LATIHAN SOAL BAB 11

1. Which of the following best describes the process for assessing control risk?
(1) Perform tests of controls, and (2) evaluate the evidence and assess control
A.
risk.
(1) Identify necessary controls, (2) perform tests of controls, and (3) evaluate
B.
the evidence and assess control risk.
(1) Identify potential misstatements that could occur, (2) identify necessary
C.
controls, (3) perform tests of controls, and (4) evaluate the evidence and
assess control risk.
(1) Consider the knowledge acquired from obtaining the understanding of
D.
internal control, (2) identify potential misstatements that could occur, (3)
identify necessary controls, (4) perform tests of controls, and (5) evaluate the
evidence and assess control risk.

2. Which of the following represents the necessary control and the test of control that
would control the risk of duplicate payment of an accounts payable voucher?
Necessary control; The computer matches check information with the
A.
supporting voucher: Test of control; Submit test data to see that the computer
appropriately matches check information with voucher information.
Necessary control; The computer electronically cancels the voucher and
B.
supporting information when the check is issued: Test of control; Submit test
data to see that the computer rejects duplicate payments.
Necessary control; The computer matches voucher date with the check date:
C.
Test of control; Submit test data to see that the computer appropriately
matches dates on the voucher and on the check.
Necessary control; There is separate duties for approving voucher and signing
D.
checks: Test of control; Observe segregation of duties

3. Controls over the completeness assertion generally

start by capturing information about a transaction when it is initiated and then
A.
follow the transaction forward through receipt or deliver and recording.
compare information associated with the recording of transactions with
B.
information associated with the passage of title, which is normally captured
during the delivery or receipt of goods and services.
compare information associated with the recording of transactions with
C.
information obtained both with the delivery or receipt of goods and services
and information associated with the initiation of the transaction.
compare information associated with the recording of transactions with
D.
information created when the transaction is initiated.

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4. When obtaining an understanding of internal controls the auditor identifies important
programmed application controls over the occurrence of sales, however, the auditor
also has serious concerns about the adequacy of the control environment due to a
weak tone at the top about control consciousness. Which of the following best
describes how the auditor should respond to this situation when planning tests of
occurrence of sales?
The auditor could assess control risk as low for an assertion after performing
A.
computer assisted audit techniques on controls relevant to that assertion.
The auditor could assess control risk as low for an assertion after performing
B.
computer assisted audit techniques on controls relevant to that assertion and
assessing the adequacy of segregation of duties.
The auditor will probably assess control risk at the maximum irrespective of
C.
the quality of the programmed application controls.
The auditor could assess control risk as low for an assertion if significant
D.
performance reviews are placed in operation.

5. After obtaining an understanding of internal control and assessing control risk the
auditors decided not to perform additional tests of controls. The auditor most likely
concluded that the
additional evidence to support a further reduction in control risk was not cost
A.
beneficial to obtain.
B. assessed level of inherent risk exceeded the assessed level of control risk.
C. internal controls were properly designed and justifiably may be relied upon.
evidence obtained through tests of controls would not support an increased
D.
level control risk.

6. When an auditor increases the planned assessed level of control risk because certain
control procedures were determined to be ineffective, the auditor would most likely
increase the
A. extent of tests of controls.
B. planned level of detection risk.
C. planned level of substantive tests.
D. level of inherent risk.

7. Which of the following is not a step in an auditor's decision to asses control risk at
below the maximum?
Evaluate the effectiveness of the internal control procedures with tests of
A.

2
 controls.
Obtain an understanding of the entity's accounting system and control
B.
environment.
Perform tests of details of transactions to detect material misstatements in the
C.
financial statements.
Consider whether control procedures can have a pervasive effect on financial
D.
statement assertions.

8. The ultimate purpose of assessing control risk is to contribute to the auditor's

evaluation of the risk that
specified controls requiring segregation of duties may be circumvented by
A.
collusion.
B. entity policies may be overridden by senior management.
C. tests of controls may fail to identify procedures relevant to assertions.
D. material misstatements may exist in the financial statement assertions.

9. A procedure that would most likely be used by an auditor in performing tests of

control procedures that involve segregation of functions and that leave no transaction
trail is
A. inspection.
B. observation.
C. reperformance.
D. reconciliation.

