Audit Practice Exam - Purchases, AP, Inventory | Take the Quiz

Assume your client is a retail grocer with material transcations in the expenditures cycle. Which of the following audit strategies would be most appropriate for the ecpenditure cycle?

An audit strategy that plans for extensive reliance on detail tests of transactions

An audit strategy that plans for extensive reliance on tests of controls

An audit strategy that plans for extensive reliance on analytical procedures

An auditstrategy that plans to assess inherent risk as low for the expenditure cycle

When goods are received, the computer would compare receiving information with information from which the following documents and generate an exception report of any discrepencies?

Purchase order and purchase requisition information

Vendor's invoice information

Vendor's shipping document and purchase order information

Vendor's shipping document and vendor's invoice information

Whih of the following porogrammed control procedures would be most effective in preventing duplicate payments?

No checks can be made payable to cash or bearer

Prenumbered checks are used and the computer prints an exception report of any breaks in sequence

After cash disbursement information is compared with uncanceled voucher information the voucher is electronically canceled

Ruun-to-run totals compare the beginning balance of the accounts payable file, less cash disbursements, with the ending accounts payable file

Internal control is strengthened when the quantity of merchandise ordered is omitted from the opurchasing information that can be accessed through the computer by the:

Department that intiated the requisition

Receiving department

Purchasing agent

Accounts payable department

An auditor selected items for test counts while observing a client's physical inventory listing. This procedure most likely obtained evidence concerningg management's assertion of:

Rights and obligations

Completeness

Existence

Valuation

Periodic or cycle counts of selected inventory items are made at various times during the year rather than a singl einventory conunt at year-end. Which of the following is necessary if the auditor plans to observe inventories at interim dates?

Complete recounts by independent teams are performed

Perpetual inventory records are maintained

Unit cost records are integrated with production accounting records

Inventory balances are rarely at low levels

The auditor is studying a ratio of accounts payable turn days. Which indicates a potential risk of unrecorded liabilities?

AP tuurn days increased from 28 to 45 days

AP turn days increased from 28 to 30 days

AP turn days decreased from 28 to 15 days

AP turn days decreased from 30 to 25 days

Which audit procedure is best for identifying unrecorded trade accounts payable?

Examining unusual relationships between monthly accounts payable balances and recorded cash payments

Reconciling vendors statements to the file of receivingg reports to identify items received just prior to the balance sheet date

Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period

Investigating payables reorded just prior to and just subsequent to the balance sheet date to determine whether they are supported by receiving reports

An auditor decided to confirm accounts payable to accomplish a low level of detection risk for the completeness assertion. Which of the following is the most reasonable sampling plan?

Cinfirm AP with an emphasis on the largest balances

Confirm AP with an emphasis on all vendors, including zero and small balances

Confirm AP using probability proportionate to size sampling

Confirm AP with an emphasis on new vendors, regardless of size of account

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Audit Practice Exam - Purchases, AP, Inventory

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