twice in the sample.
B) must be reordered in a systematic pattern before the sample can be
drawn.
C) may occur in a systematic pattern, thus negating the randomness of the
sample.
D) must be replaced in the population after sampling to permit valid
statistical inference.
159 C
A written purchase order is a contractual document that is

A) an offer to buy goods or services.
B) not enforceable if it is not in writing.
C) prepared by the receiving department.
D) an acceptance of a vendor's catalog offer to sell.
160 A
Which type of misstatement is always a fraud?
A) sales included in the journals for which no shipment was made
B) sales to related parties, such as officers and subsidiaries
C) shipments made to nonexistent customers and recorded as sales
D) sales recorded more than once.
161 C
The most effective audit evidence gathered for accounts receivable is the
A) detail tie-in of the records.
B) analysis of the allowance for doubtful accounts.
C) confirmation of accounts receivable.
D) examination of sales invoices.
162 C
Which one the following procedures performed for the billing function
provides evidence for the completeness assertion?
A) making sure that all shipments have been billed
B) making sure that no shipment has been billed more than twice
C) making sure that each shipment is billed at the correct amount
D) making sure that each shipment is billed to the proper customer
163 A
Analytical procedures are substantive tests and, if the results of the

analytical procedures are favorable, the auditor would normally
A) reduce the extent of tests of details of balances.
B) reduce the extent of tests of controls.
C) reduce the tests of transactions.
D) reduce all of the other tests.
164 A
Absent disputed amounts and minor timing differences, the vendor's

statements should reconcile to the
A) acquisition journal.
B) accounts payable master file.
C) cash disbursements amount for purchases.
D) vouchers payable amount for vendors.
165 B
The audit procedure referred to as proof of cash receipts is particularly

useful to test
A) time lags in making deposits.
B) whether all recorded cash receipts have been deposited in the bank.
C) whether there are cash receipts that have not been recorded in the
journals.
D) the client's reconciliation between cash receipts and bank deposits.
166 B
In many audits of sales transactions substantive tests of transactions can be
reduced in determining the completeness objective because
A) understatements of assets and income are a greater concern than
overstatements.
B) overstatements of assets and income are a greater concern than
understatements.
C) it doesn't matter if income is understated because the savings on income
tax offsets the reduced revenue and net income is correct.
D) the unrecorded sales cause a reduction of accounts receivable; therefore,
the ratios of the two financial statements will not be misleading.
167 B
Which of the following would least concern an auditor regarding the lack of
a specific authorization to conduct the sales transaction?
A) granting of credit
B) shipment of goods
C) determination of discounts
D) selling of goods for cash
168 D
A ________ is a document that indicates a request for merchandise by a

customer.
A) sales invoice
B) vendor invoice
C) customer order
D) sales order
169 C
For effective internal control purposes, the accounts payable department

generally should
A) approve the purchase order.
B) have the authority to sign the checks.
C) establish the agreement of the vendor's invoice with the receiving report
and purchase order.
D) supervise the preparation of the receiving report.
170 C
Which of the following test of controls is useful to test the completeness

objective for cash receipts?
A) Compare shipping documents with sales records.
B) Observe endorsement of incoming checks.
C) Examine evidence that the receivable master file is reconciled to the
general ledger.
D) Observe if the client reconciles the bank account.
171 B
Which of the following errors gives the auditor concern in auditing payroll
transactions?
A) an error that indicates possible fraud
B) computational errors in formulas when a computerized system is used
C) classification errors in charging labor to inventory and job cost accounts
D) Each of the above gives the auditor significant concern.
172 D
Some companies have customers send payments directly to an address

maintained by a bank. This is called a(n) ________ system.
A) direct deposit
B) funds transfer
C) lockbox
D) interbank transfer
173 C
The extent of a search for unrecorded liabilities largely depends on

A) materiality and inherent risk.
B) materiality and control risk.
C) materiality only.
D) inherent risk only.
174 B
The advantage of systematic sample selection is that

A) it is easy to use.
B) there is limited possibility of it being biased.
C) it is unnecessary to determine if the population is arranged randomly.
D) it automatically selects items material to the financial statements.
175 A
When the client's physical inventory occurs before the last day of the year, it
is still necessary to perform an accounts payable cutoff at the time of the
count. In addition, the auditor must verify whether all acquisitions taking
place between the count and the end of the year were added to
A) the physical inventory.
B) accounts payable.
C) accounts payable and cost of goods sold.
D) the physical inventory and accounts payable.
176 D
D) the amounts posted to the customer's account in the accounts receivable
master file.
177 B
Which of the following audit procedures would normally be included in the
audit plan when auditing the allowance for doubtful accounts?
A) Send positive confirmations.
B) Inquire of the client's credit manager.
C) Send negative confirmations.
D) Examine sales invoices.
178 B
The net realizable value of accounts receivable is equal to:

A) gross accounts receivable less allowance for uncollectible accounts.
B) gross accounts receivable less bad debt expense.
C) gross accounts receivable less returns and allowances.
D) gross accounts receivable less sales discounts.
179 A
With respect to a small company's system of purchasing supplies, an

auditor's primary concern should be to obtain satisfaction that supplies
ordered and paid for have been
A) requested by and approved by the same individual.
B) used in the course of business and solely for business purposes during the
year under audit.
C) received, counted, and checked to quantities and amounts on purchase
orders and invoices.
D) properly recorded as assets and systematically amortized over the
estimated useful life of the supplies.
180 C
Which of the following most likely would be detected by a review of a

client's sales cutoff?
A) excessive sales discounts
B) unrecorded sales for the year
C) unauthorized goods returned for credit
D) lapping of year-end accounts receivable
181 B
Which of the following is an accurate statement regarding sampling

distribution?
A) A sampling distribution is a sample with characteristics the same as those
of the population.
B) Sampling distributions allow the auditor to make probability statements
about the likely representativeness of any sample that is in the distribution.
C) Each population exception rate and sample size has the same sampling
distribution.
D) Auditors cannot use sampling distributions to draw statistical conclusions
about the unknown population being sampled.
182 B
When should auditors not perform alternative procedures in testing the
accounts receivable balance?
A) when customers do not return positive confirmation requests
B) when customers do not return negative confirmation requests
C) when confirmations are deemed to be ineffective as an audit procedure
D) when confirmations are too costly to use
183 B
What typically ends the acquisitions and payment cycle?

