Auditing Chapter 14

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1. An audit of the balance in the accounts payable account is 14. What substantive procedures are performed during the audit
ordinarily not designed to:: Detect accounts payable that are of accounts payable?: 1. Obtain trial balance of payables and
substantially past due. reconcile with the ledgers
2. Auditor confirmation of accounts payable balances at the 2. Vouch balances payable to selected creditors by inspecting
balance sheet date may be unnecessary because:: There is supporting documents
likely to be other reliable external evidence available to 3. Reconcile liabilities with creditor's monthly statements
support the balances. 4. Confirm accounts payable
5. Perform analytical procedures
3. A client erroneously recorded a large purchase twice. Which
6. Search for unrecorded accounts payable
of the following internal control measures would be most
7. Perform procedures to identify accounts payable to related
likely to detect this error in a timely and efficient manner?:
parties
Reconciling vendors' monthly statements with subsidiary
8. Evaluate financial statement presentation and disclosure
payable ledger accounts.
15. When confirming accounts payable, the approach is most
4. For effective internal control, the accounts payable
likely to be one of:: Selecting accounts that the client has
department should compare the information on each
previously done the most business, plus a sample of their
vendor's invoice with the:: Receiving report and the purchase
accounts
order.
16. Which assertion do confirmation results most directly
5. Identify three audit procedures that are concerned directly
address: existence or completeness?: Existence
or indirectly with disclosing unrecorded accounts payable.:
1. Reconcile liabilities with monthly statements from creditors 17. Which is the more significant step in establishing strong
2. Confirm accounts payable internal control over accounts payable transactions: the
3. Analytical procedures approval of an invoice for payment, or the issuance of a
check in payment of an invoice?: The approval of an invoice
6. In an audit, the valuation of year-end accounts payable is
for payment, because no one hand-signs checks anymore.
most likely addressed by:: Confirmation
18. Which of the following is the best audit procedure for
7. In performing a test of controls, the auditors vouch a sample
determining the existence of unrecorded liabilities?:
of entries in the purchases journal to the supporting
Examine selected cash disbursements in the period
documents. Which assertion would this test of controls most
subsequent to year-end
likely test?: Existence
19. Which of the following procedures is least likely to be
8. Is confirmation presumptively required for accounts
completed before the balance sheet date?: Search for
receivable, accounts payable, or both?: Accounts receivable
unrecorded liabilities
9. The least likely audit approach for a management's estimate
20. Why do auditors more frequently call for reducing recorded
relating to an accrued liability is to:: Send confirmations
earnings?: 1. Client is too optimistic
relating to the estimate.
2. Auditors are rarely sued because statements are too low
10. Ordinarily, the most significant assertion relating to accounts 3. Liabilities are understated
payable is:: Completeness 4. Assets are overstated
11. To determine that each voucher is submitted and paid only
once, when a payment is approved, supporting documents
should be cancelled by the:: Individual who signs the checks
12. What are the major responsibilities of an accounts payable
department?: 1. Cash disbursement
2. Stamp forms with the date received
3. Verify invoices
13. What documentary evidence created by the client's
organization is particularly important to the auditors in
verifying accrued property taxes?: 1. Property tax bills
2. Related paid bills