Questions from Auditing and Assurance

Q: For which of the following accounts would the matching concept be the

For which of the following accounts would the matching concept be the most appropriate? a. Cost of goods sold. b. Research and development. c. Depreciation expense. d. Sales.

Q: Why is it important for auditors to obtain control information over inventory

Why is it important for auditors to obtain control information over inventory count sheets or tickets?

Q: Which of the following would not overstate current-period net income

Which of the following would not overstate current-period net income? a. Capitalizing an expenditure that should be expensed. b. Failing to record a liability as an expense. c. Failing to record a che...

Q: A client’s purchasing system ends with the recording of a liability and

A client’s purchasing system ends with the recording of a liability and its eventual payment. Which of the following best describes auditors’ primary concern with respect to liabilities resulting from...

Q: When auditing inventories, an auditor would least likely verify that

When auditing inventories, an auditor would least likely verify that a. All inventory owned by the client is on hand at the time of the count. b. The client has used proper inventory pricing. c. The f...

Q: Budd, the purchasing agent of Lake Hardware Wholesalers, has a

Budd, the purchasing agent of Lake Hardware Wholesalers, has a relative who owns a retail hardware store. Budd arranged for hardware to be delivered by manufacturers to the retail store on a cash-on-d...

Q: Which of the following is the best audit procedure for determining the

Which of the following is the best audit procedure for determining the existence of unrecorded liabilities? a. Examine confirmation requests returned by creditors whose accounts are on a subsidiary tr...

Q: How should an audit team assess the reasonableness of a film studio’s

How should an audit team assess the reasonableness of a film studio’s estimate of film revenues? (Refer to the No Treasure in This Treasure Planet case.)

Q: Which of the following procedures is least likely to be performed before

Which of the following procedures is least likely to be performed before the balance-sheet date? a. Observation of inventory. b. Review of internal control over cash disbursements. c. Search for unrec...

Q: To determine whether accounts payable are complete, auditors perform a test

To determine whether accounts payable are complete, auditors perform a test to verify that all merchandise received has been recorded. The population for this test consists of all a. Vendors’ invoices...