A) issuance of a purchase requisition or request for purchase of
goods/services
B) issuance of a payment on accounts payable
C) approval of a new vendor
D) purchase requisition
184 B
When assessing risk control, the auditor must do all of the following except
A) assess control risk for each objective by evaluating the controls and
deficiencies for each objective.
B) perform the detailed test of balances.
C) identify the key internal controls and deficiencies.
D) associate the key controls and deficiencies with the objectives.
185 B
When deciding the acceptability of the population,

A) the methodology for deciding the acceptability of the population for
attributes differs from determining the acceptability for nonstatistical
sampling.
B) before the population can be considered acceptable, the CUER
determined on the basis of the actual sample results must be less than or
equal to TER when both are based on the same ARO.
C) when the CUER is greater than the TER, the auditor must increase the
sample size.
D) the CUER is compared with the TER in total, not for each attribute.
186 B
The risk which the auditor is willing to take in accepting a control as being
effective when the true population exception rate is greater than a tolerable
rate is the
A) finite correction factor.
B) tolerable exception rate.
C) acceptable risk of overreliance.
D) estimated population exception rate.
187 C
________ is normally characterized as a difficult and complex account to
audit.
A) Property, plant and equipment
B) Cash
C) Inventory
D) Prepaid insurance
188 C
Which of the following is a business function related to sales returns and

allowances?
B) writing off uncollectible accounts
C) processing and recording credit memos
D) granting credit
189 C
Inventory is a complex area to audit for all except which of the following
reasons?
A) Inventory is often in different locations.
B) There are several acceptable valuation methods and some entities use
different methods for different types of inventory.
C) Inventory is often the largest account on the balance sheet.
D) Inventory valuation includes few estimates.
190 D
An auditor needs to determine whether all customers of an electric utility

company are being billed. The auditor should test from the
A) sales register to the accounts receivable ledger.
B) sales register to the meter department records.
C) accounts receivable ledger to the sales register.
D) meter department records to the sales register.
191 D
A ________ is a document for communicating the description, quantity, and

related information for goods ordered by a customer.
A) sales order
B) customer order
C) vendor invoice
D) sales invoice
192 A
Who is generally responsible for opening receipts when a company uses a

lockbox to speed the handling of cash receipts?
A) company personnel
B) temporary employees in the town where the lockbox is located
C) bank employees
D) company controller
193 C
Which of the following would offer the best protection for a company that
wishes to prevent a reoccurrence of a previously detected "lapping"
problem with trade accounts receivable?
A) Separate duties so that the bookkeeper in charge of the general ledger
has no access to incoming mail.
B) Separate duties so that no employee has access to both checks from
customers and currency from daily cash receipts.
C) Have a mandatory vacation policy for employees who both handle cash
and enter cash receipts into the system.
D) Request that customer's payment checks be made payable to the
company and addressed to the treasurer.
194 C
When using statistical sampling, the auditor would most likely require a
smaller sample if the
A) population increases.
B) desired reliability decreases.
C) desired precision interval narrows.
D) expected exception rate increases.
195 B
Which of the following is an accurate statement relating to separation of

duties?
A) Management should deny cash access to anyone responsible for entering
sales and cash receipts transaction information into the computer.
B) All disagreements on the monthly statements should be directed to a
designated person who has no responsibility for handling cash or recording
sales or accounts receivable.
C) The credit granting function should be separate from the sales function.
D) All of the above are accurate statements.
196 D
________ tests are for omitted transactions, while ________ tests are for
nonexistent transactions.
A) Tracing; vouching
B) Vouching; tracing
C) Verifying; tracking
D) Tracking; verifying
197 A
The auditor is reviewing the receivables listed on the aged trial balance for
notes and related party receivables. Which balance-related audit objective is
he trying to satisfy?
A) detail tie-in
B) existence
C) classification
D) all of the above
198 C
Which one of the following would the auditor consider to be an
incompatible operation if the cashier receives remittances from the mail
room?
A) The cashier prepares the daily deposit.
B) The cashier makes the daily deposit at a local bank.
C) The cashier posts the receipts to the accounts receivable subsidiary ledger
cards.
D) The cashier endorses the checks.
199 C
Column1 Column2
The test of transactions which requires one to "reconcile recorded cash

disbursements with the cash disbursements on the bank statement"
satisfies the objective of
A) occurrence.
B) completeness.
C) accuracy.
D) posting and summarization.
10
What critical event must take place before goods can be shipped in order
to assure payment can be reasonably expected?
B) credit approval
13
A document sent to each customer showing his or her beginning accounts

receivable balance and the amount and date of each sale, cash payment
received, any debit or credit memo issued, and the ending balance is the
A) accounts receivable subsidiary ledger.
B) monthly statement.
C) remittance advice.
D) sales invoice.
18

25
D) the amounts posted to the customer's account in the accounts
receivable master file.
27
28
Which of the following is the risk that audit tests will not uncover existing
exceptions in a sample?
A) sampling risk
B) nonsampling risk
C) audit risk
D) detection risk
31
Which of the following is not a term related to evaluating results in audit

sampling until after a sample is tested and evaluated?
A) sample exception rate
B) estimated population exception rate
C) computed upper exception rate
D) exception
37
Financial instruments
A) include debt securities and money market funds.
B) such as derivatives can be used as a way of hedging.
C) must be classified as held-to-maturity securities.
41
When analyzing exceptions, the auditor should keep in mind that