10. If an auditor decides to assess control risk as low based on computer application
control procedures, which of the following would not be part of the auditor's strategy
for testing controls?
A. testing the effectiveness of computer general control procedures
B. testing the effectiveness of management controls over computer output
C. testing the effectiveness of manual follow-up procedures
D. testing the effectiveness of computer application control procedures

11. When control risk is assessed at the maximum level for all financial statement

3
 assertions, an auditor should document the auditor's
conclusion that control risk is at the maximum level – no; basis for
A.
concluding that control risk is at the maximum level – no.
conclusion that control risk is at the maximum level – no; basis for
B.
concluding that control risk is at the maximum level – yes.
conclusion that control risk is at the maximum level – yes; basis for
C.
concluding that control risk is at the maximum level – no.
conclusion that control risk is at the maximum level – yes; basis for
D.
concluding that control risk is at the maximum level – yes.

12. If an auditor submits test data on an on-line, real-time basis to test computer
application controls, this is most likely done as part of which of the following
approaches to testing controls?
A. parallel simulation
B. test data
C. integrated test facility
D. systems control audit review file

13. If the auditor assessed control risk as low for an assertion based on tests performed
during the first 10 months of the year, which of the following would be LEAST
LIKELY to be performed to update the auditor's conclusion about control risk?
A. The auditor would consider the significance of the assertion involved.
The auditor would consider the results of the tests of controls used to make
B.
that evaluation.
The auditor would consider the evidential matter about design or operation
C.
that may result from substantive test performed in the remaining period.
The auditor would consider the changes in the industry and the entity's
D.
operating environment.

14. Which of the following factors would generally NOT influence the auditor's decision
about sample size when making decisions about the extent of tests of controls?
A. the nature of the control
B. the operating effectiveness of the control environment
C. the frequency of operation of the control
D. the importance of the control

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15. A dual-purpose test normally involves:
A. performing analytical procedures and tests of controls simultaneously.
using the same evidence to draw a conclusion for tests of controls and for
B.
substantive tests.
using the same evidence to draw a conclusion about tests of controls and to
C.
develop a preliminary audit strategy.
performing tests of details of transactions and analytical procedures
D.
simultaneously.

16. An auditor makes the following assessments of internal controls for material
transaction classes:
• Completeness assertion related to credit sales as high
• Existence and Occurrence assertion related to credit sales as low
• Completeness assertion related to the cash receipts function as low
• Existence and Occurrence assertion related to the cash receipts function as high
• Completeness assertion related to the sales returns function as low
• Existence and Occurrence assertion related to the sales and returns function as
high

Based on these assessments the auditor is likely to conservatively set control risk for
the existence of accounts receivable at:
A. low.
B. moderate.
C. high.
D. maximum.

17. A material weakness in internal controls is one in which:

there is less than a remote chance that a misstatement that is more than
A.
inconsequential will occur.
there is more than a remote chance that a misstatement that is more than
B.
inconsequential will occur.
C. there is less than a remote chance that a material misstatement will occur.
D. there is more than a remote chance that a material misstatement will occur.

18. For a private company which of the following statements is true about reporting

5
 deficiencies in internal controls?
reporting in the auditor's report – none; reporting to the audit committee –
A.
only material weaknesses
reporting in the auditor's report – none; reporting to the audit committee –
B.
both significant deficiencies and only weaknesses
reporting in the auditor's report – only material weaknesses; reporting to the
C.
audit committee – both significant deficiencies and only weaknesses
reporting in the auditor's report – only material weaknesses; reporting to the
D.
audit committee – only material weaknesses

1. Which of the following best describes the steps involved in assessing the risk of
material misstatements?
(1) Evaluate the type of potential misstatements that can occur, (2) evaluate
A.
the magnitude of potential misstatements, (3) evaluate the likelihood of
potential misstatements.
B. (1) Assess inherent risk, (2) assess control risk, (3) assess detection risk.
(1) Evaluate the magnitude of potential misstatements, (2) evaluate the
C.
likelihood of potential misstatements.
(1) Assess inherent risk, (2) assess control risk, (3) assess analytical
D.
procedures risk, (4) assess test of details risk.

2. A construction industry client uses the percentage of completion method to recognize

revenue and expense on current projects. Which of the following best describes the
types of potential misstatements that the auditor should be concerned about?
It is possible that inventory is overstated. The auditor should be alert to
A.
problems with the existence and occurrence or valuation and allocation of
inventory.
Significant revenues, expense, assets and liabilities arise from this accounting
B.
estimate. The auditor should be alert for problems with the valuation and
allocation assertion.
A weak control environment may have a pervasive impact on many
C.
assertions.
D. Weak industry trends might impact the completeness of revenues.

