AICPA AICPA Certifications CPA-TEST Questions & Answers

• Question 851:

  Which of the following questions would most likely be included in an internal control questionnaire concerning the completeness assertion for purchases?

  A. Is an authorized purchase order required before the receiving department can accept a shipment or the vouchers payable department can record a voucher?

  B. Are purchase requisitions prenumbered and independently matched with vendor invoices?

  C. Is the unpaid voucher file periodically reconciled with inventory records by an employee who does not have access to purchase requisitions?

  D. Are purchase orders, receiving reports, and vouchers prenumbered and periodically accounted for?

  Correct Answer: D

  Explanation: Choice "d" is correct. A question related to whether purchase orders, receiving reports and vouchers are prenumbered and periodically accounted for would most likely be included in an internal control questionnaire concerning the completeness assertion for purchases. A gap in recorded purchase order numbers might indicate an unrecorded purchase. Choice "a" is incorrect. Requiring an authorized purchase order before accepting a shipment would relate to whether the purchase was valid, not whether it was properly accounted for. Choice "b" is incorrect. Having prenumbered purchase requisitions independently matched with vendor invoices does not indicate whether all purchases are accounted for since these documents do not show that the purchase has been recorded. Choice "c" is incorrect. Reconciling the unpaid voucher file with inventory records does not indicate whether all purchases are accounted for since these documents do not show that all purchases have been recorded.

• Question 852:

  Mailing disbursement checks and remittance advices should be controlled by the employee who:

  A. Approves the vouchers for payment.

  B. Matches the receiving reports, purchase orders, and vendor's invoices.

  C. Maintains possession of the mechanical check-signing device.

  D. Signs the checks last.

  Correct Answer: D

  Explanation:

  Choice "d" is correct. Mailing disbursement checks and remittance advices should be controlled by the

  employee who signs the check last. This employee is generally in the treasury department.

  Choices "a" and "b" are incorrect. Approving the vouchers for payment and matching the receiving report,

  purchase orders, and vendor's invoices are functions of the vouchers payable department.

  Choice "c" is incorrect. When a mechanical check-signing device is used, there is generally dual control.

  One person maintains possession of the device itself, and the other controls the signature plates. The

  person with possession of the device would not mail disbursement checks, since mailing should be done

  by the last check signer.

• Question 853:

  Which of the following controls would be most effective in assuring that recorded purchases are free of material errors?

  A. The receiving department compares the quantity ordered on purchase orders with the quantity received on receiving reports.

  B. Vendor's invoices are compared with purchase orders by an employee who is independent of the receiving department.

  C. Receiving reports require the signature of the individual who authorized the purchase.

  D. Purchase orders, receiving reports, and vendor's invoices are independently matched in preparing vouchers.

  Correct Answer: D

  Explanation:

  Choice "d" is correct. The most effective control in assuring that recorded purchases are free of material

  errors is the independent matching of the purchase order, receiving report, and vendor's invoices in

  preparing the vouchers on which the disbursement check is based.

  Choice "a" is incorrect. The receiving department should not have access to the quantity ordered on the

  purchase order. This forces receiving department employees to actually perform an independent count.

  Choice "b" is incorrect. It is not enough to compare only vendor invoices and purchase orders, as this will

  still allow payment for goods that were not received.

  Choice "c" is incorrect. Requiring that receiving reports be authorized by the individual who authorized the

  purchase does not ensure that the invoice and the related payment will be properly recorded.

• Question 854:

  Which of the following internal control procedures most likely addresses the completeness assertion for inventory?

  A. Work in process account is periodically reconciled with subsidiary records.

  B. Employees responsible for custody of finished goods do not perform the receiving function.

  C. Receiving reports are prenumbered and periodically reconciled.

  D. There is a separation of duties between payroll department and inventory accounting personnel.

  Correct Answer: C

  Explanation:

  Choice "c" is correct. The internal control procedure of prenumbering receiving reports and periodically

  reconciling them to the inventory records most likely addresses the completeness assertion for inventory,

  because it allows the auditor to determine whether all goods received have been recorded as inventory.

  Choice "a" is incorrect. Reconciling the work in process account (per the general ledger) with subsidiary

  records (direct materials, direct labor, overhead) tests that those records are interfacing properly, but does

  not provide any information about the completeness assertion for inventory.

  Choice "b" is incorrect. Separation of employees responsible for custody of finished goods from the

  receiving function addresses the safeguarding of assets, not the completeness of the inventory records.

  Choice "d" is incorrect. The separation of duties between the payroll department and inventory accounting

  personnel is related to the valuation (pricing) of inventory, not its completeness.

• Question 855:

  Which of the following control activities is not usually performed in the vouchers payable department?

  A. Determining the mathematical accuracy of the vendor's invoice.

  B. Having an authorized person approve the voucher.

  C. Controlling the mailing of the check and remittance advice.

  D. Matching the receiving report with the purchase order.

  Correct Answer: C

  Explanation:

  Choice "c" is correct. Internal control is enhanced if check mailing is performed by the treasury (cash

  disbursements) department.

