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Please answer the attached questions.;Thanks!:);1. Which of the following accounts in a merchandising company is affected by both the revenue cycle and another cycle?;a. sales;b. sales returns and allowances;c. inventory;d. accounts receivable;e. accounts payable;2. The audit objective, "The accounts receivable balance represents gross claims on customers and agrees with the sum of the accounts receivable subsidiary ledger" is derived from the assertion of;a. existence or occurrence.;b. completeness.;c. rights and obligations.;d. valuation or allocation.;e. presentation or disclosure.;3. The bonding of employees will normally be expected to;a. "weed out" dishonest employees already hired.;b. eliminate the need for separation of duties in the cash receipts area.;c. guarantee that all employee fraud will be prevented.;d. provide reasonable assurance that all employees will perform their jobs with the utmost integrity.;e. serve as a deterrent to dishonesty.;4. A company policy states that annual vacations are mandatory for all employees. This policy is most important for employees who;a. are not bonded.;b. handle cash receipts.;c. maintain the detailed accounting records.;d. have access to the general ledger.;e. serve as inventory clerks.;5. In a credit-merchandising environment, which of the following documents usually initiates the activity in the sales cycle?;a. shipping document;b. customer order;c. material requisition;d. sales invoice;e. sales order;6. Controls designed to reduce the risk of omissions, duplications, incorrect pricing, and other types of errors in the billing process include all of the following except;a. comparison of control totals for shipping documents with corresponding totals for sales invoices.;b. computer matching of sales invoice information with purchase order information.;c. computer matching of sales invoice information with sales order and shipping information.;d. computer-programmed checks on the mathematical accuracy of sales invoices.;e. computer matching of sales prices with an authorized price list and sales order prices in preparing the sales invoices.;7. Use of modern point-of-sale terminals to record over-the-counter cash sales provides all of the following except;a. an immediate visual display for the customer to verify the accuracy of price and cash tendered.;b. a printed receipt for the customer.;c. an internal record of the transaction on a computer file or tape locked inside the terminal/register.;d. assurance that all cash sales are processed through the system.;e. printed control totals of the day's receipts processed on the device.;8. The use of a lockbox system enhances controls over cash receipts because the post office box is directly controlled by the;a. mailroom staff.;b. internal audit department.;c. treasurer.;d. chief financial officer.;e. company's bank.;9. In most merchandising firm audits, the auditor's concern over sales adjustment transactions is based upon the;a. sheer number and value of these transactions.;b. implication these transactions have for operating efficiency.;c. poor controls normally found over these transactions and the inherent lack of documentation.;d. lack of proper authorization for these transactions.;e. potential use of these transactions to conceal a theft of cash.;17. The taking of a physical inventory by a client is normally done according to a plan or a list of instructions. The client's instructions should include the following matters except;a. date of the counts.;b. names of employees responsible for observing the inventory taking.;c. locations to be counted.;d. segregation or identification of goods not owned.;e. detailed instructions on how the counts are to be made.;18. Inherent risk for the valuation or allocation assertion will be high in the personnel services cycle when;a. employee turnover is low.;b. factory workers are paid based on production.;c. payroll checks are drawn from a separate imprest bank account.;d. pay periods are weekly.;e. employee absenteeism is minimal.;23. The substantive test of inspecting plant asset additions is categorized under;a. initial procedures.;b. analytical procedures.;c. tests of details of transactions.;d. tests of details of balances.;e. presentation and disclosure.;24. The following procedures may be useful to the auditor in determining whether all retirements have been recorded except;a. analyze the miscellaneous expense account for proceeds from sales of plant assets.;b. investigate the disposition of facilities associated with discontinued product lines and operations.;c. trace retirement work orders and authorizations for retirements to the accounting records.;d. review insurance policies for termination or reductions of coverage.;e. make inquiry of management as to retirements.;25. The financing cycle interfaces with the;a. investing cycle.;b. expenditure cycle.;c. revenue cycle.;d. production cycle.;e. personnel services cycle.;26. The specific financing cycle audit objective, long-term debt and related income statement balances and stockholders' equity balances are properly identified and classified in the financial statements, relates to the;a. rights and