3. Analytical procedures for a retailer show significant increases in both profit margins
and inventory turn days. Which of the following best describes the types of potential
misstatements that the auditor should be concerned about?

6
 A. The auditor should be concerned about revenue recognition problems.
B. The auditor should be concerned about the completeness of inventory.
C. The auditor should be concerned about the existence of inventory.
D. The auditor should be concerned about the completeness of revenues.

4. If the auditor plans to following a primarily substantive approach detection risk is

normally assessed as:
A. maximum or moderate
B. high or moderate
C. moderate or low
D. low or very low

5. If the auditor plans to follow a lower assessed level of control risk approach the
auditor will usually plan:
A. less extensive substantive tests at year-end.
B. more extensive substantive tests at year-end.
C. less extensive substantive tests at an interim date.
D. more extensive substantive tests at an interim date.

6. Which of the following best contrasts tests of controls and substantive tests?
Tests of controls are usually performed at interim and substantive tests are
A.
usually performed at year-end.
Both tests of controls and substantive tests are primarily designed to provide
B.
evidence about control risk.
Tests of control are designed to draw a conclusion about frequency of
C.
deviations from proscribed controls and substantive tests are designed to draw
conclusions about monetary errors.
D. Both tests of controls and substantive tests are always required by GAAS.

7. Generalized audit software is normally NOT designed to perform which of the

following?
A. Reconcile detail audit data with the general ledger.

7
 B. Perform tests on an entire population.
C. Select and print audit samples.
D. Assess detection risk.

8. Which of the following would NOT describe the nature of a substantive test?
A. initial procedures
B. tests of details of accounting estimates
C. tests of details of disclosures
D. risk assessment procedures

9. If an auditor sends a confirmation of a customers balance in accounts receivables, this

best described as a(n):
A. initial procedure.
B. analytical procedure.
C. test of details of balances.
D. test of details of accounting estimates.

10. Which of the following factors would tend to increase sample sizes?
A. The audit population is homogeneous.
B. The auditor is willing to accept a large amount of tolerable misstatement.
C. The audit population is a large audit population.
D. The auditor is willing to accept a high level of detection risk.

11. Which of the following would normally NOT be performed when auditing an
accounting estimate?
A. Send a confirmation or obtain evidence from an outside third party.
Perform procedures to review and test management's process in making the
B.
estimate.
C. Prepare an independent expectation of the estimate.

8
 Review subsequent transactions and events occurring prior to completing the
D.
audit that pertain to the estimate.

12. As the acceptable level of detection risk decreases, the assurance directly provided
from
A. substantive tests should increase.
B. substantive tests should decrease.
C. tests of controls should increase.
D. tests of controls should decrease.

13. As the acceptable level of detection risk decreases, an auditor may change the
timing of substantive tests by performing them at an interim date rather than
A.
at year-end.
nature of substantive tests from a less effective to a more effective
B.
procedure.
timing of tests of controls by performing them at several dates rather than at
C.
one time.
D. assessed level on inherent risk to a higher amount.

14. Which of the following conditions does NOT need to exist in order for the auditor to
consider moving the timing of a substantive test to an interim date?
A. Internal control during the interim period and year-end is effective.
There are no conditions or circumstances that might predispose management
B.
to misstate the financial statements in the remaining period.
C. Inherent risk would be assessed as low.
The year-end balances of the accounts examined at the interim date are
D.
reasonably predictable as to amount, relative significance, and composition.

15. If detection risk is assessed as low the auditor will normally consider which of the
following?
Perform more effective audit procedures, with larger samples sizes, at year-
A.
end.
Perform more effective audit procedures, with smaller samples sizes, at year-
B.
end.
Perform less effective audit procedures, with smaller samples sizes, at an
C.

9
 interim date.
Perform more effective audit procedures, with smaller samples sizes, at an
D.
interim date.

16. An auditor's decision either to apply analytical procedures as substantive tests or to

perform tests of transaction and account balances usually is determined by the
A. availability of data aggregated at a high level.
B. relative effectiveness of the tests.
C. timing of tests performed at the balance sheet date.
D. auditor's familiarity with industry trends.

