ACC 492 Final Exam: Comprehensive Review of Auditing and Internal Control Concepts

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ACC 492 Final Exam: Comprehensive Review of Auditing and Internal ControlConcepts1. The cash disbursements journal also is called thea) Voucher register.b) Purchases journal.c) Check register.d) Accounts payable subsidiary ledger.2. Inassessing control risk for purchases, an auditor vouches a sample of entries in the voucherregister to the supporting documents. Which assertion would this test of controls most likelysupport?a) Completeness.b) Existence or occurrence.c) Valuation or allocation.d) Rights and obligations.3. An important purpose of the auditor’s review of the client’s procurement system should be todetermine the effectiveness of the procedures to protect againsta) Improper materials handling.b)Unauthorized persons issuing purchase orders.c) Mispostings of purchase returns.d) Excessive shrinkage or spoilage.4. A client erroneously recorded a large purchase twice. Which of the following internal controlmeasures would be most likely to detect this error in a timely and efficient manner?a) Footing the purchases journal.b) Reconciling vendors’ monthly statements with subsidiary payable ledger accounts.c) Tracing totals from the purchases journal to the ledger accounts.d) Sending written quarterly confirmation to all vendors.5. Which of the following departments most likely would approve changes in pay rates anddeductions from employee salaries?a) Personnel.b) Treasurer.c) Controller.d) Payroll.6. Possible misstatements related to the validity internal control objective for payroll transactionsinclude all of the following excepta) Payments to fictitious employees.b) Payments to terminated employees.c) Payments to valid employees who have not worked.d) Payment to valid employees at a rate in excess of the authorized amount.7. When examining payroll transactions, an auditor is primarily concerned with the possibility ofa) Posting of gross payroll amounts to incorrect salary expense accounts.b) Overpayments and unauthorized payments.c) Misfootings of employee time records.d) Excess withholding of amounts required to be withheld.8. An auditor vouched data for a sample of employees in a payroll register to approved clockcard data to provide assurance that

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a) Payments to employees are computed at authorized rates.b) Internal controls relating to unclaimed payroll checks are operating effectively.c) Segregation of duties exist between the preparation and distribution of the payroll.d) Employees work the number of hours for which they are paid.9. Which of the following circumstances most likely would cause an auditor to suspect anemployee payroll fraud scheme?a) Payrolls checks are disbursed be the same employee each payday.b) There are significant unexplained variances between standard and actual labor cost.c) Employee time cards are approved by individual departmental supervisors.d) A separate payroll bank account is maintained on an imprest basis.10. If preparation of a periodic scrap report is essential in order to maintain adequate control overthe manufacturing process, the data for this report should be accumulated in thea) Production Department.b) Accounting Department.c) Warehousing Department.d) Budget Department.11. Which of the following departments typically approves purchase requisitions?a) Raw materials stores.b) Cost accounting.c) IT.d) Inventory management.12. Which of the following best describes the validity audit objectives for inventory?a) Purchase requisitions initiated by authorized personnel.b) Recorded inventory actually exists.c) Inventory properly accumulated from journals and ledgers.d) All inventory is recorded.13. Auditors are most likely to ensure that no production activity is scheduled prior toa) Determining standard costs.b) Observing physical inventory.c) Completing the book to physical adjustment.d) Determining the amount of consigned inventory.14. Which of the following is least likely to be a possible cause of book-to-physical differencesin inventory quantities?a) Inventory cutoff errors.b) Misapplication of LIFO.c) Unreported scrap or spoilage.d) Theft.15. The auditor is most likely t seek information from the plant manager with respect to thea) Adequacy of the provision for uncollectible accounts.b) Appropriateness of physical inventory observation procedures.c) Existence of obsolete machinery.d) Deferral or procurement of certain necessary insurance coverage.16. In the examination of property, plant, and equipment, the auditor tries to determine all of thefollowing except thea) Adequacy of internal controls.b) Extent of property abandoned during the year.

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