In order to determine whether accounts payable are understated, auditors wish to obtain a sample of purchase transactions from suppliers and how they were recorded in the accounting books. � , sampling is the best mechanism to obtain this type of samples. a . discovery b . attributes c . random digits d . variables

In order to determine whether accounts payable are understated, auditors wish to obtain a sample of purchase transactions from suppliers and how they were recorded in the accounting books. � , sampling is the best mechanism to obtain this type of samples. a . discovery b . attributes c . random digits d . variables

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The auditor verifying whether all goods received by the company have been recorded appropriately. The source document that the auditor would test would mostly likely be the? A. Supplier Invoice B. Purchase Orders C. Receiving Reports D. Check Vouchers
Explain how judgement is used in statistical and non-statistical sampling in an audit service
11) To obtain evidence on the completeness assertion for revenue, the auditor would select a sample of shipping documents and trace them to the sales journal True False
Audit sampling should not be applied to which of the following audit procedures? A. Physically inspecting items of plant and equipment. B. Inspecting purchase acquisition forms for any evidence of approval. C. Calculating accounts payable turnover ratio and ensuring that it is reasonable compared with the previous year. D. Performing substantive tests for the occurrence of sales. E. Performing external confirmation of cash payable.
An audit procedure that involves taking a sample of recorded transactions and obtaining original source documents supporting the recorded transactions is referred to as what? a. vouching b. directional testing c. a walk-through d. tracing
Assuming that the auditor properly documents receiving reportnumbers as a part of the physical inventory observation procedures, explain how theproper cutoff of purchases, including tests for the possibility of raw materials in transit,should be verified later in the audit
Which of the following is the best reason for prenumbering in numerical sequence documents such as sales orders, shipping documents, and sales invoices?a. Enables company personnel to determine the accuracy of each document.b. Enables personnel to determine the proper period recording of sales revenue and receivables.c. Enables personnel to check the numerical sequence for missing documents and unrecorded transactions.d. Enables personnel to determine the validity of recorded transactions.
Which of the following audit procedures will best uncover an understatement of sales and accounts receivables? Select one: O 1. Test a sample of sales transactions, selecting the sample from pre numbered shipping documents O 2. Test a sample of sales transactions, selecting the sample from sales invoices recorded in the sales journal O 3. Confirm accounts receivable 4. Review the aged receivable trial balance
CAATS (Computer Assisted Auditing Techniques) can be used in all of the following ways when gathering evidence except: Multiple Choice For the selection of accounts receivable, loans, or other receivables for confirmation. For matching vendor invoices with supporting purchase orders and receiving reports. For the development of expectations when performing analytical procedures. For scanning inventory quantities for negative balance.
Which of the following types of audit evidence is the least persuasive? a. Bank statements obtained from the client. O b. O c. Prenumbered purchase order forms. O d. Correspondence from the client's attorney about litigation. Test counts of inventory performed by the auditor.