AUDITING+ASSURANCE 12MONTH ACCESS CARD
AUDITING+ASSURANCE 12MONTH ACCESS CARD
17th Edition
ISBN: 9780135635131
Author: ARENS
Publisher: WILEY
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Chapter 21, Problem 15.1MCQ
To determine

Identify the inadequate controls over the invoicing function.

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Which of the following is false regarding a perpetualinventory system?a. Physical counts are never needed because records aremaintained on a transaction-by-transaction basis.b. The Inventory records are updated with each inventorypurchase, sale, or return transaction.c. Cost of Goods Sold is increased as sales are recorded.d. A perpetual inventory system can be used to detectshrinkage
1. Which of the following is a control procedure to address the threat of purchasing goods or services at inflated prices? A. Requiring multiple approvals for purchases B. Performing regular physical inventory counts C. Conducting vendor audits D. Implementing encryption for sensitive data 2. Which of the following is not a common error in the expenditure cycle? A. Recording the wrong purchase order number B. Recording the wrong vendor name for goods received C. Recording the wrong quantity of goods received D. Recording the wrong price for goods received 3. The primary objective of internal controls in the expenditure cycle is to: A. Ensure the accuracy and completeness of financial transactions B. Streamline the procurement process C. Minimize the cost of purchases D. Increase the speed of payment processing
A serious exposure in the ordering process of the expenditure cycle is increased inventory costs. What is the related threat and applicable control procedure that address this exposure? A. mistakes in counting; do not inform receiving employees about quantity ordered B. paying for items not received; requiring that all supplier invoices be matched to supporting documents C. purchasing at inflated prices; review of purchase orders D. theft of inventory; periodic physical counts of inventory and reconciliation to recorded quantities E. mistakes in posting to accounts payable; reconciliation of detailed accounts payable to the general ledger control account
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