17. Auditors try to identify predictable relationships when using analytical procedures.
Relationships involving transactions form which of the following accounts most
likely would yield the highest level of evidence using analytical procedures?
A. total revenues and number of sales for a retail grocer
total revenues, the number of rooms, occupancy rates, and average room rate
B.
for a hotel
C. total revenues and the number of subscribers for a magazine
total interest expense and the average principal balance outstanding for a
D.
construction company building new homes

18. After identifying related party transactions, an auditor most likely would
substantiate that the transactions were consummated on terms equivalent to
A.
those prevailing in arms-length transactions.
discuss the implications of the transactions with third parties, such as the
B.
entity's attorney and bankers.
determine whether the transactions were approved by the board of directors
C.
or other appropriate officials.
ascertain whether the transactions would have occurred if the parties had not
D.
been related.

19. The purpose of an audit program for substantive tests is to:

describe the nature of procedures to be performed - yes; describe the timing
A.
of substantive – yes; ensure that audit evidence is obtained for all audit
objectives – yes.

10
 describe the nature of procedures to be performed - yes; describe the timing
B.
of substantive – yes; ensure that audit evidence is obtained for all audit
objectives – not necessarily.
describe the nature of procedures to be performed - yes; describe the timing
C.
of substantive – not necessarily; ensure that audit evidence is obtained for all
audit objectives – yes.
describe the nature of procedures to be performed - not necessarily; describe
D.
the timing of substantive – not necessarily; ensure that audit evidence is
obtained for all audit objectives – yes.

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Latihan Chapter 13
1. In the audit of Fine Host Corporation, the SEC found that the audit team, under the
supervision of John Bacsik,
A. did not project the results of the sample on the entire population.
B. used a sample size that was too small.
C. did not use statistical sampling for substantive tests.
D. did not use statistical sampling for tests of controls.
2. An advantage to using statistical over nonstatistical sampling methods in tests of
controls is that the statistical methods
A. afford greater assurance than a nonstatistical sample of equal size.
B. provide an objective basis for quantitatively evaluating sample risks.
can more easily convert the sample into a dual purpose test useful for
C.
substantive testing.
D. eliminate the need to use judgment in determining appropriate sample sizes.

3. The risk of incorrect acceptance and the likelihood of assessing control risk too low
relate to the
A. effectiveness of the audit.
B. efficiency of the audit.
C. preliminary estimates of materiality levels.
D. allowable risk of tolerable error.
4. Which of the following is NOT related to nonsampling risk?
A. human mistakes, such as failing to recognize errors in documents
B. applying auditing procedures inappropriate to the audit objective
C. using nonstatistical sampling for procedures such as sending confirmations
D. misinterpreting the results of a sample
5. The purpose of an audit sample for tests of controls is to:
A. determine the estimated risk of assessing control risk too low.
B. determine the estimated risk of assessing control risk too high.
determine the estimated rate of deviations from prescribed control procedures
C.
in a population.
determine the estimated rate of deviation from prescribed control procedures
D.

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 in a sample.
6. To determine the sample size for a test of controls, an auditor should consider nature
of the control, the frequency of operation of the control, the importance of the control,
the tolerable deviation rate, the allowable risk of assessing control risk too low, the
population size and the
A. expected deviation rate.
B. upper precision limit.
C. risk of incorrect acceptance.
D. risk of incorrect rejection.

7. If an auditor plans to assess control risk as low, which of the following best describes
a reasonable range for the auditor's tolerable deviation rate?
A. 1% - 5%
B. 2% - 7%
C. 6% - 12%
D. 11% - 20%
8. Which of the following factors is associated with smaller sample sizes for tests of
controls?
A. The control is a manual control.
B. The control operates frequently (e.g., on every transaction)
The auditor determines that he or she can accept a small amount of sampling
C.
risk – the risk of assessing control risk too low.
The auditor determines that he or she can accept a larger tolerable deviation
D.
rate.
9. Which of the following statements is correct concerning audit sampling for tests of
controls?
The population size has little or no effect on determining sample size except
A.
for small populations (population sizes less than 5,000).
The expected population deviation rate has little or no effect on determining
B.
sample size except for small populations (population sizes less than 5,000).
For larger population sizes, as the population size doubles the sample size
C.
also should double.
For a given tolerable rate, a larger sample size should be selected as the
D.
expected population deviation rate decreases.
10. In planning a statistical sample for a test of controls, an auditor increased the
expected population deviation rate from the prior year's rate because of the results of

