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Accounting Auditing Exam

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Question 1;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;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;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;Revenues must be realized or realizable and _________ to be recognized.;Select one;a. Foreseeable;b. Collected;c. Earned;d. Shipped;Question 5;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;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;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;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;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;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;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;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;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;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;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;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;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;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;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;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#81683 | Written in 18-Jul-2015

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