1- The following would be the best protection for an entity that wishes to prevent the lapping of trade accounts receivable:

1. A) segregate duties so that the bookkeeper in charge of the general ledger has no access to incoming mail.

2. B) have customers send payments directly to the entity’s bank.

3. C) ask that customers’ payment cheques be made payable to the entity and addressed to the treasurer.

4. D) segregate duties so that no employee has access to both the cheques from customers and currency from daily cash receipts.

2- When costing manufactured inventory all of the following procedures are necessary

except:

A) determining the cost of materials entered into raw materials.
B) determining the cost of raw materials transferred to work in process.

C) recording costs of direct labour applied to work in process.
D) determine the cost of purchases.

3- In auditing property, plant, and equipment (PPE), why might the auditor decide to assess control risk at the maximum and perform predominantly substantive testing?

1. A) Because transactions relating to property, plant, and equipment are few and usually individually material, assessment of control risk relating to these transactions is usually assumed to be the maximum.

2. B) The number of additions to/disposals of PPE is usually not a material number. Therefore, it is not of concern to the auditor.

3. C) PPE in total is material. All material balances should be tested using a substantive approach.

4. D) The controls over PPE for most companies are usually poor.

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Answer rating: 100% (QA)

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