A) all exceptions must be reported to management.
B) they should determine the breakdown in the internal controls that
allowed the exceptions to occur.
C) the nature of an exception and its causes have no effect on the
qualitative evaluation of the system.
D) exceptions do not need to be analyzed if it is too costly.
42
What critical event must take place before goods can be shipped in order
to assure payment can be reasonably expected?
B) credit approval
50
Smith Manufacturing Company's accounts receivable clerk has a friend
who is also a customer of Smith Manufacturing. The accounts receivable
clerk has issued fictitious credit memos to his friend for goods supposedly
returned. The most effective procedure for preventing this activity is to
A) prenumber and account for all credit memorandums.
B) require receiving reports that provide evidence of returned inventory
items to support all credit memorandums before they are approved.
C) have independent sales and accounts receivable departments.
D) mail monthly statements to customers.
52
To test for recorded sales for which there were no actual shipments, the
auditor vouches from the
A) bill of lading to the sales journal.
B) sales journal to the shipping documents.
C) sales journal to the accounts receivable subsidiary ledger.
D) bill of lading to the supporting customer order and sales order.
57
Which of the following is one of the main differences between attributes

sampling and nonstatistical sampling?
A) the number of steps involved
B) the calculation of the initial sample sizes
C) determining the objectives of the audit test
D) defining the population
60
The auditor is performing substantive tests of balances for accounts

payable. What documentation would provide the best evidence for the
ending balance?
A) vendors' invoices
B) vendors' statements
C) receiving reports
D) purchase orders
69

75
Which of the following would normally be discovered as part of the audit
of the bank reconciliation?
A) failure to bill a customer
B) failure to include a deposit in transit on the bank reconciliation
C) duplicate payment of a vendor's invoice
D) payment to an employee for more hours than she worked
76
You are performing the audit of Jenkins and Company. Your tests of
controls and tests of transactions for accounts payable demonstrate that
the controls are operating effectively. This would normally allow you to
A) eliminate the need for substantive testing of balances for accounts
payable.
B) reduce the need for substantive testing of balances for accounts
payable.
C) reduce control tests in other transactions cycles.
D) increase the need for substantive testing of balances for accounts
payable.
78
One type of shipping document is the ________, which is a written

contract between the carrier and the seller of the receipt and shipment of
goods.
A) sales order
B) bill of lading
C) sales invoice
D) customer order
82
Many audits have a ________ risk of misstatement for the payroll cycle.
A) high
B) low
C) moderate
D) zero
85
An imprest petty cash fund would least likely be used to pay for which of
the following items?
A) minor office supplies
B) monthly interest expense
C) stamps for small mailings
D) small contributions to a local charity
88
Which of the following is a correct statement regarding the shipment of
goods?
A) The shipping document must be in paper form.
B) The shipping document is used to update the perpetual inventory
records.
C) Only one copy of the shipping document is needed.
D) All of the above are correct statements.
92
The careful and timely preparation of all payroll tax returns is necessary to
avoid penalties and criminal charges. The most important control in the
timely preparation of these returns is
A) computerized preparation of tax returns.
B) a well-defined set of policies that indicate when each form must be
filed.
C) independent verification of computer output by a competent individual.
D) the use of an outside payroll service.
94
Which of the following is likely to be determined first when performing

tests of details for accounts receivable?
A) Recorded accounts receivable exist.
B) Accounts receivable in the aged trial balance agree with related master
file amounts, and the total is correctly added and agrees with the general
ledger.
C) The client has a right to the accounts receivable.
D) Existing accounts receivable are included.
102
Which of the following cycles does not affect cash in bank?

A) capital acquisitions cycle
B) inventory and warehousing
C) payroll and personnel cycle
D) acquisitions and disbursements
103
Which of the following occurrences would be least likely to warrant further

audit attention for the auditor?
A) deviations from client's established control procedures
B) deviations from client's budgeted values
C) monetary misstatements in populations of transaction data
D) monetary misstatements in populations of account balance details
106
________ accumulate costs by individual jobs as material is issued into
production and labor costs are incurred.
A) Just-in-time production systems
B) Job cost systems
C) Process cost systems
D) Manufacturing systems
112

116

A) credit memo.
C) vendor invoice.
117
Which of the following is most correct when using audit sampling for
exception rates?
A) The auditor is concerned with the lowest rate.
B) The auditor is concerned with the highest rate.
C) The auditor is concerned with the average on previous audits.
D) The auditor is not concerned with the exception rate for audits of
nonpublic companies.
120
The auditor traces items from the source documents to the journals in
order to accumulate audit evidence that will satisfy the
A) existence objective.
B) completeness objective.
C) ownership objective.
D) valuation objective.
131
________ is not a transaction-related audit objective for the classes of

transactions underlying the payroll cycle.
A) Classification
B) Existence
C) Timing
D) Completeness
133
The audit of cost accounting begins with the internal transfer of assets
from raw materials to work-in-process to
A) manufacturing overhead.
B) finished goods inventory.
C) the perpetual inventory master files.
D) retail sales.
135

A) credit memo.
C) vendor invoice.
137
Absent disputed amounts and minor timing differences, the vendor's

statements should reconcile to the
A) acquisition journal.
B) accounts payable master file.
C) cash disbursements amount for purchases.
D) vouchers payable amount for vendors.
165
The audit procedure referred to as proof of cash receipts is particularly

useful to test
A) time lags in making deposits.
B) whether all recorded cash receipts have been deposited in the bank.
C) whether there are cash receipts that have not been recorded in the
journals.
D) the client's reconciliation between cash receipts and bank deposits.
166
In many audits of sales transactions substantive tests of transactions can

be reduced in determining the completeness objective because
A) understatements of assets and income are a greater concern than
overstatements.
B) overstatements of assets and income are a greater concern than
understatements.
C) it doesn't matter if income is understated because the savings on
income tax offsets the reduced revenue and net income is correct.
D) the unrecorded sales cause a reduction of accounts receivable;
therefore, the ratios of the two financial statements will not be misleading.
167
Which of the following test of controls is useful to test the completeness
objective for cash receipts?
A) Compare shipping documents with sales records.
B) Observe endorsement of incoming checks.
C) Examine evidence that the receivable master file is reconciled to the
general ledger.
D) Observe if the client reconciles the bank account.
171
The extent of a search for unrecorded liabilities largely depends on

