Unlock the secrets to mastering accounts payable with our comprehensive quiz collection designed specifically for business and management students. This expertly crafted document covers essential audit procedures, internal controls, and liability verifications in accounts payable. Whether you're pr...
ACCOUNTING
Auditing Test 3
Level: ACC 402 (Auditing) Advanced
Edition: 2024/2025
Compiled By: Simon Mwangi
, Accounting 2 of 25 pages
Circle the letter of the Answer that corresponds to the displayed Question.
1
Question: The amount of accrued payroll is typically verified by confirmation with selected
employees.
a) True
b) False
c) Weakness of Internal Control
d) There is likely to be other reliable external evidence available to support the balances.
Correct Answer: There is likely to be other reliable external evidence available to support the
balances.
Explanation: Accrued payroll amounts are often supported by reliable external evidence, such as
payroll records and employee confirmations, making direct confirmation less necessary.
2
Question: Which of the following procedures relating to the audit of accounts payable would the
auditors be most likely to delegate entirely to the client's employees?
a) Strength of Internal Control
b) True
c) Prepare a schedule of accounts payable.
d) Detect accounts payable due to public versus non-public companies.
Correct Answer: Prepare a schedule of accounts payable.
Explanation: Preparing a schedule of accounts payable is a routine task that auditors often delegate to
the client's employees, as it involves compiling data rather than assessing internal controls or detection
of issues.
3
Question: Auditor confirmation of accounts payable balances at the balance sheet date may be
unnecessary because:
a) There is likely to be other reliable external evidence available to support the balances.
b) Coordinate cutoff tests with physical inventory observation.
c) Selecting the accounts of companies with whom the client has previously done the most business,
plus a sample of other accounts.
d) Weakness of Internal Control
Correct Answer: There is likely to be other reliable external evidence available to support the
balances.
Explanation: Other reliable external evidence, such as vendor statements or payment records, may be
sufficient to verify accounts payable balances without requiring confirmation.
GoldenChapter – Stuvia 2024/2025 Edition
, Accounting 3 of 25 pages
4
Question: The adequacy of each vendor’s past record as a supplier is verified.
a) Confirmation.
b) False
c) Strength of Internal Control
d) True
Correct Answer: True
Explanation: Evaluating a vendor’s past performance is part of assessing the adequacy of internal
controls and can be a relevant factor in the audit process.
5
Question: Auditor confirmation of accounts payable balances at the balance sheet date may be
unnecessary because:
a) Completeness.
b) False
c) There is likely to be other reliable external evidence available to support the balances.
d) Weakness of Internal Control
Correct Answer: There is likely to be other reliable external evidence available to support the
balances.
Explanation: When other reliable external evidence is available, it may reduce the need for
confirmation of accounts payable balances.
6
Question: When testing the amount of pension liability, the auditors typically rely on a specialist.
a) Vouching cash disbursements recorded prior to year-end.
b) Reviewing unusual transactions during the year.
c) True
d) Vouch purchases recorded after year-end.
Correct Answer: True
Explanation: Pension liability often involves complex calculations and actuarial assumptions, so
auditors frequently rely on specialists to ensure accuracy.
7
Question: All supporting documentation is required for payment and is made available to the treasurer.
a) Strength of Internal Control
b) Accounts payable are not materially understated.
c) Vouch purchases recorded after year-end.
GoldenChapter – Stuvia 2024/2025 Edition
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