AUDITING LL W/ CONNECT <C>
11th Edition
ISBN: 9781307416268
Author: MESSIER
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 13.19MCQ
To determine
Concept Introduction:
Inventory is the most valuable asset for a company. The company applies controls over inventory for its safeguard and detection of inventory frauds. The auditor also tests these controls to determine the nature and extent of the
To choose: the internal control activity that is most likely to address the completeness assertion of the inventory.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Which of the following internal control activities most likely addresses the completeness assertion for inventory?a. The work-in-process account is periodically reconciled with subsidiary inventory records.b. Employees responsible for custody of finished goods do not perform the receiving function.c. Receiving reports are prenumbered, and the numbering sequence is checked periodically.d. There is a separation of duties between the payroll department and inventory accounting personnel
Which of the following is not generally an internal control activity?
a.Physically counting inventory in a perpetual inventory system
b.Establishing clear lines of authority to carry out specific tasks
c.Reducing the cost of hiring seasonal employees
d.Limiting access to computerized accounting records
Which, if any, of the following situations represent improper segregation of functions?A. The billing department prepares the customers ‘invoices, and the AR department posts to thecustomers’ accounts.B The sales department approves sales credit memos as the result of product returns, and subsequentadjustments to the customer accounts are performed by the AR department.C The shipping department ships goods that have been retrieved from stock by warehouse personnel.D. The general accounting department posts to the general ledger accounts after receiving journalvouchers that are prepared by the billing department.
Chapter 13 Solutions
AUDITING LL W/ CONNECT <C>
Ch. 13 - Prob. 13.1RQCh. 13 - Prob. 13.2RQCh. 13 - Prob. 13.3RQCh. 13 - Prob. 13.4RQCh. 13 - Prob. 13.5RQCh. 13 - Prob. 13.6RQCh. 13 - Prob. 13.7RQCh. 13 - Prob. 13.8RQCh. 13 - Prob. 13.9RQCh. 13 - Prob. 13.10RQ
Ch. 13 - Prob. 13.11RQCh. 13 - Prob. 13.12RQCh. 13 - Prob. 13.13RQCh. 13 - Prob. 13.14MCQCh. 13 - Prob. 13.15MCQCh. 13 - Prob. 13.16MCQCh. 13 - Prob. 13.17MCQCh. 13 - Prob. 13.18MCQCh. 13 - Prob. 13.19MCQCh. 13 - Prob. 13.20MCQCh. 13 - Prob. 13.21MCQCh. 13 - Prob. 13.22MCQCh. 13 - Prob. 13.23MCQCh. 13 - Prob. 13.24MCQCh. 13 - Prob. 13.25MCQCh. 13 - Prob. 13.26MCQCh. 13 - Prob. 13.27PCh. 13 - Prob. 13.28PCh. 13 - Prob. 13.29PCh. 13 - Prob. 13.30PCh. 13 - Prob. 13.31PCh. 13 - Prob. 13.32P
Knowledge Booster
Similar questions
- For effective internal control, the accounts payable department generally should(1) stamp, perforate, or otherwise cancel supporting documentation after paymentis mailed.(2) ascertain that each requisition is approved as to price, quantity, and quality byan authorized employee.(3) omit information about the quantity ordered on the copy of the purchase orderforwarded to the receiving department prior to receipt of goods.(4) establish the agreement of the vendor’s invoice with the receiving report andpurchase orderarrow_forwardWhich, if any, of the following situations represent improper segregation of functions?a. The billing department prepares the customers’ invoices, and the accounts receivable department posts to the customers’ accounts.b. The sales department approves sales credit memos as the result of product returns, and subsequent adjustments to the customer accounts are performed by the accounts receivable department.c. The shipping department ships goods that have been retrieved from stock by warehouse personnel.d. The general accounting department posts to the general ledger accounts after receiving journal vouchers that are prepared by the billing department.arrow_forwardSegregation of Functions Comment on the specific risks (if any) that are caused by the following combination of tasks. A) A sales manager, who works on commission based on gross sales, approves credit and has the authority to write off uncollectible accounts. B) The warehouse clerk, who has custodial responsibility over inventory in the warehouse, updates the inventory subsidiary ledger and prepares an inventory summary for the general ledger department. C). The billing clerk bills customers and records sales in the sales journal. D). The shop foreman approves and submits time cards to timekeeping and distributes paychecks to employees. E) The accounting clerk posts to individual accounts receivable subsidiary accounts and performs the reconciliation of the subsidiary ledger and the GL control account.arrow_forward
