Audit Procedures by Transaction Cycle

Question 1

Does the revenue cycle require tracing or vouching?

Answer 1

Vouching

Question 2

What is the biggest audit concern?

Answer 2

Overstatement of assets or revenues

Question 3

What reduces risk of overstatement?

Answer 3

Segregation of duties

Question 4

What are the 3 functions to the segregation of duties?

Answer 4

Authority, recordkeeping, and custody

Question 5

What can cause of problem with segregation of duties?

Answer 5

Collusion and management override

Question 6

Using strong internal control, segregationl of the functions in a sales transaction should exist as follows?

Answer 6

Preparation of the sales order, credit approval, shipment, billing, and accounting

Question 7

What assertion is credit approval?

Answer 7

Valuation

Question 8

What function is involved in credit approval?

Answer 8

Authority

Question 9

What function is involved in shipment?

Answer 9

Custody

Question 10

What function is involved in billing and accounting?

Answer 10

Recordkeeping

Question 11

Can incoming mail be opened by a person who has access to the accounts receivable ledger?

Answer 11

No

Question 12

The receipts should be listed in detail and sent to?

Answer 12

Cashier, Accounts receivable department, Accounting department

Question 13

What should the cashier do with the receipts?

Answer 13

Prepare the bank deposit

Question 14

What assertions are used when auditing accounts receivable?

Answer 14

Completeness, valuation, allocation, and accuracy, existence and occurrence, and rights and obligations

Question 15

What assertions are used when auditing sales transactions?

Answer 15

Completeness, cutoff, valuation, allocation, and accuracy, existence and occurrence, and understandability and classification

Question 16

What assertions are used when auditing presentation and disclosure?

Answer 16

Completeness, valuation, allocation, and accuracy, rights and obligations and occurrence, and understandability and classification

Question 17

Confirmations generally provide evidence regarding?

Answer 17

Existence and rights and obligations

Question 18

Does the expenditure cycle require tracing or vouching?

Answer 18

Tracing

Question 19

What are the functions in a purchase transaction that should be segregated?

Answer 19

Purchase requisition, purchase orders, and receipt of goods or services

Question 20

Should the purchase order be given to the shipping department with the quantity ordered?

Answer 20

No

Question 21

What are the 3 functions the accounting department has when pertaining to accounts payable?

Answer 21

Recording the payable, approving the invoice for payment and recording payment after paid by treasurer

Question 22

What function of segregation of duty deals with recording the payable?

Answer 22

Recordkeeping

Question 23

What function in segregation of duties deal with approving invoices for payment and recording payment?

Answer 23

Authority

Question 24

When an invoice arrives, the accounting department approves it by?

Answer 24

Matching the invoice, purchase order, receiving report, and the requisition

Question 25

Who pays the bill?

Answer 25

Treasury

Question 26

Should the functions of approving the payment and signing the checks be segregated?

Answer 26

Yes

Question 27

What are all the treasurer duties dealing with a disbursement?

Answer 27

Prepares, signs, and mails the check and cancels all supporting document after payment

Question 28

What assertions are used when auditing accounts payable?

Answer 28

Completeness, valuation, allocation, and accuracy, existence and occurrence, and rights and obligations

Question 29

What procedures is performed for the assertion of completeness when auditing accounts payable?

Answer 29

Search for Unrecorded Liabilities

Question 30

What assertions are used for auditing purchase transactions?

Answer 30

Completeness, cutoff, valuation, allocation, and accuracy, existence and occurrence, and understandability and classification

Question 31

What assertions are used when auditing presentation and disclosure?

Answer 31

Completeness, valuation, allocation, and accuracy, rights and obligations and occurrence, and understandability and classification

Question 32

Does the cash cycle require tracing or vouching?

Answer 32

Vouching

Question 33

What are the 2 cash cycle fraud schemes?

Answer 33

Lapping and kiting

Question 34

What assertions are used whern auditing the ending cash balance?

Answer 34

Completeness, valuation and allocation, existence

Question 35

What assertions are used when auditing cash receipts and cash disbursements?

Answer 35

Completeness, cutoff, valuation, allocation, and accuracy, existence and occurrence, and understandability and classification

Question 36

Does the inventory cycle require tracing or vouching?

Answer 36

Vouching

Question 37

Duties that should be segregated in the inventory cycle include?

Answer 37

Purchasing, Receiving, warehouse, and shipping

Question 38

Should the investment cycle require vouching or tracing?

Answer 38

Vouching

Question 39

Should property, plant, and equipment cycle require vouching or tracing?

Answer 39

Vouching

Question 40

Should payroll and personnel cycle require tracing or vouching?

Answer 40

Tracing

Question 41

Segregation of duties in payroll should include?

Answer 41

Authorization to employ and pay, supervision, timekeeping and cost accounting, payroll check preparation, and check distribution

Question 42

Whose function is it to hire?

Answer 42

HR

Question 43

Should financing cycle require tracing or vouching?

Answer 43

Tracing