obligations assertion.;b. completeness assertion.;c. existence or occurrence assertion.;d. valuation or allocation assertion.;e. presentation or disclosure assertion.;27. The classes of transactions associated with the audit of plant assets do not include;a. disposals of fixed assets.;b. repair and maintenance transactions.;c. depreciation expense.;d. board minutes authorizing asset acquisitions.;e. manufacture of fixed assets.;33. Which of the following is correct concerning the inspecting and counting of securities on hand?;a. All securities should be controlled by the auditor until the count is completed.;b. The custodian need not be present during the count.;c. A receipt should be provided by the auditor to the custodian when the securities are returned.;d. The auditor should observe the broker's advice number on the document.;e. The auditor should observe the name of the broker.;34. Which of the following is not true concerning the confirmation of securities held by outsiders for safekeeping?;a. Confirmations should be requested as of the date other securities are counted.;b. The auditor must control the mailings.;c. The auditor should receive responses directly from the custodian.;d. The data confirmed are the same as the data that should be noted when the auditor is able to inspect the securities.;e. Either positive or negative confirmations can be used.;35. Initial procedures for substantive tests of investments would not ordinarily include;a. understanding investment policies regarding the proportion of investments in government securities, corporate bonds, and equity securities.;b. understanding an entity's policy for investing excess cash, its financing activities, and its ability to generate free cash flow.;c. checking the mathematical accuracy of client-prepared schedules of investments.;d. determining that subsidiary investment ledgers agree with related general ledger control account balances.;e. understanding economic drivers that allow an entity to engage in investing activities.;36. The specific audit objective, recorded cash balances exist at the balance sheet date, is derived from the;a. existence or occurrence assertion.;b. completeness assertion.;c. rights and obligations assertion.;d. valuation or allocation assertion.;e. presentation or disclosure assertion.;37. Which of the following is not among the characteristics of the procedures performed in completing the audit?;a. They are optional since they have only an indirect impact on the opinion to be expressed.;b. They involve many subjective judgments by the auditor.;c. They are performed after the balance sheet date.;d. They are usually performed by audit managers or other senior members of the audit team who have extensive audit experience with the client.;e. They do not pertain to specific transaction cycles or accounts.;38. Which of the following is not among the specific auditing procedures the auditor performs to obtain additional audit evidence?;a. making subsequent events review;b. reading minutes of meetings;c. reviewing evidence concerning litigation, claims, and assessments;d. obtaining client representation letter;e. performing analytical procedures;39. By definition, subsequent events occur between;a. the interim and balance sheet date.;b. the balance sheet date and the report date.;c. the report date and the date the report is issued.;d. the date the report is approved and the date the report is issued.;e. the balance sheet date and the date the report is issued.;40. Pro forma data attached to the financial statements are only required with;a. a material type 1 subsequent event.;b. a very material type 1 subsequent event.;c. a material type 2 subsequent event.;d. a very material type 2 subsequent event.;e. either a material type 1 or a very material type 2 subsequent event.;41. Which of the following events in a subsequent period is an example of a type 1 subsequent event?;a. issuance of long-term bonds;b. settlement of warranties in excess of recorded amounts;c. purchase of a business;d. issuance of preferred stock;e. casualty loss resulting from a flood;42. Which of the following events in the subsequent period is an example of a Type 2 subsequent event?;a. realization of recorded year-end receivables at a different amount than recorded;b. settlement of recorded year-end estimated product warranty liabilities at a different amount than recorded;c. purchase of a machine;d. purchase of a business;e. sale of equipment;43. Ordinarily, type 1 subsequent events require;a. adjustment.;b. adjustment and disclosure.;c. a disclaimer.;d. inclusion as a reportable condition.;e. Disclosure.;44. In working with the minutes of meetings of stockholders, board of directors, and its subcommittees, the auditor should;a. read the minutes of all important meetings.;b. read the minutes of all meetings.;c. read the significant items in all meetings.;d. read the minutes of all stockholders' meetings.;e. scan the minutes of all meetings.;45. Which of the following is not an example of a loss contingency?;a. guarantees of obligations of others;b. income tax disputes under appeal;c. the client's claim against another for patent infringement;d. secondary endorsements;e. product warranties;1. Which