A) materiality and inherent risk.
B) materiality and control risk.
C) materiality only.
D) inherent risk only.
174
D) the amounts posted to the customer's account in the accounts
receivable master file.
177
Which of the following audit procedures would normally be included in the

audit plan when auditing the allowance for doubtful accounts?
A) Send positive confirmations.
B) Inquire of the client's credit manager.
C) Send negative confirmations.
D) Examine sales invoices.
178
Which of the following most likely would be detected by a review of a

client's sales cutoff?
A) excessive sales discounts
B) unrecorded sales for the year
C) unauthorized goods returned for credit
D) lapping of year-end accounts receivable
181
Which of the following is an accurate statement regarding sampling
distribution?
A) A sampling distribution is a sample with characteristics the same as
those of the population.
B) Sampling distributions allow the auditor to make probability statements
about the likely representativeness of any sample that is in the
distribution.
C) Each population exception rate and sample size has the same sampling
distribution.
D) Auditors cannot use sampling distributions to draw statistical
conclusions about the unknown population being sampled.
182
When should auditors not perform alternative procedures in testing the

accounts receivable balance?
A) when customers do not return positive confirmation requests
B) when customers do not return negative confirmation requests
C) when confirmations are deemed to be ineffective as an audit procedure
D) when confirmations are too costly to use
183
What typically ends the acquisitions and payment cycle?

