Auditing Final Exam Questions FINC 403 - Mauldin With Complete Solutions
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AUDITING
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AUDITING
Which cycle is not directly linked to the production cycle?
a) Acquisition and expenditure cycle.
b) Payroll cycle.
c) Revenue and collection cycle.
d) Finance and investment cycle. - ----Finance and Investment Cycle
Which of the following is an internal control weakness for a company wh...
which cycle is not directly linked to the producti
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Auditing Final Exam Questions FINC 403 -
Mauldin
Which cycle is not directly linked to the production cycle?
a) Acquisition and expenditure cycle.
b) Payroll cycle.
c) Revenue and collection cycle.
d) Finance and investment cycle. - ----Finance and Investment Cycle
Which of the following is an internal control weakness for a company whose inventory of supplies
consists of a large number of individual items?
a) Supplies of relatively little value are expensed when purchased.
b) The cycle basis is used for physical counts.
c) The warehouse manager is responsible for maintenance of perpetual inventory records.
d) Perpetual inventory records are maintained only for items of significant value. - ----c) The
warehouse manager is responsible for maintenance of perpetual inventory records.
To make a year-to-year comparison of inventory turnover most meaningful, the auditor performs the
analysis
a) For the company as a whole.
b) By division.
c) By product.
d) All of the above. - ----c) By product.
An auditor usually traces the details of the test counts made during the observation of physical inventory
counts to a final inventory compilation. This audit procedure is undertaken to provide evidence that
items physically present and observed by the auditor at the time of the physical inventory count are
a) Owned by the client.
, b) Not obsolete.
c) Physically present at the time of the preparation of the final inventory schedule.
d) Included in the final inventory schedule. - ----d) Included in the final inventory schedule.
From the auditors' point of view, inventory counts are more acceptable prior to the year-end when
a) Internal control is weak.
b) Accurate perpetual inventory records are maintained.
c) Inventory is slow moving.
d) Significant amounts of inventory are held on a consignment basis. - ----b) Accurate perpetual
inventory records are maintained.
Which of the following internal control activities most likely addresses the completeness assertion for
inventory?
a) The work-in-process account is periodically reconciled with subsidiary inventory records.
b) Employees responsible for custody of finished goods do not perform the receiving function.
c) Receiving reports are prenumbered, and the numbering sequence is checked periodically.
d) There is a separation of duties between the payroll department and inventory accounting personnel.
- ----c) Receiving reports are prenumbered, and the numbering sequence is checked periodically.
An auditor selected items for test counts while observing a client's physical inventory. The auditor then
traced the test counts to the client's inventory listing. This procedure most likely obtained evidence
concerning management's balance assertion of
a) Rights and obligations.
b) Completeness.
c) Existence.
d) Valuation and allocation. - ----b) Completeness.
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