11 29 lo 7 which of the following statements is false regarding obtain ing evidence 1357664

11-29     LO 7 Which of the following statements is false regarding obtain-

ing evidence about internal control operating effectiveness in the acquisition and payment cycle?

a.       For integrated audits, the auditor will test the operating effec- tiveness of important controls as of the client’s year end.

b.       The auditor will select controls that are important to the audi- tor’s conclusion about whether the organization’s controls ade- quately address the assessed risk of material misstatement in the acquisition and payment cycle.

c.       Evidence of proper payment is not necessary for each purchase and payment, but is necessary for those that are material.

d.       The auditor will take a sample of receiving reports and trace through the system to test controls related to the completeness assertion for accounts payable.

 

11 30 lo 7 refer to the auditing in practice feature inventory controls at csk auto 1357665

11-30     LO 7 Refer to the Auditing in Practice feature “Inventory Controls

at CSK Auto Corporation.” Which of the following represents an implication of weaknesses in the company’s controls over inventory?

a.       The company could not adequately process and account for the disposition of inventory returns from customers.

b.       The board of directors fired the CEO of CSK Auto as a result of the internal control deficiencies.

c.       The company had to make adjustments to year-end inventory balances.

d.       a. & c.

e.       a. & b.

 

11 31 lo 8 which of the following auditing procedures would be used to test the exis 1357666

11-31     LO 8 Which of the following auditing procedures would be used

to test the existence or occurrence assertion for inventory?

a.       Perform year-end cutoff tests by noting the last shipping and receiving document numbers used before physical inventory is taken.

b.       Make inquiries of the client regarding the segregation of duties between the purchasing department and the receiving department.

c.       Review the client’s proposed physical inventory procedures to determine whether they are likely to result in a complete and correct physical inventory.

 

 

 

 

 

 

d.       Make inquiries of the client regarding allowances made for expected returns.

e.       All of the above.

 

11 32 lo 8 which of the following auditing procedures would be used to test the valu 1357667

11-32     LO 8 Which of the following auditing procedures would be used

to test the valuation or allocation assertion for   inventory?

a.       Inquire of production and warehouse personnel about the exis- tence of obsolete inventory.

b.       Test inventory cost by taking a sample of recorded inventory, and trace to source documents indicating cost of inventory.

c.       Review trade journals for changes in product technology.

d.       Inquire of the client about sales adjustments (markdowns) that have been offered to sell any products.

e.       All of the above.

 

11 35 lo 1 match the following assertions with their associated descrip tion a exist 1357669

11-35     LO 1 Match the following assertions with their associated descrip-

tion: (a) existence or occurrence, (b) completeness, (c) rights and obli- gations, (d) valuation or allocation, (e) presentation and disclosure.

1.       The company has title to the inventory as of the balance sheet date.

2.       Inventory balances exist at the balance sheet date.

3.       Inventory is properly classified on the balance sheet and dis- closed in the notes to the financial statements.

4.       Inventory balances include all inventory transactions that have taken place during the period.

5.       The recorded balances reflect the true underlying economic value of those assets.