Question: 1 Which of the following comparisons would an auditor most

1. Which of the following comparisons would an auditor most likely make in evaluating an entity’s costs and expenses?
a. The current year’s accounts receivable with the prior year’s accounts receivable.
b. The current year’s payroll expense with the prior year’s payroll expense.
c. The budgeted current year’s sales with the prior year’s sales.
d. The budgeted current year’s warranty expense with the current year’s contingent liabilities.

2. The auditor will most likely perform extensive tests for possible understatements of
a. Revenues.
b. Assets.
c. Liabilities.
d. Capital.

3. In testing plant and equipment balances, an auditor can inspect new additions listed on the analysis of plant and equipment. This procedure is designed to obtain evidence concerning management’s assertion of

4. Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities?
a. Trace a sample of accounts payable entries recorded just before year-end to the unmatched receiving report file.
b. Compare a sample of purchase orders issued just after year-end with the year-end accounts payable trial balance.
c. Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices.
d. Scan the cash disbursements entries recorded just before year-end for indications of unusual transactions.

5. When using confirmations to provide evidence about the completeness assertion for accounts payable, the appropriate population most likely would be
a. Vendors with whom the entity has previously done business.
b. Amounts recorded in the accounts payable subsidiary ledger.
c. Payees of checks drawn in the month after the year-end.
d. Invoices filed in the entity’s open invoice file.

6. Auditor confirmation of accounts payable balances at the balance sheet date can be unnecessary because
a. This is a duplication of cutoff tests.
b. Accounts payable balances at the balance sheet date cannot be paid before the audit is completed.
c. Correspondence with the audit client’s attorney will reveal all legal action by vendors for nonpayment.
d. There is likely to be other reliable external evidence to support the balances.

7. Which of the following is a substantive test that an auditor most likely would per-form to verify the existence and valuation of recorded accounts payable?
a. Investigating the open purchase order file to ascertain that prenumbered purchase orders are used and accounted for.
b. Receiving the client’s mail, unopened, for a reasonable period of time after the year-end to search for unrecorded vendors’ invoices.
c. Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports.
d. Confirming accounts payable balances with known suppliers who have zero balances.

8. In auditing accounts payable, an auditor’s procedures most likely would focus primarily on management’s assertions of
a. Existence or occurrence.
b. Presentation and disclosure.
c. Completeness.
d. Valuation or allocation.

9. To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all
a. Payment vouchers.
b. Receiving reports.
c. Purchase requisitions.
d. Vendors’ invoices.

10. An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash disbursements journal. The purpose of this substantive audit procedure most likely was to
a. Identify unusually large purchases that should be investigated further.
b. Verify that cash disbursements were for goods actually received.
c. Determine that purchases were properly recorded.
d. Test whether payments were for goods actuallyordered.

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