Chapter 11 – Auditing the Purchasing Process
1. Product costs should be matched directly with specific transactions and are recognized upon
recognition of revenue.
2. A purchase transaction usually begins with the preparation of a purchase order.
3. A receiving report is used to document the ordering of goods.
Chapter 11 – Auditing the Purchasing Process
4. The purchase journal is referred to as a check register.
5. The principal business objectives of the purchasing process are acquiring goods and services
and paying for those goods and services.
6. The accounts payable department is responsible for ensuring that all vendor invoices, cash
disbursements, and adjustments are recorded in the accounts payable records.
Chapter 11 – Auditing the Purchasing Process
7. After the controls are tested, the auditor sets the achieved level of control risk.
8. Because of the low volume of purchase return transactions, the auditor normally does not test
the controls associated with these transactions.
9. Analytical procedures can be used to examine the reasonableness of accounts payable and
accrued expenses.
Chapter 11 – Auditing the Purchasing Process
10. Accounts payable confirmations are used less frequently by auditors than accounts
receivable confirmations.
11. A product cost is
12. Which of the following accounts is not affected by cash disbursement transactions?
Chapter 11 – Auditing the Purchasing Process
13. A debit memo
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?
Chapter 11 – Auditing the Purchasing Process
15. The occurrence assertion for accounts payable includes
16. The cutoff assertion for accounts payable includes
Chapter 11 – Auditing the Purchasing Process
17. The accounts payable department receives the purchase order form to accomplish all of the
following except to:
18. Unrecorded liabilities are most likely to be found during the review of which of the
following documents?
Chapter 11 – Auditing the Purchasing Process
19. 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
20. The cash disbursements journal is also called the
Chapter 11 – Auditing the Purchasing Process
21. An important primary purpose of the auditor’s review of the client’s procurement system
should be to determine the effectiveness of the activities to protect against
22. A client erroneously recorded a large purchase twice. Which of the following internal
controls would be most likely to detect this error in a timely and efficient manner?
Chapter 11 – Auditing the Purchasing Process
23. An auditor performs a test to determine whether all merchandise was received for which the
client was billed. The population for this test consists of all
24. An auditor compares information on canceled checks with information contained in the
cash disbursements journal. The objective of this test is to determine that
Chapter 11 – Auditing the Purchasing Process
25. Which of the following procedures would an auditor most likely perform in searching for
unrecorded payables?
26. Tests designed to detect purchases made before the end of the year that have been recorded
in the subsequent year most likely would provide assurance about management’s assertion of
Chapter 11 – Auditing the Purchasing Process
27. The audit procedures used to verify accrued liabilities differ from those employed for the
verification of accounts payable because
28. The auditor is most likely to verify accrued commissions payable in conjunction with the
Chapter 11 – Auditing the Purchasing Process
29. Which of the following procedures relating to the examination of accounts payable could
the auditor delegate entirely to the client’s employees?
30. Which of the following audit procedures is least likely to detect an unrecorded liability?
Chapter 11 – Auditing the Purchasing Process
31. A client’s procurement system ends with the assumption of a liability and the eventual
payment of the liability. Which of the following best describes the auditor’s primary concern
with respect to liabilities resulting from the procurement system?
32. For effective internal control, the accounts payable department should compare the
information on each vendor’s invoice with the
Chapter 11 – Auditing the Purchasing Process
33. The authority to accept incoming goods in receiving should be based on a(an)
34. A voucher
Chapter 11 – Auditing the Purchasing Process
35. Operating control over the check signature plate normally should be the responsibility of
the
36. In testing controls over cash disbursements, an auditor most likely would determine that the
person who signs the checks also
Chapter 11 – Auditing the Purchasing Process
37. With respect to a small company’s system of purchasing supplies, an auditor’s primary
concern should be to obtain satisfaction that supplies ordered and paid for have been
38. As an in-charge auditor, you are reviewing a summary of control weaknesses in cash
disbursement procedures. Which one of the following weaknesses, standing alone, should
cause you the least concern?
Chapter 11 – Auditing the Purchasing Process
39. Tests of controls for the occurrence assertion for purchases include all of the following
except:
40. An internal control questionnaire indicates that an approved receiving report is required to
accompany every check request for payment of merchandise. Which of the following
procedures provides the greatest assurance that this control is operating effectively?
Chapter 11 – Auditing the Purchasing Process
41. An auditor wishes to perform tests of controls on a client’s cash disbursements procedures.
If the control activities leave no audit trail of documentary evidence, the auditor most likely will
test the procedures by
42. An entity’s internal control requires that for every check request there be an approved
voucher, supported by a prenumbered purchase order and a prenumbered receiving report. To
determine whether checks are being issued for unauthorized expenditures, an auditor most
likely would select items for testing from the population of all
Chapter 11 – Auditing the Purchasing Process
43. To provide assurance that each voucher is submitted and paid only once, an auditor most
likely would examine a sample of paid vouchers and determine whether each voucher is
44. Which of the following is the most effective control activity to detect vouchers prepared for
the payment of goods that were not received?