Question 1

Which of the following tests or procedures are primarily focused on the completeness, existence, and valuation assertions?
A)Vouching payroll transactions to supporting documentation
B)Recalculating accrued payroll liabilities at year-end to underlying payroll records
C)Reviewing activity in payroll accounts and investigate entries that appear unusual
D)None of the answer choices is correct.

Accepted Answer

Recalculating accrued payroll liabilities at year-end involves verifying the completeness and existence of the liabilities and ensuring that they are properly valued. Vouching payroll transactions to supporting documentation and reviewing activity in payroll accounts both primarily focus on the occurrence and accuracy assertions. Therefore, B is the best choice that primarily focuses on completeness, existence, and valuation assertions.

Question 2

________ systems use an independent third party to settle a business to business (B2B) transaction.

Accepted Answer

The answer of ________ systems use an independent third party...

Question 3

The use of audit data analytics as a substantive test in auditing the payroll process depends on which of the following?
A)The substance of the client's data
B)The quantity of the client's data
C)The quality of the client's data
D)The nature of the client's data

Accepted Answer

The quality of the client's data is crucial for using audit data analytics as a substantive test in auditing the payroll process because it ensures the data is accurate, complete, and reliable for analysis.

Question 4

Which three of the following are assertions of relevant transaction classes which belong to the key purchasing cycle assertion?
A)Occurrence
B)Completeness
C)Accuracy
D)Rights and obligations

Accepted Answer

The answer of Which three of the following are assertions...

Question 5

A ________ is a formal order to a bank to pay the payee the indicated amount.

Accepted Answer

The answer of A ________ is a formal order to...

Question 6

"Liabilities, payables, reserves, and accrual estimate failure" is one of the categories of _______ related to expense recording and liabilities.

Accepted Answer

The answer of "Liabilities, payables, reserves, and accrual estimate failure"...

Question 7

A key tenet of internal control is _______ of duties

Accepted Answer

The answer of A key tenet of internal control is...

Question 8

When performing substantive tests of the payroll process, recalculating accrued payroll tax liabilities at year-end to underlying payroll records is a test of which of the following key assertions?
A)Occurrence, accuracy, and classification
B)Occurrence, completeness, and valuation
C)Completeness, valuation, and existence

Accepted Answer

Recalculating accrued payroll tax liabilities at year-end to underlying payroll records primarily tests the completeness, valuation, and existence assertions, ensuring that all liabilities are recorded, valued correctly, and actually exist.

Question 9

All of the following are tests of presentation and disclosure for auditing the payroll process, EXCEPT _______.
A)reviewing presentation and disclosure for payroll costs in drafts of financial statements
B)evaluating the completeness of presentation and disclosure for receivables in drafts of financial statements
C)reading disclosures and independently evaluate their understandability
D)verifying accrued payroll was reported and in the drafts of the financial statements

Accepted Answer

The answer of All of the following are tests of...

Question 10

In the given table, match the left of the table with the statements on the right-hand side of table.

Accepted Answer

The answer of In the given table, match the left...

Question 11

The procurement process involves selecting vendors, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and _______.

Accepted Answer

The answer of The procurement process involves selecting vendors, establishing...

Question 12

Cash disbursement transactions are one of the major transactions classes with significant volumes of transactions in the_______.

Accepted Answer

The answer of Cash disbursement transactions are one of the...

Question 13

Assume you are involved in an audit and your expectations regarding effective controls are not confirmed.In this situation, you will need to take all of the following steps, EXCEPT _______.
A)determining if the client has a compensating control
B)evaluating the significance of the weaknesses
C)communicating the control weaknesses to management and those charged with governance
D)All of the answer choices are correct.

Accepted Answer

The answer of Assume you are involved in an audit...

Question 14

All of the following are tests of details of balances for auditing the payroll process, EXCEPT _______.
A)verifying totals of payroll registers
B)recalculating accrued payroll liabilities at year-end
C)determining that accrued payroll payables are the obligations of the entity
D)recalculating accrued payroll tax liabilities at year-end

Accepted Answer

Verifying totals of payroll registers is a test of controls, not a test of details of balances.

Question 15

In the given table, match the left of the table with the statements on the right-hand side of table.

Accepted Answer

The answer of In the given table, match the left...

Question 16

Determining that accrued payroll payables are the obligations of the entity is an example of which of the following?
A)Substantive analytical procedures
B)Tests of details of transactions
C)Tests of details of balances
D)Audit data analytics

Accepted Answer

Accrued payroll payables are a part of accounts payable and accruals. Tests of details of balances are performed to test the completeness and accuracy of accounts payable and accruals. Therefore, determining that accrued payroll payables are the obligations of the entity is an example of tests of details of balances.

Question 17

An internal document indicating the vendor, the amount due, and payment terms for the purchases received is referred to as a _______

Accepted Answer

The answer of An internal document indicating the vendor, the...

Question 18

A ________is a form showing the description, quantity, and other data pertaining to the goods the vendor has authorized the purchaser to return.It serves as the basis for initiating the purchase return.

Accepted Answer

The answer of A ________is a form showing the description,...

Question 19

Often vendors will send a _______ showing the beginning payable balance, transactions during the month, and the ending payable balance.

Accepted Answer

The answer of Often vendors will send a _______ showing...

Question 20

Many audit clients build in _______ controls so if one control does not find a misstatement, another control is designed to surface the problem.

Accepted Answer

The answer of Many audit clients build in _______ controls...

Quiz 12: Auditing the Purchases Cycle and Payroll Cycle

Which of the following tests or procedures are primarily focused on the completeness, existence, and valuation assertions?

________ systems use an independent third party to settle a business to business (B2B) transaction.

The use of audit data analytics as a substantive test in auditing the payroll process depends on which of the following?

Which three of the following are assertions of relevant transaction classes which belong to the key purchasing cycle assertion?

A ________ is a formal order to a bank to pay the payee the indicated amount.

"Liabilities, payables, reserves, and accrual estimate failure" is one of the categories of _______ related to expense recording and liabilities.

A key tenet of internal control is _______ of duties

When performing substantive tests of the payroll process, recalculating accrued payroll tax liabilities at year-end to underlying payroll records is a test of which of the following key assertions?

All of the following are tests of presentation and disclosure for auditing the payroll process, EXCEPT _______.

In the given table, match the left of the table with the statements on the right-hand side of table.

The procurement process involves selecting vendors, establishing payment terms, negotiating contracts, purchasing goods, receiving goods, and recording of purchases and _______.

Cash disbursement transactions are one of the major transactions classes with significant volumes of transactions in the_______.

Assume you are involved in an audit and your expectations regarding effective controls are not confirmed.In this situation, you will need to take all of the following steps, EXCEPT _______.

All of the following are tests of details of balances for auditing the payroll process, EXCEPT _______.

In the given table, match the left of the table with the statements on the right-hand side of table.

Determining that accrued payroll payables are the obligations of the entity is an example of which of the following?

An internal document indicating the vendor, the amount due, and payment terms for the purchases received is referred to as a _______

A ________is a form showing the description, quantity, and other data pertaining to the goods the vendor has authorized the purchaser to return.It serves as the basis for initiating the purchase return.

Often vendors will send a _______ showing the beginning payable balance, transactions during the month, and the ending payable balance.

Many audit clients build in _______ controls so if one control does not find a misstatement, another control is designed to surface the problem.