13
 the prior year's tests of controls and the overall control environment. If other factors
remain constant, compared to last year this will cause an increase in
A. tolerable rate.
B. allowance for sampling risk.
C. risk of assessing control risk too low.
D. sample size.
11. An auditor plans to examine a sample of 20 checks for countersignatures as
prescribed by the client's internal control procedures. One of the checks in the chosen
sample of 20 cannot be found. The auditor should consider the reasons for this
limitation and
A. evaluate the results as if the sample size had been 19.
treat the missing check as a deviation for the purpose of evaluating the
B.
sample.
treat the missing check in the same manner as the majority of the other 19
C.
checks, that is, countersigned or not.
D. choose another check to replace the missing check in the sample.
12. In the audit of the financial statements of Delta Company, the auditor determines that
in performing a test of controls, the deviation rate in the sample does not support the
planned control risk when, in fact, the true deviation rate in the population does
support the planned control risk. This situation illustrates the risk of
A. assessing control risk too high.
B. assessing control risk too low.
C. incorrect rejection.
D. incorrect acceptance.
13. An auditor may use either of two statistical sampling approaches in substantive
testing, probability-proportional-to-size (PPS) sampling or classical variables
sampling. PPS sampling is primarily applicable in testing for
A. the number of errors in year-end sales cutoff.
B. an overstatement of accounts receivable.
C. an understatement of accounts payable.
D. proper segregation of duties in accounts receivable collections.
14. In a probability-proportional-to-size sample with a sampling interval of $10,000, an
auditor discovered that a selected account receivable with a recorded amount of
$5,000 had an audit amount of $2,000. The projected misstatement of this sample
was

14
 A. $3,000.
B. $4,000.
C. $6,000.
D. $8,000.
15. Which of the following most likely would be an advantage in using classical
variables sampling rather than probability-proportional-to-size (PPS) sampling?
An estimate of the standard deviation of the population's recorded amounts
A.
is not required.
The auditor rarely needs the assistance of a computer program to design an
B.
efficient sample.
Inclusion of zero and negative balances generally does not require special
C.
design considerations.
Any amount that is individually significant is automatically identified and
D.
selected.
16. While performing a substantive test of details during an audit, the auditor determined
that the sample results supported the conclusion that the recorded account balance
was materially misstated. It was, in fact, not materially misstated. This situation
illustrates the risk of
A. incorrect rejection.
B. incorrect acceptance.
C. assessing control risk too low.
D. assessing control risk too high.
17. An advantage of using statistical sampling techniques is that such techniques
A. mathematically measure and control sampling risk.
B. eliminate the need for judgmental decisions.
define the values of tolerable error and risk of incorrect acceptance required
C.
to provide audit satisfaction.
D. have been established in the courts to be superior to judgment sampling.
18. When planning a statistical PPS sample, which of the following factors would
normally increase sample size compared to the same population for the previous
year?
A. The population size in terms of book value has decreased.
B. The auditor decides to accept a larger amount of tolerable misstatement.
The auditor decides to accept a smaller amount of risk of incorrect
C.
acceptance.

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 The auditor estimates that the anticipated misstatement in the population has
D.
decreased.
19. The auditor's decision about the risk of incorrect acceptance affects which of the
following factors in a statistical PPS sample?
A. tolerable misstatement
B. reliability factor
C. book value of the population
D. anticipated misstatement
20. An auditor uses nonstatistical ratio estimation to evaluate the results of a sample.
The population book value was $2,000,000 and contained 350 items. The auditor
selected 100 items with a book value of $500,000. The audited value of the sample
was $480,000. The estimated audited value of the population is:
A. $1,980,000.
B. $1,930,000.
C. $1,920,000.
D. $1,900,000.