A) issuance of a purchase requisition or request for purchase of
goods/services
B) issuance of a payment on accounts payable
C) approval of a new vendor
D) purchase requisition
184
When assessing risk control, the auditor must do all of the following except
A) assess control risk for each objective by evaluating the controls and
deficiencies for each objective.
B) perform the detailed test of balances.
C) identify the key internal controls and deficiencies.
D) associate the key controls and deficiencies with the objectives.
185
When deciding the acceptability of the population,
A) the methodology for deciding the acceptability of the population for
attributes differs from determining the acceptability for nonstatistical
sampling.
B) before the population can be considered acceptable, the CUER
determined on the basis of the actual sample results must be less than or
equal to TER when both are based on the same ARO.
C) when the CUER is greater than the TER, the auditor must increase the
sample size.
D) the CUER is compared with the TER in total, not for each attribute.
186
When using statistical sampling, the auditor would most likely require a
smaller sample if the
A) population increases.
B) desired reliability decreases.
C) desired precision interval narrows.
D) expected exception rate increases.
195
Column22 Column3
B
B
B
B
B
B
D B
B
B
B
B
B
B
B
B
D B
B
B
B
Column3 Count of Column3
A 50
B 48
C 61
D 39
(empty)
Total Result 198
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English
Credit should be approved before a customer's order is received.
Separate perpetual records are likely to be kept only for raw materials inventory.
Misstatements involving the completeness objective for sales lead to overstatements of assets and income.
A misstatement of an expense account usually also results in an equal misstatement of accounts receivable.
An approved purchase requisition form authorizes shipment of goods to customers.
Firing personnel terminates the payroll and personnel cycle.
A high inherent risk increases planned detection risk and decreases planned substantive tests.
Auditing standard indicate that if the auditor identifies a significant risk at the assertion level, the auditor is not
required to perform substantive procedures.
A credit memo is a document used internally that indicates authority to write-off an account receivable as
uncollectible.
The audit procedure "recompute hours worked from time cards" is normally performed when testing the
completeness objective for payroll.
A vendor invoice is normally prepared at the time tangible goods are received and indicates the description of goods,
the quantity received, the date received, and other relevant data.
Tests of controls and tests of details of balances are the auditor's most important means of verifying account balances
in the payroll and personnel cycle.
A vendor's statement is unreliable and auditors rarely use it
Auditors use the results of the substantive tests of transactions of sales and the collection cycle to determine the
extent to which inherent risk is satisfied for each accounts receivable balance-related audit objective.
Failure to record the acquisition of goods and services received overstates both accounts payable and net income.
A sales invoice is a document that usually indicates credit approval.
The cash account is not part of the acquisitions and payment cycle.
When auditing sales returns and allowances, the emphasis is normally on testing the completeness objective.
Examples of cash equivalents include time deposits, certificates of deposit, and marketable securities.
Tests of detail tie-in are normally conducted last in the audit of the sales and collections cycle.
Both U.S. and international auditing standards require the use of confirmations for accounts receivable.
Auditors typically set performance materiality for accounts payable relatively low.
Auditors typically test details of account balances in the audit of payroll.
The criterion used by most merchandising and manufacturing clients for determining when revenue recognition takes
place is whether title to the goods has passed
The prelisting of cash receipts should be prepared by the individual who has primary responsibility for the recording
of cash receipts
When verifying the correct balance in accounts payable, vendors' invoices are more useful than vendors' statements.
Most accrued liabilities can be identified by the existence of vendors' invoices for the obligation.
To test for the completeness balance-related audit objective, the auditor should review the accounts receivable trail
balance for large or unusual items.
Management typically allocates overhead using total raw materials as the basis for the allocation.
T/F
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Vietnamese
Tín dụng phải được phê duyệt trước khi nhận được đơn đặt hàng của khách hàng.
Các hồ sơ lưu niên riêng biệt có thể chỉ được lưu giữ để kiểm kê nguyên liệu thô.
Các sai sót liên quan đến mục tiêu đầy đủ cho việc bán hàng dẫn đến việc phóng đại tài sản và thu nhập.
Một sai sót trong một tài khoản chi phí thường cũng dẫn đến một sai sót tương đương với các tài khoản phải
thu.
Đơn trưng cầu mua hàng đã được phê duyệt cho phép vận chuyển hàng hóa cho khách hàng.
Sa thải nhân sự chấm dứt chu kỳ biên chế và nhân sự.
Rủi ro cố hữu cao làm tăng rủi ro phát hiện theo kế hoạch và giảm các thử nghiệm nội dung theo kế hoạch.
Chuẩn mực kiểm toán chỉ ra rằng nếu xác định được rủi ro trọng yếu ở cấp độ cơ sở dẫn liệu thì kiểm toán viên
không bắt buộc phải thực hiện các thủ tục cơ bản.
Thư báo ghi có là một tài liệu được sử dụng nội bộ để chỉ ra thẩm quyền xóa sổ một khoản phải thu là không thể
thu hồi được.
Quy trình kiểm toán "tính lại giờ làm việc từ thẻ thời gian" thường được thực hiện khi kiểm tra mục tiêu tính đầy
đủ của bảng lương.
Hóa đơn của nhà cung cấp thường được lập tại thời điểm hàng hóa hữu hình được nhận và cho biết mô tả hàng
hóa, số lượng nhận được, ngày nhận được và các dữ liệu liên quan khác.
Thử nghiệm kiểm soát và thử nghiệm chi tiết các số dư là phương tiện quan trọng nhất của kiểm toán viên để xác
minh các số dư tài khoản trong chu trình tiền lương và nhân sự.
Tuyên bố của nhà cung cấp là không đáng tin cậy và kiểm toán viên hiếm khi sử dụng nó
Kiểm toán viên sử dụng kết quả của các thử nghiệm cơ bản đối với các giao dịch bán hàng và chu kỳ thu tiền để
xác định mức độ rủi ro vốn có được thỏa mãn đối với từng mục tiêu kiểm toán liên quan đến số dư tài khoản
phải thu.
Việc không ghi nhận việc mua lại hàng hóa và dịch vụ đã nhận làm phóng đại cả khoản phải trả và thu nhập ròng.
Hóa đơn bán hàng là một tài liệu thường chỉ ra sự chấp thuận tín dụng.
Tài khoản tiền mặt không phải là một phần của chu trình mua lại và thanh toán.
Khi kiểm toán lợi nhuận bán hàng và các khoản phụ cấp, thông thường người ta nhấn mạnh vào việc kiểm tra
mục tiêu tính đầy đủ.
Ví dụ về các khoản tương đương tiền bao gồm tiền gửi có kỳ hạn, chứng chỉ tiền gửi và chứng khoán thị trường.
Các thử nghiệm về sự liên kết chi tiết thường được tiến hành sau cùng trong quá trình đánh giá chu trình bán
hàng và thu tiền.
Cả hai tiêu chuẩn kiểm toán Hoa Kỳ và quốc tế đều yêu cầu sử dụng các xác nhận đối với các khoản phải thu.
Kiểm toán viên thường đặt tính trọng yếu của kết quả hoạt động đối với các khoản phải trả là tương đối thấp.
Kiểm toán viên thường kiểm tra chi tiết số dư tài khoản trong quá trình kiểm toán bảng lương.
Tiêu chí được hầu hết các khách hàng kinh doanh và sản xuất sử dụng để xác định thời điểm ghi nhận doanh thu
là liệu quyền sở hữu hàng hóa đã được thông qua hay chưa
Việc lập phiếu thu tiền mặt nên được chuẩn bị bởi cá nhân chịu trách nhiệm chính về việc ghi chép các khoản thu
tiền mặt.
Khi xác minh số dư chính xác trong các khoản phải trả, hóa đơn của nhà cung cấp hữu ích hơn so với báo cáo của
nhà cung cấp.
Hầu hết các khoản nợ phải trả dồn tích có thể được xác định bằng sự tồn tại của các hóa đơn của nhà cung cấp
cho nghĩa vụ.
Để kiểm tra tính đầy đủ của mục tiêu kiểm toán liên quan đến số dư, kiểm toán viên cần xem xét số dư các khoản
phải thu đối với các khoản mục lớn hoặc bất thường.
Ban Giám đốc thường phân bổ chi phí chung bằng cách sử dụng tổng số nguyên vật liệu thô làm cơ sở cho việc
phân bổ.
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English
Confirmation is the most common test of details of balances for the accuracy of accounts receivable.
