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Accounting Audit midterm

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Question;Question 1;Question text;You are explaining the ?fraud triangle? to a friend. You tell your friend that there are three;conditions that often exist when a fraud occurs. From the options below, which is not;considered one of these factors?;Select one;a. Motive;b. Lack of Training;c. Opportunity;d. Rationalization;Question 2;Question text;You are an auditor on an engagement testing controls over;cash receipts. Your client receives a large volume of its customer cash;remittances by mail. The accountants who;record cash receipts are also receiving and handling the cash. Implementing what procedure/process would;reduce the risk of employee misappropriation of cash?;Select one;a. Employee fidelity;bonds.;b. Independently;prepared mailroom prelists.;c. Daily check;summaries.;d. A bank lockbox;system.;Question 3;Question text;You are an auditor on an engagement performing substantive;procedures of cash receipts. Your main source of information for vouching the;bank reconciliation items is the ??;Select one;a. Standard bank;confirmation.;b. Bank statement at;audit date.;c. Cutoff bank;statement.;d. Accounting journal;at year end.;Question 4;Not yet answered;Marked out of 7.50;Flag question;Question text;Revenues must be realized or realizable and _________ to be;recognized.;Select one;a. Foreseeable;b. Collected;c. Earned;d. Shipped;Question 5;Question text;You are an auditor on an engagement of a public client. You are currently auditing revenue.;The SEC has four criteria that must be met to recognize;revenue. From the options below, which;is not one of these criteria?;Select one;a. Cash is collected;b. Persuasive;evidence of an arrangement exists;c. Delivery has;occurred or services have been rendered;d. The seller's price;to the buyer is fixed or determinable;Question 6;Question text;You are an auditor on an engagement testing controls related;to the revenue and collection cycle.;What assertion are you intending to satisfy if you are;scanning your client?s sales invoices and checking for missing numbers in the;sequence?;Select one;a. Completeness;b. Accuracy;c. Occurrence;d. Classification;Question 7;Not yet answered;Marked out of 7.50;Flag question;Question text;You are an auditor on an engagement performing substantive;procedures for the revenue and collection cycle. You send out accounts;receivable confirmations to your client?s customers. Confirmations provide evidence of _________.;Select one;a. Existence;b. Valuation or;allocation;c. Rights and;obligations;d. Completeness;Question 8;Not yet answered;Marked out of 7.50;Flag question;Question text;You are an auditor on an engagement performing substantive;procedures for the revenue and collection cycle. In evaluating the adequacy of;the allowance for doubtful accounts, you would most likely review your client's;aging of receivables to support management's financial statement assertion of?.;Select one;a. Existence;b. Valuation or;allocation;c. Completeness;d. Rights and;obligations;Question 9;Not yet answered;Marked out of 7.50;Flag question;Question text;You are an auditor on an engagement performing tests of;controls for the revenue and collection cycle.;Your client has a control activity which requires that;credit sales are approved by the credit department. To test this, you examine invoices for;credit approval. What transaction assertion is this activity intended to;satisfy?;Select one;a. Occurrence;b. Completeness;c. Accuracy;d. Cutoff;Question 10;Not yet answered;Marked out of 7.50;Flag question;Question text;You are an auditor on an engagement. You are going to test a computerized;processing system. Which of the;following is true of the test data approach?;Select one;a. Several;transactions of each type must be tested.;b. Test data are;processed by the client's computer programs under the audit team's control;c. Test data must;consist of all possible valid and invalid combinations;d. The computer;program used to process test data is different from the program used throughout;the year by the client.;Question 11;Not yet answered;Marked out of 7.50;Flag question;Question text;You are an auditor on an engagement.;Your approach to evaluating a computerized processing system;is to compare the source documents to the system?s output. This is known as auditing ????..;Select one;a. Around the;computer;b. Through the;computer;c. Without the;computer;d. With the computer;Question 12;Not yet answered;Marked out of 7.50;Flag question;Question text;You are an auditor on an engagement.;Your audit team made a copy of your client's accounting;revenue program. Your team used this copy of the program to process actual;client data. The output of the secured program was compared to that of the;client's system. This audit technique would be considered ????;Select one;a. Generalized audit;software;b. Parallel;simulation;c. Test data;d. Tagging;transactions;Question 13;Not yet answered;Marked out of 7.50;Flag question;Question text;You are an auditor on an engagement. To obtain a better understanding of your;client?s computerized environment, you interview an employee who evaluates the;existing system and designs new computerized processing systems. This employee would most likely have the;title of ???;Select one;a. Programmer;b. Systems analyst;c. Computer operator;d. Data conversion;operator;Question 14;Not yet answered;Marked out of 7.50;Flag question;Question text;are computer controls that are pervasive and;apply to all applications of a computerized processing system.;Select one;a. Computer controls;b. Environment;controls;c. Automated;application controls;d. General controls.;Question 15;Not yet answered;Marked out of 7.50;Flag question;Question text;You are an auditor on an engagement.;Your audit team created a ?fake? department in your client?s;company. The audit team created records;(data) for this ?fake? department including customers and receivables. This data was processed simultaneously with;actual client data. This process/technique;is known as ????;Select one;a. Sample audit;review file;b. Integrated test;facility;c. Systems control;audit review file;d. Program analysis;software;Question 16;Not yet answered;Marked out of 7.50;Flag question;Question text;You are an auditor on an engagement. Your client improperly;capitalized an expense. This would cause;which of the following scenarios?;Select one;a. Understatement of;profit in the current year and overstatement in future years.;b. Understatement of;profit in the current year and in future years.;c. Overstatement of;profit in the current year and understatement in future years.;d. Overstatement of;profit in the current year and in future years.;Question 17;Not yet answered;Marked out of 7.50;Flag question;Question text;You are an auditor on an engagement. You are assessing your client?s internal;controls related to its payroll cycle. Which one of the situations below would;represent an internal control weakness in the payroll department?;Select one;a. Payroll department;personnel are rotated in their duties.;b. Paychecks are;distributed by the employees' immediate supervisor.;c. Payroll records;are reconciled with quarterly tax reports.;d. The timekeeping;function is independent of the payroll department.;Question 18;Not yet answered;Marked out of 7.50;Flag question;Question text;You are an auditor on an engagement. You are assessing your client?s internal;controls related to its payroll cycle. Which of the following personnel;department (Human Resources) procedures reduces the risk of payroll fraud and;represents an appropriate responsibility for the department?;Select one;a. Distributing;paychecks.;b. Authorizing;overtime hours.;c. Authorizing the;addition or deletion of employees from the payroll.;d. Collecting and;retaining unclaimed paychecks;Question 19;Not yet answered;Marked out of 7.50;Flag question;Question text;You are an auditor on an engagement. You are assessing your client?s internal;controls related to its payroll cycle. The purpose of segregating the duties of;hiring personnel and distributing payroll checks is to separate the;Select one;a. Human resources;function from the controllership function.;b. Administrative;controls from the internal accounting controls.;c. Authorization of;transactions from the custody of related assets.;d. Operational;responsibility from the record keeping responsibility.;Question 20;Not yet answered;Marked out of 7.50;Flag question;Question text;You are an auditor on an engagement. You are preparing to perform substantive;procedures in the acquisition and expenditure cycle. For the liability account balances, your are;most concerned with management' assertion about;Select one;a. Existence.;b. Rights and;obligations.;c. Completeness.;d. Valuation and;allocation.

 

Paper#40294 | Written in 18-Jul-2015

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