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Chapter 14: Audit of Sales And Collection Answers

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1 Fraudulent use of corporate credit cards will be minimized by which of the following controls? A. Subjecting credit card charges to the same expense controls as those used on regular company expense forms. B. Periodically reviewing the validity of the need for credit cards at executive and operating levels. C. Establishing a corporate policy on the issuance of credit cards to authorized employees. D. Reconciling the monthly statement from the credit card company with the submitted copies of the cardholders’ charge slips. 2 What is a possible consequence of an employee’s being able to visit the safe-deposit box unaccompanied? A. It would be impossible to obtain a fidelity bond on the employee. B. The employee could pledge …show more content…

B. Review the mortgage amortization schedule. C. Recompute mortgage interest expense. D. Examine the current year’s canceled checks. 10 Which of the following is a standard control over cash disbursements? A. Checks should be signed by the controller and at least one other employee of the company. B. Checks should be sequentially numbered and the numerical sequence should be accounted for by the person preparing bank reconciliations. C. Checks and supporting documents should be marked “Paid” immediately after the check is returned with the bank statement. D. Checks should be sent directly to the payee by the employee who prepares documents that authorize check preparation. 11In assessing risks of material misstatement 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? A. Completeness. B. Classification. C. Accuracy. D. Occurrence. 12 In auditing for unrecorded noncurrent bonds payable, an auditor most likely will A. Compare interest expense with the bond payable amount for reasonableness. B. Examine documentation of assets purchased with bond proceeds for liens. C. Confirm the existence of individual bondholders at year end. D. Perform analytical procedures on the bond premium and discount accounts. 13 One objective of internal control is to record property, plant, and equipment (PPE) additions correctly as to account, amount, and period.

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