of the following accounts in a merchandising company is;affected by both the revenue cycle and another cycle?;a. sales;b. sales returns and allowances;c. inventory;d. accounts receivable;e. accounts payable;2. The audit objective, ???The accounts receivable balance represents;gross claims on customers and agrees with the sum of the accounts;receivable subsidiary ledger??? is derived from the assertion of;a. existence or occurrence.;b. completeness.;c. rights and obligations.;d. valuation or allocation.;e. presentation or disclosure.;3. The bonding of employees will normally be expected to;a. ???weed out??? dishonest employees already hired.;b. eliminate the need for separation of duties in the cash receipts;area.;c. guarantee that all employee fraud will be prevented.;d. provide reasonable assurance that all employees will perform their;jobs with the utmost integrity.;e. serve as a deterrent to dishonesty.;4. A company policy states that annual vacations are mandatory for all;employees. This policy is most important for employees who;a. are not bonded.;b. handle cash receipts.;c. maintain the detailed accounting records.;d. have access to the general ledger.;e. serve as inventory clerks.;5. In a credit-merchandising environment, which of the following;documents usually initiates the activity in the sales cycle?;a. shipping document;b. customer order;c. material requisition;d. sales invoice;e. sales order;6. Controls designed to reduce the risk of omissions, duplications;incorrect pricing, and other types of errors in the billing process;include all of the following except;a. comparison of control totals for shipping documents with;corresponding totals for sales invoices.;b. computer matching of sales invoice information with purchase order;information.;c. computer matching of sales invoice information with sales order and;shipping information.;d. computer-programmed checks on the mathematical accuracy of sales;invoices.;e. computer matching of sales prices with an authorized price list and;sales order prices in preparing the sales invoices.;7. Use of modern point-of-sale terminals to record over-the-counter cash;sales provides all of the following except;a. an immediate visual display for the customer to verify the accuracy;of price and cash tendered.;b. a printed receipt for the customer.;c. an internal record of the transaction on a computer file or tape;locked inside the terminal/register.;d. assurance that all cash sales are processed through the system.;e. printed control totals of the day???s receipts processed on the;device.;8. The use of a lockbox system enhances controls over cash receipts;because the post office box is directly controlled by the;a. mailroom staff.;b. internal audit department.;c. treasurer.;d. chief financial officer.;e. company???s bank.;9. In most merchandising firm audits, the auditor's concern over sales;adjustment transactions is based upon the;a. sheer number and value of these transactions.;b. implication these transactions have for operating efficiency.;c. poor controls normally found over these transactions and the;inherent lack of documentation.;d. lack of proper authorization for these transactions.;e. potential use of these transactions to conceal a theft of cash.;17. The taking of a physical inventory by a client is normally done;according to a plan or a list of instructions. The client???s;instructions should include the following matters except;a. date of the counts.;b. names of employees responsible for observing the inventory taking.;c. locations to be counted.;d. segregation or identification of goods not owned.;e. detailed instructions on how the counts are to be made.;18. Inherent risk for the valuation or allocation assertion will be high;in the personnel services cycle when;a. employee turnover is low.;b. factory workers are paid based on production.;c. payroll checks are drawn from a separate imprest bank account.;d. pay periods are weekly.;e. employee absenteeism is minimal.;23. The substantive test of inspecting plant asset additions is;categorized under;a. initial procedures.;b. analytical procedures.;c. tests of details of transactions.;d. tests of details of balances.;e. presentation and disclosure.;24. The following procedures may be useful to the auditor in determining;whether all retirements have been recorded except;a. analyze the miscellaneous expense account for proceeds from sales of;plant assets.;b. investigate the disposition of facilities associated with;discontinued product lines and operations.;c. trace retirement work orders and authorizations for retirements to;the accounting records.;d. review insurance policies for termination or reductions of coverage.;e. make inquiry of management as to retirements.;25. The financing cycle interfaces with the;a. investing cycle.;b. expenditure cycle.;c. revenue cycle.;d. production cycle.;e. personnel services cycle.;26. The specific financing cycle audit objective, long-term debt and;related income statement balances and stockholders??? equity balances;are properly identified and classified in the financial statements;relates to the;a. rights and obligations assertion.;b. completeness assertion.;c. existence or occurrence assertion.;d. valuation