An essential part of the auditor's responsibility in auditing cash receipts is to identify deficiencies in internal control that increa
The auditor should perform procedures to verify the addresses used for the accounts receivable confirmations.
Credit should be approved before a customer's order is received.
Separate perpetual records are likely to be kept only for raw materials inventory.
Misstatements involving the completeness objective for sales lead to overstatements of assets and income.
A confirmation is a type of audit evidence.
Tests of the presentation and disclosure-related objectives are generally done as part of the completion phase of the audit.
A misstatement of an expense account usually also results in an equal misstatement of accounts receivable.
For most clients, the balance sheet accounts related to payroll are normally insignificant, except for labor charged to inventory
The overall objective in the audit of the sales and collection cycle is to evaluate whether the account balances affected by the
An approved purchase requisition form authorizes shipment of goods to customers.
For good internal control, the payroll function should be independent of the human resources department.
Firing personnel terminates the payroll and personnel cycle.
A high inherent risk increases planned detection risk and decreases planned substantive tests.
Auditing standard indicate that if the auditor identifies a significant risk at the assertion level, the auditor is not required to pe
Auditors must maintain control of confirmations until they are returned from the customer.
A credit memo is a document used internally that indicates authority to write-off an account receivable as uncollectible.
At the completion of the tests of controls and substantive tests of transactions, auditors must analyze each exception to deter
Despite the large dollar amounts involved in the payroll and personnel cycle, auditors typically spend less time auditing this cy
The auditors ultimate substantive tests depend on the relative effectiveness of internal controls related to accounts payable.
While most cycles include at least two classes of transactions, the payroll and personnel cycle includes only one class of transa
There should generally be correspondence in the client's file establishing the uncollectibility of their account.
A substantive test of transactions commonly used to test the completeness objective for acquisitions is "Trace from a file of re
The audit procedure "recompute hours worked from time cards" is normally performed when testing the completeness objecti
Auditing the acquisition and payment cycle often takes more time than any other cycle.
A vendor invoice is normally prepared at the time tangible goods are received and indicates the description of goods, the quan
Tests of controls and tests of details of balances are the auditor's most important means of verifying account balances in the p
Favorable results from analytical procedures may reduce the extent to which the auditor needs to test details of balances.
Checks should be prenumbered to make it easier to account for all checks.
A vendor's statement is unreliable and auditors rarely use it
The sales journal is generated from the sales transaction file.
Auditors use the results of the substantive tests of transactions of sales and the collection cycle to determine the extent to wh
Payroll checks should be distributed by someone independent of the payroll and timekeeping functions.
When verifying the transfer of inventory from one location to another, the audit objectives with which the auditor is primarily
accuracy of recorded transfers.
Failure to record the acquisition of goods and services received overstates both accounts payable and net income.
A sales invoice is a document that usually indicates credit approval.
The cash account is not part of the acquisitions and payment cycle.
When auditing sales returns and allowances, the emphasis is normally on testing the completeness objective.
Examples of cash equivalents include time deposits, certificates of deposit, and marketable securities.
The balance-related audit objective realizable value is not applicable when auditing accounts payable.
Physical examination is an essential type of evidence used to verify the existence and count of inventory.
When labor is a material part of inventory valuation, auditors should emphasize testing internal controls over proper classifica
Paying employees for their services ends the payroll and personnel cycle.
Tests of detail tie-in are normally conducted last in the audit of the sales and collections cycle.
Both U.S. and international auditing standards require the use of confirmations for accounts receivable.
An acquisitions transaction file is a computer generated file that includes all information entered into the system regarding ac
The nature, extent, and timing of substantive tests of payroll transactions vary depending, in part, on assessed control risk.
Auditors typically set performance materiality for accounts payable relatively low.
Recording a sale that did not occur violates the occurrence transaction-related audit objective and the existence balance-relat
When auditing accounts payable, the auditor is more concerned about the possibility of understatements than overstatement
For proper internal control, the person(s) responsible for signing the payroll checks should not have access to timekeeping or b
Tests of the realizable value balance-related audit objective are for the purpose of evaluating the allowance for doubtful accou
Hiring personnel initiates the payroll and personnel cycle.
Auditors typically test details of account balances in the audit of payroll.
Auditors primarily emphasize the understatement of liabilities in the audit of accounts payable because they are concerned ab
It is generally more difficult for the auditor to detect payment of fraudulent hours than payment of fictitious employees.
The criterion used by most merchandising and manufacturing clients for determining when revenue recognition takes place is
When auditors evaluate sales returns and allowances, a primary emphasis is on the objective of occurrence.
The most difficult type of cash embezzlement for the auditor to detect is when the cash is stolen before it can be recorded in t
The prelisting of cash receipts should be prepared by the individual who has primary responsibility for the recording of cash re
When verifying the correct balance in accounts payable, vendors' invoices are more useful than vendors' statements.
The shipping point is critical because it is the first point at which company assets are released to another party
A comparison of the current year's inventory turnover ratio with previous years' may indicate the presence of obsolete invent
Most accrued liabilities can be identified by the existence of vendors' invoices for the obligation.
The audit procedure "Examine canceled check for authorized signature, proper endorsement, and cancellation by the bank" is
The theft of cash can occur before receipts are entered in the records or after they are entered in the records.`
To test for the completeness balance-related audit objective, the auditor should review the accounts receivable trail balance f
The extent and timing of an auditor's physical examination of inventory is significantly influenced by the adequacy of the clien
Management typically allocates overhead using total raw materials as the basis for the allocation.
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T T
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T T
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T T
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T T
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T T
T T
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F F
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T T
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F F
T T
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F F
T T
T T
T T
T T
T T
F F
T T
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Vietnamese
Xác nhận là kiểm tra phổ biến nhất đối với chi tiết số dư về tính chính xác của các khoản phải thu.
Một phần trách nhiệm thiết yếu của kiểm toán viên trong việc kiểm toán các khoản thu tiền mặt là xác định những
khiếm khuyết trong kiểm soát nội bộ làm tăng khả năng xảy ra gian lận.
Kiểm toán viên cần thực hiện các thủ tục để xác minh các địa chỉ được sử dụng để xác nhận các khoản phải thu.