  Choice "a" is incorrect. Mathematical accuracy of the vendor's invoice is usually verified in the vouchers

  payable department.

  Choice "b" is incorrect. Voucher approval by an authorized person is usually performed in the vouchers

  payable department.

  Choice "d" is incorrect. Matching the receiving report with the purchase order is usually performed in the

  vouchers payable department.

• Question 856:

  To determine whether accounts payable are complete, an auditor performs a test to verify that all merchandise received is recorded. The population of documents for this test consists of all:

  A. Vendor's invoices.

  B. Purchase orders.

  C. Receiving reports.

  D. Canceled checks.

  Correct Answer: C

  Explanation:

  Choice "c" is correct. The auditor is looking for situations where merchandise has been received but was

  not recorded. Such situations may be identified by selecting receiving reports and then determining

  whether the related payable was recorded.

  Choice "a" is incorrect. Selecting from vendor's invoices might allow a purchase to be selected for which

  the goods have not yet been received.

  Choice "b" is incorrect. Selecting from purchase orders might allow a purchase to be selected for which the

  goods have not yet been received.

  Choice "d" is incorrect. Selecting from canceled checks will not result in testing of accounts payable, since

  the payable is eliminated once payment is made.

• Question 857:

  For effective internal control purposes, the vouchers payable department generally should:

  A. Stamp, perforate, or otherwise cancel supporting documentation after payment is mailed.

  B. Ascertain that each requisition is approved as to price, quantity and quality by an authorized employee.

  C. Obliterate the quantity ordered on the receiving department copy of the purchase order.

  D. Establish the agreement of the vendor's invoice with the receiving report and purchase order.

  Correct Answer: D

  Explanation:

  Choice "d" is correct. For effective internal control purposes, the vouchers payable department generally

  should establish the agreement of the vendor's invoice with the receiving report and purchase order.

  Choice "a" is incorrect. The treasury or cash disbursement department should stamp, perforate, or

  otherwise cancel supporting documentation after payment is mailed.

  Choice "b" is incorrect. The purchasing department should verify that each requisition has been properly

  approved.

  Choice "c" is incorrect. The purchasing department should obliterate the "quantity ordered" on the

  receiving department copy of the purchase order.

• Question 858:

  Which of the following is the most effective control activity to detect vouchers that were prepared for the payment of goods that were not received?

  A. Count goods upon receipt in storeroom.

  B. Match purchase order, receiving report, and vendor's invoice for each voucher in accounts payable department.

  C. Compare goods received with goods requisitioned in receiving department.

  D. Verify vouchers for accuracy and approval in internal audit department.

  Correct Answer: B

  Explanation: Choice "b" is correct. The most effective control activity to detect vouchers that were prepared for the payment of goods that were not received is to match the purchase order, receiving report, and vendor's invoice for each voucher in the accounts payable department. Choices "a" and "c" are incorrect. Controls that start with goods received would not be effective at detecting a situation where vouchers are prepared for goods that were not received. Choice "d" is incorrect. Verifying vouchers for accuracy and approval in the internal audit department might detect vouchers that were prepared for the payment of goods that were not received. However, this is not the most effective control, since it would likely occur subsequent to the processing of the transaction.

• Question 859:

  For effective internal accounting control, the accounts payable department should compare the information on each vendor's invoice with the:

  A. Receiving report and the purchase order.

  B. Receiving report and the voucher.

  C. Vendor's packing slip and the purchase order.

  D. Vendor's packing slip and the voucher.

  Correct Answer: A

  Explanation: Choice "a" is correct. For effective internal accounting control, the accounts payable department should compare the information on each vendor's invoice with the receiving report and the purchase order to assure that goods were received and that the purchase was properly authorized. Choices "b", "c", and "d" are incorrect. Vendor packing slips and internally generated vouchers do not

  provide assurance that goods were received and that the purchase was properly authorized.

• Question 860:

  Which of the following procedures would an auditor most likely perform to test controls relating to management's assertion about the completeness of cash receipts for cash sales at a retail outlet?

  A. Observe the consistency of the employees' use of cash registers and tapes.

  B. Inquire about employees' access to recorded but undeposited cash.

  C. Trace the deposits in the cash receipts journal to the cash balance in the general ledger.

  D. Compare the cash balance in the general ledger with the bank confirmation request.

  Correct Answer: A

  Explanation:

  Choice "a" is correct. Observing the consistent use of cash registers and tapes by employees would

  provide evidence to the auditor regarding the controls over the completeness of cash receipts.

  Choices "b", "c", and "d" are incorrect. The completeness assertion relates to the recording of all

  transactions. Inquiries about access to recorded cash, tracing from the cash receipts journal, and testing

  the general ledger balance do not provide evidence regarding possible unrecorded transactions.