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Online Quizzes
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1

To adequately provide for the segregation of duties, purchase requisitions should be initiated by which of the following departments?
A)Purchasing department.
B)Sales department.
C)Stores or warehouse.
D)Shipping.
2

Which of the following is an internal control weakness for a company whose inventory of supplies consists of a large number of individual items?
A)Supplies of relatively little value are expensed when purchased.
B)The cycle basis is used for physical counts.
C)The storekeeper is responsible for maintenance of perpetual inventory records.
D)Perpetual inventory records are maintained only for items of significant value.
3

A washing machine manufacturer puts bar codes on all boxes containing washing machines. The bar codes are scanned prior to shipping. This is most likely to be indicative of what type of system?
A)A periodic inventory system.
B)A perpetual inventory system.
C)A process order costing system.
D)A just-in-time inventory system.
4

Ordinarily, are auditors more concerned with an under- or overstatement of ending inventory, and why?
A)Overstatement, because net income would be overstated also.
B)Understatement, because net income would be overstated.
C)Overstatement, because this would indicate that liabilities are likely to be understated.
D)Understatement, because this would indicate that liabilities are likely to be understated.
5

In conjunction with the observation of a client's physical inventory, the auditors should:
A)Plan the physical inventory.
B)Segregate damaged and obsolete goods.
C)Supervise the client's personnel.
D)Evaluate the adequacy of the client's counting procedures.
6

An auditor has accounted for a sequence of inventory tags and is now tracing information on a representative number of tags to the inventory summary sheets. Which assertion does this procedure relate to most directly?
A)Completeness.
B)Existence.
C)Presentation.
D)Valuation.
7

A client's physical count of inventories was higher than the inventory quantities per the perpetual records. This situation could be the result of the failure to record:
A)Sales.
B)Sales discounts.
C)Purchases.
D)Purchase returns.
8

Purchase cutoff procedures should be designed to test that merchandise is included in the inventory of the client when the client:
A)Has paid for the merchandise.
B)Has physical possession of the merchandise.
C)Holds legal title to the merchandise.
D)Holds the shipping documents for the merchandise issued in the company's name.
9

An inventory turnover analysis is most likely to help the auditors to detect:
A)Inadequacies in inventory pricing.
B)Methods of avoiding cyclical holding cost.
C)Optimum automatic reorder points.
D)Obsolete merchandise.
10

When the auditors discover an overstatement of accounts payable, they would most likely also expect to find an overstatement of:
A)Accrued liabilities.
B)Inventory.
C)Retained earnings.
D)Revenues.







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