- How does the procedure for determining inventory requirements differ between a basic batch-processing system and batch processing with real-time data input of sales and receipts of inventory? What about for the procedures the receiving department uses?arrow_forwardSales orders are written by sales people who have no access to the goods, which are released by warehouse personnel. This is example of: an analytical review establishing a system for storing and counting inventory proper documentation that is monitored properly segregation of dutiesarrow_forwardThe following set of items describes activities completed by a company in purchasing and paying for merchandise. For each activity, identify whether or not the activity adheres to or violates sound internal control procedures. The receiving department compares the quantity received with the quantity printed on the receiving report when the purchase order was prepared. O d. Cannot be determined. O c. Neither strengthens nor violates internal control O b. Violates sound internal control procedures O a. Adheres to sound internal control proceduresarrow_forward
- Kent manages the physical goods inventory in the warehouse and he also maintains the accounting records of the inventory held there. Which of the following internal control activities have been violated? A. Establishment of authorization B. Segregation of duties C. Documentation and record keeping procedures D. Checks on recorded amountsarrow_forwardA serious exposure for an organization that is connnected with the revenue cycle is the loss of assets. What is the related threat and applicable contrtol procudure associated with this exposure? A. receiving unordered goods; compare to valid order B. billing errors; reconciliation of shipping documents to sales order C. shipping errors, data entry controls D. theft of inventory; documentation of all internal transfers of inventoryarrow_forwardWhat are the risks that are caused by the following combination of tasks? - The warehouse clerk who has custodial responsibility over inventory in the warehouse, updates the inventory subsidiary ledger and prepares an inventory summary for the general ledger department. - The billing clerk bills customers and records sales in the sales journal.arrow_forward
- Which of the following situations is NOT a segregation of duties violation?a. The treasurer has the authority to sign checks but gives the signature block to the assistant treasurer to run the check-signing machine.b. The warehouse clerk, who has custodial responsibility over inventory in the warehouse, selects the vendor and authorizes purchases when inventories are low.c. The sales manager has the responsibility to approve credit and the authority to write off accounts.d. The department time clerk is given the undistributed payroll checks to mail to absent employees.e. The accounting clerk who shares the record keeping responsibility for the accounts receivable subsidiary ledger performs the monthly reconciliation of the subsidiary ledger and the control account.arrow_forwardInternal control is strengthened when the quality of merchandise orderd is omitted from the copy of the purchase order sent to which depertement? a. Department that initited the requisition b. Receiving department c. purchasing agent d. account payable departmentarrow_forwardFollowing are audit procedures commonlyperformed in the inventory and warehousing cycle for a manufacturing company:1. Read the client’s physical inventory instructions and observe whether they are beingfollowed by those responsible for counting the inventory.2. Account for a sequence of inventory tags and trace each tag to the physical inventoryto make sure it actually exists.3. Compare the client’s count of physical inventory at an interim date with the perpetualinventory master file.4. Trace the auditor’s test counts recorded in the audit files to the final inventorycompilation and compare the tag number, description, and quantity.5. Compare the unit price on the final inventory summary with vendors’ invoices.6. Account for a sequence of raw material requisitions and examine each requisitionfor an authorized approval.7. Trace the recorded additions on the finished goods perpetual inventory master fileto the records for completed production.a. Identify whether each of the procedures…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning