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Audit and Assurance Concepts and Applications 2

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Alyanah Saripada
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760 views2 pages

Audit and Assurance Concepts and Applications 2

Testbank

Uploaded by

Alyanah Saripada
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

Which of the following is a question that the auditor would expect to find on the production
cycle section of an internal control questionnaire?
- Are all releases by storekeepers of raw materials from storage based on approved requisition
documents?
2. Which of these is implemented to maintain accurate inventory records?
- Periodic counts are conducted to adjust the perpetual records
3. A most likely procedure in obtaining an understanding of a manufacturing entity’s internal
control over inventory balances
- Reviewing the entity’s description of inventory policies and procedures
4. For several years a client’s physical inventory count has been lower than what was shown on
the books at the time of the count so that downward adjustments to the inventory account
were required. Contributing to the inventory problem could be weaknesses in internal control
that led to the failure to record some
- Purchases returned to vendors
5. When auditing merchandise inventory at year-end, the auditor performs a purchase cut-off
test to obtain evidence that:
- All goods owned at year-end are included in the inventory balance
6. Cherry Lou Factory: How much is the value of inventory as of December 31, 2012?
- 166,500
7. How much is the cost of sales for the year 2012?
- 1,993,500
8. How much of the total cost should be allocated to “Class A”?
- 1,620,000
9. An auditor’s program to examine long-term debt most likely would include steps that require
- Correlating interest expense recorded for the period with outstanding debt
10. Two months before the year end, the bookkeeper erroneously recorded the receipt of a long-
term bank loan by a debit to cash and a credit to sales. Which of the following is the most
effective procedure for detecting this type of error?
- Analyze bank confirmation information
11. In performing an audit, which one of the following procedures would be considered a
“substantive test”?
- Comparing last year’s interest expense with this year’s interest expense
12. During the course of an audit, an auditor observes that the recorded interest expense seems
excessive in relation to the balance in long-term debt. This observation could lead the auditor
to suspect that
- Long-term debt is understated
13. Bowles Corporation: The amount to be reported under current liabilities as liability under
finance lease as of December 31, 2012 is
- 48,611
14. The annual lease payment under the lease is
- 95,950
15. *****The number of shares issued and outstanding as of December 31, 2012 is
- 1,386,000
16. The balance of retained earnings as of December 31, 2012 is
- 2,001,600
17. The balance of share premium as of December 31, 2012 is
- 2,075,000
18. The balance of share capital as of December 31, 2012 is
- 3,465,000
19. Which of the following is not a control that is designed to protect investment securities?
- Custody over securities should be limited to individuals who have recordkeeping
responsibility over the securities.
20. Which of the following controls would a company most likely use to safeguard marketable
securities when an independent trust agent is not employed?
- Two company officials have joint control of marketable securities, which are kept in a bank
safe-deposit box.
21. A weakness in internal control over recording retirements of equipment may cause an auditor
to
- Select certain items of equipment from the accounting records and locate them in the plant.
22. Which of the following controls would be most effective in assuring that the proper custody of
assets in the investing cycle is maintained?
- The recorded balances in the investment subsidiary ledger are periodically compared with
the contents of the safe-deposit box by independent personnel.
23. ABC Corp: Assuming that all the investments are accounted for at fair market value through
profit or losses under PAS 39, what is the realized gain/loss on sale of investment in 2012?
- 60,000
24. Assuming that all the investments are accounted for at fair market value through profit or
losses under PFRS 9, what is the unrealized holding gain/loss to be reported in the 2013
statement of comprehensive income?
- 280,000
25. Assuming that all the investments are accounted as available-for-sale securities under PAS 39,
what is the unrealized holding gain/loss to be reported in the stockholders’ equity portion of
the 2012 statement of financial position?
- 508,147

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