Scribd
Upload
23 views2 pages

Aap 6

The document discusses audit procedures related to payroll and inventory. It provides multiple choice questions about testing inventory costs, evaluating controls over the payroll cycle, examining payroll transactions for the possibility of overpayments or underwithholding, and identifying substantive tests of payroll transactions such as accounting for a sequence of payroll checks.

Uploaded by

batistillenie
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
Download as docx, pdf, or txt
23 views2 pages

Aap 6

The document discusses audit procedures related to payroll and inventory. It provides multiple choice questions about testing inventory costs, evaluating controls over the payroll cycle, examining payroll transactions for the possibility of overpayments or underwithholding, and identifying substantive tests of payroll transactions such as accounting for a sequence of payroll checks.

Uploaded by

batistillenie
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
Download as docx, pdf, or txt
Download as docx, pdf, or txt
You are on page 1/ 2

1.

You are gathering evidence for the audit objective that existing inventory items are included in
the inventory listing schedule. The audit procedure that would provide you with the best
evidence to confirm this objective is:
a. trace from inventory tags to the inventory listing schedule and make sure the inventory tag
is included.
b. trace the inventory totals to the general ledger.
c. perform tests of lower-of-cost-or-market.
d. account for unused tags shown in the auditor's documentation to make sure no tags have
been added.
2. Pricing manufactured inventory is difficult. Auditors must evaluate the method of allocating
manufacturing overhead for all but which of the following?
a. Reasonableness
b. Computational correctness
c. Compliance with generally accepted auditing standards
d. Consistency

3. When labor is a significant part of inventory, verifying the proper accounting of these costs
should be tested in the:
a. inventory and warehousing cycle.
b. payroll and personnel cycle.
c. acquisitions and payments cycle.
d. cash cycle.

4. Most companies, with the exception of small ones, have effective controls over the payroll
cycle.

Auditors typically test details of account balances in the audit of payroll.


a. True, False
b. False, True
c. True, True
d. False, False

5. Which of the following departments is most likely responsible for pay rate changes and changes
in deductible amounts for employees?
a. General Accounting
b. Human Resources
c. Treasury
d. Controller

6. An auditor is vouching a sample of hourly employees from the payroll master file to approved
time clock or time sheet data in order to provide evidence that:
a. employees work the number of hours for which they are paid.
b. payments are made at the contractual rate.
c. product cost information is accurate.
d. segregation of duties is present between the payroll function and the payment function for
cash disbursements.

7. To minimize the opportunity for fraud, unclaimed salary checks should be:
a. redeposited.
b. kept in the payroll department.
c. left with the employee's supervisor.
d. held for the employee in the personnel department.

8. Although significant client business risks affecting payroll are unlikely for most companies, an
area that would have the most business risk would be:
a. payment of hourly employees.
b. payment of salaried employees.
c. payments to employees for stock options and bonus plans.
d. payments to employees who have direct deposit of their payroll checks.

9. When examining payroll transactions, an auditor is primarily concerned with the possibility
of:
a. incorrect summaries of employee time records.
b. overpayments and unauthorized payments.
c. under withholding of amounts required to be withheld.
d. posting of gross payroll amounts to incorrect salary expense accounts.
10. Which of the following is a substantive test of transactions?
a. Review personnel policies.
b. Account for a sequence of payroll checks.
c. Reconcile the disbursements in the payroll journal with the disbursements on the payroll
bank statement.
d. Examine printouts of transactions rejected by the computer as having invalid employee IDs.

You might also like