1) Substantive procedure for cash would not include: a) prepare the bank reconciliation , b) confirm the bank balance as of the balance sheet date with bank
2) As part of the audit of property, plant and equipment, the auditor selected a number of addition to review. one of the invoices selected was issued by the vendor for the cost to repair some factory equipment. based solely on this test, the auditor can conclude that: a) property, plant, and equipment is fairly stated, b)property, plant, and equipment is overstated, c)property, plant, and equipment is understated.
3) Match the question on the internal control questionnaire for the acquisition cycle to the appropriate assertion
a) are vendor invoices matched to purchase orders and receiving reports before being entered into the system 1) existence/occurrence
b) are vendor statement reconciled to account payable ledgers? 2) completeness
c) are unmatched receiving reports reviewed periodically? 3) Valuation
4) presentation / disclosure
4) Which of the following customer responses to an accounts receivable confirmation would cause an auditor the most concern? ( the balance sheet date is December 31): a) we sent check on December 30th , b) we returned the items on December 1st, c) the balance stated does include the early payment discount we plan to take when we pay the bill on January 3rd
5) Which of the following steps should be performed by the auditor as part of the accounts receivable confirmation process? ( SELECT ALL THAT APPLY) a) select the customers to be confirmed, b) prepare the confirmation letters ,c) sign the confirmation letter, d) Mail the confirmation ,e) Receive the confirmation response
6) MATCH the substantive audit procedure to the assertion being tested ( more than one audit procedure can be used to test the same assertion). the procedure all relate to sales cycle :1) existence/ occurrence, 2) completeness, 3) valuation , 4) presentation/disclosure, 5) Rights/obligation
a) Obtain the listing of revenues ( by customer) for the year. Determine whether sales to any customers represent more than 5% of total sales for the year
b) Select a sample of invoices issued during the last 5 days of the year and agree to the invoices to the packing slips as to date, description, and quantity
c) Review the account receivable aging report and discuss balances over 90 days past due with the accounting manager
d) Select the sample invoices issued during the first 5 days after year end and agree the invoices to the packing slip as to date, description, and quantity
e) Review loan agreements to determine whether receivables are pledge as security
7) Indicate whether the following statement are true or false: A) Misstatements found in population tested 100% must be extrapolated to the total account balance, B) Comparing budgeted sales to actual sales ( by product) may provide evidence of slow-moving or obsolete inventory , C)Statistical sampling is not required under generally accepted auditing standards, D) Multiplying the balance in N/P at the balance sheet date by the clients borrowing rate and comparing that amount to interest expense would provide strong evidence that all debts was properly recorded, E) substantive analytical procedures could not be used in the audit or property, plant, and equipment.