or allocation assertion.;e. presentation or disclosure assertion.;27. The classes of transactions associated with the audit of plant;assets do not include;a. disposals of fixed assets.;b. repair and maintenance transactions.;c. depreciation expense.;d. board minutes authorizing asset acquisitions.;e. manufacture of fixed assets.;33. Which of the following is correct concerning the inspecting and;counting of securities on hand?;a. All securities should be controlled by the auditor until the count;is completed.;b. The custodian need not be present during the count.;c. A receipt should be provided by the auditor to the custodian when;the securities are returned.;d. The auditor should observe the broker???s advice number on the;document.;e. The auditor should observe the name of the broker.;34. Which of the following is not true concerning the confirmation of;securities held by outsiders for safekeeping?;a. Confirmations should be requested as of the date other securities;are counted.;b. The auditor must control the mailings.;c. The auditor should receive responses directly from the custodian.;d. The data confirmed are the same as the data that should be noted;when the auditor is able to inspect the securities.;e. Either positive or negative confirmations can be used.;35. Initial procedures for substantive tests of investments would not;ordinarily include;a. understanding investment policies regarding the proportion of;investments in government securities, corporate bonds, and equity;securities.;b. understanding an entity???s policy for investing excess cash, its;financing activities, and its ability to generate free cash flow.;c. checking the mathematical accuracy of client-prepared schedules of;investments.;d. determining that subsidiary investment ledgers agree with related;general ledger control account balances.;e. understanding economic drivers that allow an entity to engage in;investing activities.;36. The specific audit objective, recorded cash balances exist at the;balance sheet date, is derived from the;a. existence or occurrence assertion.;b. completeness assertion.;c. rights and obligations assertion.;d. valuation or allocation assertion.;e. presentation or disclosure assertion.;37. Which of the following is not among the characteristics of the;procedures performed in completing the audit?;a. They are optional since they have only an indirect impact on the;opinion to be expressed.;b. They involve many subjective judgments by the auditor.;c. They are performed after the balance sheet date.;d. They are usually performed by audit managers or other senior members;of the audit team who have extensive audit experience with the client.;e. They do not pertain to specific transaction cycles or accounts.;38. Which of the following is not among the specific auditing;procedures the auditor performs to obtain additional audit evidence?;a. making subsequent events review;b. reading minutes of meetings;c. reviewing evidence concerning litigation, claims, and assessments;d. obtaining client representation letter;e. performing analytical procedures;39. By definition, subsequent events occur between;a. the interim and balance sheet date.;b. the balance sheet date and the report date.;c. the report date and the date the report is issued.;d. the date the report is approved and the date the report is issued.;e. the balance sheet date and the date the report is issued.;40. Pro forma data attached to the financial statements are only;required with;a. a material type 1 subsequent event.;b. a very material type 1 subsequent event.;c. a material type 2 subsequent event.;d. a very material type 2 subsequent event.;e. either a material type 1 or a very material type 2 subsequent event.;41. Which of the following events in a subsequent period is an example;of a type 1 subsequent event?;a. issuance of long-term bonds;b. settlement of warranties in excess of recorded amounts;c. purchase of a business;d. issuance of preferred stock;e. casualty loss resulting from a flood;42. Which of the following events in the subsequent period is an;example of a Type 2 subsequent event?;a. realization of recorded year-end receivables at a different amount;than recorded;b. settlement of recorded year-end estimated product warranty;liabilities at a different amount than recorded;c. purchase of a machine;d. purchase of a business;e. sale of equipment;43. Ordinarily, type 1 subsequent events require;a. adjustment.;b. adjustment and disclosure.;c. a disclaimer.;d. inclusion as a reportable condition.;e. Disclosure.;44. In working with the minutes of meetings of stockholders, board of;directors, and its subcommittees, the auditor should;a. read the minutes of all important meetings.;b. read the minutes of all meetings.;c. read the significant items in all meetings.;d. read the minutes of all stockholders??? meetings.;e. scan the minutes of all meetings.;45. Which of the following is not an example of a loss contingency?;a. guarantees of obligations of others;b. income tax disputes under appeal;c. the client???s claim against another for patent infringement;d. secondary endorsements;e. product warranties

 

Paper#26663 | Written in 18-Jul-2015

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