Tín dụng phải được phê duyệt trước khi nhận được đơn đặt hàng của khách hàng.
Các hồ sơ lưu niên riêng biệt có thể chỉ được lưu giữ để kiểm kê nguyên liệu thô.
Các sai sót liên quan đến mục tiêu đầy đủ cho việc bán hàng dẫn đến việc phóng đại tài sản và thu nhập.
Xác nhận là một loại bằng chứng kiểm toán.
Các thử nghiệm về việc trình bày và các mục tiêu liên quan đến thuyết minh thông tin thường được thực hiện như
một phần của giai đoạn hoàn thành cuộc đánh giá.
Một sai sót trong một tài khoản chi phí thường cũng dẫn đến một sai sót tương đương với các tài khoản phải thu.
Đối với hầu hết các khách hàng, các tài khoản trên bảng cân đối kế toán liên quan đến bảng lương thường không
đáng kể, ngoại trừ lao động được tính cho hàng tồn kho.
Mục tiêu tổng thể trong quá trình kiểm toán chu trình bán hàng và thu tiền là đánh giá xem các số dư tài khoản bị
ảnh hưởng bởi chu trình này có được trình bày hợp lý theo các chuẩn mực kế toán hay không
Đơn trưng cầu mua hàng đã được phê duyệt cho phép vận chuyển hàng hóa cho khách hàng.
Để kiểm soát nội bộ tốt, chức năng trả lương nên độc lập với bộ phận nhân sự.
Sa thải nhân sự chấm dứt chu kỳ biên chế và nhân sự.
Rủi ro cố hữu cao làm tăng rủi ro phát hiện theo kế hoạch và giảm các thử nghiệm nội dung theo kế hoạch.
Chuẩn mực kiểm toán chỉ ra rằng nếu xác định được rủi ro trọng yếu ở cấp độ cơ sở dẫn liệu thì kiểm toán viên không
bắt buộc phải thực hiện các thủ tục cơ bản.
Kiểm toán viên phải duy trì kiểm soát các xác nhận cho đến khi chúng được trả lại từ khách hàng.
Thư báo ghi có là một tài liệu được sử dụng nội bộ để chỉ ra thẩm quyền xóa sổ một khoản phải thu là không thể thu
hồi được.
Sau khi hoàn thành các thử nghiệm kiểm soát và thử nghiệm cơ bản của giao dịch, kiểm toán viên phải phân tích từng
ngoại lệ để xác định nguyên nhân và ý nghĩa của ngoại lệ đối với rủi ro kiểm soát đã đánh giá.
Mặc dù có số tiền lớn liên quan đến chu trình trả lương và nhân sự, kiểm toán viên thường dành ít thời gian hơn để
kiểm tra chu trình này so với những người khác.
Các thử nghiệm cơ bản cuối cùng của kiểm toán viên phụ thuộc vào tính hiệu quả tương đối của các kiểm soát nội bộ
liên quan đến các khoản phải trả.
Trong khi hầu hết các chu trình bao gồm ít nhất hai loại giao dịch, thì chu trình trả lương và nhân sự chỉ bao gồm một
loại giao dịch.
Nhìn chung, phải có thư từ trong hồ sơ của khách hàng xác định tính không thể hoạt động của tài khoản của họ.
Nhìn chung, phải có thư từ trong hồ sơ của khách hàng xác định tính không thể hoạt động của tài khoản của họ.
Quy trình kiểm toán "tính lại giờ làm việc từ thẻ thời gian" thường được thực hiện khi kiểm tra mục tiêu tính đầy đủ
của bảng lương.
Việc kiểm toán chu trình mua lại và thanh toán thường mất nhiều thời gian hơn bất kỳ chu trình nào khác.
Hóa đơn của nhà cung cấp thường được lập tại thời điểm hàng hóa hữu hình được nhận và cho biết mô tả hàng hóa,
số lượng nhận được, ngày nhận được và các dữ liệu liên quan khác.
Thử nghiệm kiểm soát và thử nghiệm chi tiết các số dư là phương tiện quan trọng nhất của kiểm toán viên để xác
minh các số dư tài khoản trong chu trình tiền lương và nhân sự.
Kết quả thuận lợi từ các thủ tục phân tích có thể làm giảm mức độ mà kiểm toán viên cần kiểm tra chi tiết các số dư.
Các séc nên được đánh số trước để dễ dàng hơn trong việc hạch toán tất cả các séc.
Tuyên bố của nhà cung cấp là không đáng tin cậy và kiểm toán viên hiếm khi sử dụng nó
Nhật ký bán hàng được tạo từ tệp giao dịch bán hàng.
Kiểm toán viên sử dụng kết quả của các thử nghiệm cơ bản đối với các giao dịch bán hàng và chu kỳ thu tiền để xác
định mức độ rủi ro vốn có được thỏa mãn đối với từng mục tiêu kiểm toán liên quan đến số dư tài khoản phải thu.
Séc tính lương nên được phân phối bởi một người độc lập với chức năng tính lương và chấm công.
Khi xác minh việc chuyển hàng tồn kho từ địa điểm này sang địa điểm khác, mục tiêu kiểm toán mà kiểm toán viên
quan tâm chủ yếu là sự xuất hiện của các lần chuyển đã ghi, tính đầy đủ của việc chuyển đã ghi và tính chính xác của
việc chuyển đã ghi.
Việc không ghi nhận việc mua lại hàng hóa và dịch vụ đã nhận làm phóng đại cả khoản phải trả và thu nhập ròng.
Hóa đơn bán hàng là một tài liệu thường chỉ ra sự chấp thuận tín dụng.
Tài khoản tiền mặt không phải là một phần của chu trình mua lại và thanh toán.
Khi kiểm toán lợi nhuận bán hàng và các khoản phụ cấp, thông thường người ta nhấn mạnh vào việc kiểm tra mục
tiêu tính đầy đủ.
Ví dụ về các khoản tương đương tiền bao gồm tiền gửi có kỳ hạn, chứng chỉ tiền gửi và chứng khoán thị trường.
Giá trị có thể thực hiện được của mục tiêu kiểm toán liên quan đến số dư không được áp dụng khi kiểm toán các
khoản phải trả.
Kiểm tra thực tế là một loại bằng chứng cần thiết được sử dụng để xác minh sự tồn tại và số lượng hàng tồn kho.
Khi lao động là một phần quan trọng của việc xác định giá trị hàng tồn kho, kiểm toán viên nên nhấn mạnh việc thử
nghiệm kiểm soát nội bộ đối với việc phân loại phù hợp các giao dịch trả lương.
Việc trả tiền cho nhân viên cho các dịch vụ của họ kết thúc chu trình trả lương và nhân sự.
Các thử nghiệm về sự liên kết chi tiết thường được tiến hành sau cùng trong quá trình đánh giá chu trình bán hàng và
thu tiền.
Cả hai tiêu chuẩn kiểm toán Hoa Kỳ và quốc tế đều yêu cầu sử dụng các xác nhận đối với các khoản phải thu.
Tệp giao dịch mua lại là tệp được tạo bằng máy tính bao gồm tất cả thông tin được nhập vào hệ thống liên quan đến
các giao dịch mua lại.
Bản chất, mức độ và thời gian của các thử nghiệm cơ bản đối với các giao dịch trả lương thay đổi một phần tùy thuộc
vào rủi ro kiểm soát đã được đánh giá.
Kiểm toán viên thường đặt tính trọng yếu của kết quả hoạt động đối với các khoản phải trả là tương đối thấp.
Việc ghi nhận một giao dịch bán không xảy ra vi phạm mục tiêu kiểm toán liên quan đến giao dịch đã xảy ra và mục
tiêu kiểm toán liên quan đến số dư tồn tại.
Khi kiểm toán các khoản phải trả, kiểm toán viên quan tâm nhiều hơn đến khả năng xảy ra sai sót hơn là nói quá.
Để có kiểm soát nội bộ phù hợp, (những) người chịu trách nhiệm ký kiểm tra bảng lương không được có quyền truy
cập vào việc chấm công hoặc có liên quan đến việc lập bảng lương.
Các thử nghiệm về mục tiêu kiểm toán liên quan đến số dư giá trị có thể thực hiện được nhằm mục đích đánh giá
khoản dự phòng cho các tài khoản khó đòi.
Việc thuê nhân sự bắt đầu chu trình trả lương và nhân sự.
Kiểm toán viên thường kiểm tra chi tiết số dư tài khoản trong quá trình kiểm toán bảng lương.
Kiểm toán viên chủ yếu nhấn mạnh đến việc trình bày thấp các khoản nợ phải trả trong quá trình kiểm toán các
khoản phải trả vì họ lo ngại về trách nhiệm pháp lý tiềm tàng.
Nhìn chung, kiểm toán viên khó phát hiện ra việc thanh toán số giờ gian lận hơn việc thanh toán cho nhân viên hư
cấu.
Tiêu chí được hầu hết các khách hàng kinh doanh và sản xuất sử dụng để xác định thời điểm ghi nhận doanh thu là
liệu quyền sở hữu hàng hóa đã được thông qua hay chưa
Khi kiểm toán viên đánh giá lợi nhuận bán hàng và các khoản phụ cấp, trọng tâm chính là mục tiêu xảy ra.
Loại tham ô tiền mặt khó phát hiện nhất đối với kiểm toán viên là khi tiền mặt bị mất cắp trước khi được ghi vào sổ
nhật ký chứng từ thu tiền.
Việc lập phiếu thu tiền mặt nên được chuẩn bị bởi cá nhân chịu trách nhiệm chính về việc ghi chép các khoản thu tiền
mặt.
Khi xác minh số dư chính xác trong các khoản phải trả, hóa đơn của nhà cung cấp hữu ích hơn so với báo cáo của nhà
cung cấp.
Điểm vận chuyển rất quan trọng vì đây là điểm đầu tiên mà tại đó tài sản của công ty được chuyển giao cho một bên
khác
So sánh tỷ lệ vòng quay hàng tồn kho của năm hiện tại với các năm trước 'có thể chỉ ra sự hiện diện của hàng tồn kho
lỗi thời.
Hầu hết các khoản nợ phải trả dồn tích có thể được xác định bằng sự tồn tại của các hóa đơn của nhà cung cấp cho
nghĩa vụ.
Quy trình kiểm toán "Kiểm tra séc đã hủy để tìm chữ ký được ủy quyền, ký hậu phù hợp và ngân hàng hủy" được sử
dụng để kiểm tra mục tiêu xảy ra đối với các khoản giải ngân tiền mặt.
Việc đánh cắp tiền mặt có thể xảy ra trước khi biên lai được nhập vào hồ sơ hoặc sau khi chúng được nhập vào hồ sơ.
'
Để kiểm tra tính đầy đủ của mục tiêu kiểm toán liên quan đến số dư, kiểm toán viên cần xem xét số dư các khoản
phải thu đối với các khoản mục lớn hoặc bất thường.
Phạm vi và thời gian kiểm tra thực tế hàng tồn kho của kiểm toán viên bị ảnh hưởng đáng kể bởi tính đầy đủ của hồ
sơ hàng tồn kho vĩnh viễn của khách hàng.
Ban Giám đốc thường phân bổ chi phí chung bằng cách sử dụng tổng số nguyên vật liệu thô làm cơ sở cho việc phân
bổ.
T/F Count of Column3
F 29
T 41
Total Result 70

