Chap011 - Chapter 11 - Auditing the Purchasing Process...

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Unformatted text preview: Chapter 11 - Auditing the Purchasing Process Chapter 11 Auditing the Purchasing Process True / False Questions 1. Product costs should be matched directly with specific transactions and are recognized upon recognition of revenue. True False 2. A purchase transaction usually begins with the preparation of a purchase order. True False 3. A receiving report is used to document the ordering of goods. True False 4. The purchase journal is referred to as a check register. True False 5. The principal business objectives of the purchasing process are acquiring goods and services and paying for those goods and services. True False 6. The accounts payable department is responsible for ensuring that all vendor invoices, cash disbursements, and adjustments are recorded in the accounts payable records. True False 7. After the controls are tested, the auditor sets the level of control risk. True False 11-1 Chapter 11 - Auditing the Purchasing Process 8. Because of the low volume of purchase return transactions, the auditor normally does not test the controls associated with these transactions. True False 9. Analytical procedures can be used to examine the reasonableness of accounts payable and accrued expenses. True False 10. Account payable confirmations are used less frequently by auditors than accounts receivable confirmations. True False Multiple Choice Questions 11. A product cost is A. An expense allocated by a systematic procedure B. Recognized during the period in which a liability is incurred C. Recognized in the period during which related revenue is recognized D. Recognized in the period in which cash is spent 12. Which of the following accounts is not affected by cash disbursement transactions? A. Cash B. Accounts payable C. Purchase discounts D. Purchase returns 13. A debit memo A. Reduces the amount of accounts payable to a vendor B. Reduces accounts payable when payment is made C. Is used by vendors to record cash payments received D. Authorizes a debit to purchases when goods are received 11-2 Chapter 11 - Auditing the Purchasing Process 14. In assessing control risk for purchases, an auditor vouches a sample of entries in the voucher register to the supporting documents. Which assertion would this test of controls most likely support? A. Completeness B. Occurrence C. Accuracy D. Classification 15. The occurrence assertion for accounts payable includes A. Determining whether all accounts payable are recorded B. Determining whether all accounts payable actually are liabilities C. Determining whether all accounts payable are recorded in the proper period D. Determining whether all accounts payable are properly classified in the financial statements 16. The cutoff assertion for accounts payable includes A. Determining whether all accounts payable are recorded B. Determining whether all accounts payable actually are liabilities C. Determining whether all accounts payable are recorded in the proper period D. Determining whether all accounts payable are properly classified in the financial D....
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This note was uploaded on 10/16/2011 for the course ACCT 6334 taught by Professor Chrits during the Spring '11 term at University of Texas at Austin.

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Chap011 - Chapter 11 - Auditing the Purchasing Process...

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