Learning objectives addressed by this exercise: Chapter 5-Learning Objective(s) 1 and 4 2. Each of the following internal controls has been taken from a standard internal control questionnaire used by a CPA firm for assessing control risk in different transaction cycles. 1. Overall comparisons of purchases and inventory levels are made periodically. 2. Receiving reports are automatically and continuously posted to the perpetual inventory record. 3. The individuals preparing the payroll do not perform other payroll duties (timekeeping, distribution of checks) or have access to payroll data master files or cash. 4. All sale of the companys common stock are approved by the board of directors. 5. All credit sales are posted to customers individual subsidiary accounts. 6. The cost accounting function is kept separate from the inventory and production departments. 7. All significant accounting estimates related to determining fair market value of derivative instruments are reviewed by at least two members of senior management with knowledge and expertise in financial instruments. 8. Recorded sales are supported by sales orders, shipping documents, and invoices. 9. All voided and spoiled payroll checks are properly mutilated and retained. 10. A chart of accounts is used to classify each purchase entry. Required: For each internal control, identify: (1) the transaction-related audit objective(s) to which it applies; and (2) the transaction cycle where the control is most likely to be tested PCAOB Assertion Transaction Cycle l A. Existence or Occurrence I. Revenue and Cash Collection B. Rights and Obligations II. Acquisition and Disbursement C. Completeness III. Payroll and Personnel D. Valuation or Allocation IV. Production E. Presentation and Disclosure V. Finance and Investment