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Customer billing is a critical process which auditors must understand.

Discuss the key internal controls that should be present in the

Discuss the procedures involved in, and the purpose of a surprise

Discuss each of the following documents and records used in the

The audit of the inventory and warehousing cycle consists of five

Explain what lapping means, and discuss the internal control

Briefly describe the circumstances in which it is acceptable to use

In testing for the transaction-related audit objective of occurrence,

Discuss the circumstances in which it is desirable to send

Discuss each of the following primary documents and records used in

The personnel in the receiving department should be independent of the storeroom

Lapping, which is a common type of embezzlement, is the postponement of entries for

The embezzlement can be easily prevented by separation of duties and a mandatory

3) Trace receiving reports issued before year end to vendor invoices.

5) Send confirmations to vendors.

1. Decide on the appropriate criteria for cutoff.

2. Evaluate whether the client has established adequate procedures to ensure a

3. Test whether the cutoff was correct.

Kiểm tra giao dịch:

In the flow of inventory and costs, when work-in-progress is credited,

Who is generally responsible for opening receipts when a company uses a

The acceptable risk of overreliance

When labor is a material factor in inventory valuation, the auditor should

The test of transactions which requires one to "reconcile recorded cash

A liability is properly accounted for as an account payable if

An inventory acquisition is received late in the afternoon of December 31

Which one of the following substantive analytical procedures would be most

A document sent to each customer showing his or her beginning accounts

When dealing with the processing and recording of cash receipts,

Which accounts are involved in the sales class of transactions?

An imprest petty cash fund

Cutoff information for inventory acquisitions should be obtained during

An effective procedure to test for unfilled shipments is to trace from the

Which of the following is a correct statement regarding block sampling?

The inventory and warehousing cycle can be thought of as having two

It would be appropriate for the payroll department to be responsible for

A ________ indicates a reduction in the amount due from a customer

Which of the following is an accurate statement regarding cash?

Which of the following is not a term related to evaluating results in audit

Which one of the following best describes the auditors responsibilities

Which of the following statements is most correct with respect to the

When analyzing exceptions, the auditor should keep in mind that

Failure to record the acquisition of goods is a violation of which audit

Which document or record is used in the write-off of uncollectible accounts

When designing audit procedures, tracing of source documents to the

Smith Manufacturing Company's accounts receivable clerk has a friend who

When dealing with the processing and recording of cash receipts,

In many audits, no substantive tests of transactions are made for the

An auditor is comparing the write-off of uncollectible accounts as a

________ is a balance-related audit objective that is not applicable to

Which one of the following best describes the auditors responsibilities

Which of the following is one of the main differences between attributes

Which of the following is not a "cash equivalent"?

Auditors who prefer statistical to nonstatistical sampling believe that the

Most companies recognize sales revenue when

The computer-generated file which records acquisitions, disbursements and

An auditor is vouching a sample of hourly employees from the payroll

Which accounts are involved in the sales class of transactions?