ACCT 444 Week 5 Quiz

ACCT 444 Week 5 Quiz
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ACCT 444 Week 5 Quiz
1. (TCO
6) The
auditor
looks for
an
indication
on
duplicate
sales
invoices
to see
whether
the
invoices
have been
verified.
This is an
example
of (Points
: 3)
a test of details of balances.
a test of control.
a substantive test of transactions.
both a test of control and a substantive test of transactions.
1. (TCO
6) Tests
of
controls
may

include
which of
the
following
types of
evidence?
(Points :
3)
Observation
Reperformance
Inquiries
All of the above
1. (TCO
6) For
efficiency,
tests of
controls
are
frequently
done at
the same
time as
(Points :
3)
analytical procedures.
compliance tests.
tests of transactions.
tests of details of balances.
2. (TCO 6)
Analytical
procedures
are
defined in
the
auditing
standards
as (Points
: 3)

compliance
tests.
substantive
tests.
tests of
controls.
helpful
procedures
not
possessing
the validity
of other
tests
available to
the auditor.
2. (TCO 6) Which of the following is not a direct result of performing analytical procedures?
(Points : 3)
Identify areas of potential misstatements.
Reduce detailed audit risk.
Understand the client’s business.
Identify specific errors in the accounts.
2. (TCO 6)
Analytical
procedures
may be
classified
as being
primarily
(Points :
3)
tests of controls.
substantive tests.
tests of ratios.
tests of details of balances.
3. (TCO
6) Which
of the

following
audit
tests is
usually
the least
costly to
perform?
(Points :
3)
Analytical
procedures
Tests of
controls
Tests of
balances
Substantive
tests of
transactions
3. (TCO 6) Which of the following audit tests is usually the most costly to perform? (Points : 3)
Analytical procedures
Tests of controls
Tests of balances
Substantive tests of transactions
4. (TCO
6) Which
of the
following
tests
commonly
occur
together?
(Points :
3)
Substantive
tests of
transactions
and tests of
controls
Substantive

tests of
transactions
and obtaining
an
understanding
of internal
controls
Analytical
procedures
and tests of
controls
All of the
above
4. (TCO 6) Which of the following relationships between types of tests and audit evidence is not
correct? (Points : 3)
Tests of details and documentation
Tests of controls and observation
Tests of details and observation
Substantive tests of transactions and reperformance
5. (TCO
6) The
sequence
of steps
in
gathering
evidence
as the
basis of
the
auditor’s
opinion
are
(Points :
3)
substantive
tests,
initial
assessment
of control
risk, and

tests of
controls.
initial
assessment
of control
risk,
substantive
tests, and
tests of
controls.
initial
assessment
of control
risk, tests
of
controls,
and
substantive
tests.
tests of
controls,
initial
assessment
of control
risk, and
substantive
tests.
5. (TCO 6) The purpose of tests of controls is to provide reasonable assurance that the (Points :
3)
accounting treatment of transactions and balances is valid and proper.
internal control procedures are functioning as intended.
entity has complied with GAAP disclosure requirements.
entity has complied with requirements of quality control.
6. (TCO
9) It is
important
that sales
be billed
and
recorded
in the

journal as
soon as
possible
after
(Points :
3)
the order is received.
the order is received and credit is approved.
credit is approved and it is verified that there is enough
inventory to fill the order.
the shipment takes place.
6. (TCO 9) The use of prenumbered sales invoices is meant to
prevent (Points : 3)
the failure to bill or record sales.
duplicate billings and recording of sales.
both A and B are correct.
neither A nor B is correct.
6. (TCO 9)
Prenumbered
documents
will only be
useful for
control
purposes if
(Points : 3)
a different numerical sequence is used for each company.
the sequence is accounted for periodically.
employees do not have access to the complete sequence.
All of the above
7. (TCO 9)
Which one
of the
following is
not an
auditor’s
concern

about a key
authorization
point in the
sales or
collection
cycle?
(Points : 3)
The receiving
room must
have
authorization
before
releasing
items to
inventory
control.
Credit must
be authorized
before the
sale.
Goods must
be shipped
after the
authorization.
Prices must
be
authorized.
7. (TCO 9) At which point in an ordinary sales transaction would a lack of specific authorization
be of least concern to the auditor? (Points : 3)
Granting of credit
Shipment of goods
Determination of discounts
Selling of goods for cash
8. (TCO
9) The
creditgranting
functions
should be
separated

from
which of
the
following?
(Points :
3)
Purchasing functions
Manufacturing function
Sales function
None of the above
9. (TCO 9)
When
designing
substantive
tests of
transactions
for sales, the
auditor is
concerned with
the possibility
of several
types of
misstatements.
Which of the
following is
not one of the
types of these
misstatements?
(Points : 3)
Sales being included in the journal for which no shipment was made
Sales to related parties, such as officers and subsidiaries
Sales recorded more than once
Shipments being made to nonexistent customers and recorded as sales
10. (TCO
9) A key
internal
control in

the sales
and
collection
cycle is
the
separation
of duties
between
cash
handling
and
record
keeping.
The
objective
most
directly
associated
with this
control is
to verify
that
(Points :
3)
cash receipts recorded in the cash receipts journal are reasonable.
cash receipts are properly classified.
recorded cash receipts result from legitimate transactions.
existing cash receipts are recorded.
10. (TCO 9)
Which one
of the
following
would the
auditor
consider to
be an
incompatible
operation if
the cashier
receives
remittances
from the

mailroom?
(Points : 3)
The cashier prepares the daily deposit.
The cashier makes the deaily deposit at a local bank.
The cashier posts the receipts to the accounts receivable subsidiary ledger cards.
The cashier endorses the checks.