Expenditure Cycle - CPA Auditing and Attestation (AUD)

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Question

Proper segregation of duties requires that

Answer

Proper segregation of duties requires that bank reconciliations are prepared by those employees not associated with disbursing funds.

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Question

Physical control over those in charge of disbursement would be:

Answer

Physical control is not associated with procedures. The use methods to protect assets such as physical barriers and mitigating activities such as insurance. The other examples are procedural internal control methods.

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Question

At the end of each month, the senior accountant compares a vendor statement to the accounts payable. This is an example of a

Answer

Comparing independent documents with company records is a form of the review procedure. It doesn’t require authorization or physical control.

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Question

In auditing A/P, an auditor's procedures most likely would focus primarily on management's assertion of:

Answer

When testing liabilities, an auditor generally is concerned about understatement. Therefore, in auditing A/P, an auditor's procedures most likely would focus primarily on management's assertion of completeness.

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Question

The authority to accept incoming goods in receiving should be based on a(n):

Answer

The authority to accept incoming goods in receiving should be based upon an approved purchase order.

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Question

Of the following, which is not a purchase transaction that should be segregated in the expenditure cycle?

Answer

Cash receipts would be involved in the revenue cycle so it could not be included in the expenditure cycle.

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