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Latihan Chapter 14

1. An auditor wants to determine that all sales adjustments are recorded. This relates to
which of the following audit objectives?
A. the transaction class audit objective for occurrence
B. the transaction class audit objective for accuracy
C. the account balance audit objective for valuation
D. the transaction class audit objective for completeness
2. If the auditor is concerned about the risk of fraud in the revenue cycle, which of the
following best describes auditor concerns about eh potential for fraud related to credit
sales?
A. management fraud – high risk; employee fraud – high risk
B. management fraud – high risk; employee fraud – low risk
C. management fraud – low risk; employee fraud – high risk
D. management fraud – low risk; employee fraud – low risk
3. The auditor is studying a ratio of accounts receivable growth rate to the growth rate of
sales. Which of the following indicates a potential risk of collection problems in
accounts receivable?
A. Sales grew by 10% and receivables grew by 11% from year one to year two.
Sales declines by 2% and receivables declined by 7% from year one to year
B.
two.
Sales grew by 10% and receivables declined by 2% from year one to year
C.
two.
D. Sales grew by 5% and receivables grew by 17% from year one to year two.
4. Which of the following controls most likely would be effective in offsetting the
tendency of sales personnel to maximize sales volume at the expense of high bad debt
write-offs?
Employees responsible for authorizing sales and bad-debt write offs are
A.
denied access to cash.
Employees who review exception reports based on the computer matching of
B.
shipping information and data on sales invoices do not have the authority to
write-off bad debts.
Employees who approve credit limits included in a master customer file are
C.
separated from the sales function.
The accounts receivable master file (accounts receivable subsidiary ledger) is
D.
reconciled with the general ledger control account by an employee
independent of the authorization of credit.

17
5. Which of the following controls most likely would help ensure that all credit sales
transactions of an entity are recorded?
The computer compares sales orders with a customer's credit limit and
A.
current account balances.
The accounts receivable master file (accounts receivable subsidiary ledger) is
B.
reconciled with the general ledger control account.
The accounting department supervisor controls the mailing of monthly
C.
statements to customer and investigates any difference reported by customers.
The computer prints a report of all shipments that have not been matched
D.
with a sales invoice.
6. Which of the following internal control procedures most likely would assure that no
fictitious billings have been posted to the accounts receivable ledger?
The computer compares the sum of daily sales with the total of posting
A.
(debits) to the accounts receivable master file.
The computer compares each sales invoice with supporting shipping
B.
information.
The accounts receivable master file (accounts receivable subsidiary ledger) is
C.
reconciled with the general ledger control account.
D. Each shipment on credit is supported by prenumbered sales invoice.
7. An auditor most likely would review an entity's periodic accounting for the numerical
sequence of shipping documents and invoices to support management's financial
statement assertion of
A. existence or occurrence.
B. rights and obligations.
C. valuation or allocation.
D. completeness.
8. Sound internal control procedures dictate that defective merchandise returned by
customers should be presented initially to the
A. accounts receivable supervisor.
B. receiving clerk.
C. sales management.
D. sales clerk.
9. An auditor would consider a cashier's job description to contain compatible duties if
the cashier receives remittances from the mailroom and also prepares the
A. prelist of individual checks.
B. monthly bank reconciliation.

18
 C. daily deposit slip.
D. remittance advices.
10. The questions below appear on an Internal Control Questionnaire. Which
question, if answered NO, would have disclosed that the cashier diverted cash
received over the counter from a customer to his or her own use and wrote off
the receivable as a bad debt?
Are aging schedules of accounts receivable prepared periodically and
A.
reviewed by a responsible official?
B. Are journal entries approved by a responsible official?
Are receipts given directly to the cashier by the person who opens the
C.
mail?
Are remittance advices, letter, or envelopes that accompany receipts
D.
separated and given directly to the accounting department?
11. In updating a computerized accounts receivable file, which one of the following
would be used as a batch control to verify the accuracy of posting cash
remittances?
A. the sum of net sales.
B. the sum of cash deposits less discounts taken by customers
C. the sum of cash deposits plus discounts taken by customers
D. the sum of net sales plus discounts taken by customers
12. An entity with a large volume of customer remittances by mail could most likely
reduce the risk of employee misappropriation of cash by using
A. employee fidelity bonds.
B. independently prepared mailroom prelists.
C. daily check summaries.
D. a bank lockbox system.
13. Immediately upon receipt of cash, a responsible employee should
A. prepare a prelisting of cash received or a remittance listing.
B. record the amount in the cash receipts journal.
C. update the subsidiary accounts receivable records.
D. prepare a deposit slip in triplicate.
14. An auditor's purpose in reviewing credit ratings of customers with delinquent
accounts receivable is most likely to obtain evidence concerning management's
assertions about

19
 A. presentation and disclosure.
B. existence or occurrence.
C. rights and obligations.
D. valuation or allocation.
15. The negative request form of accounts receivable confirmation is useful
particularly when the
assess level of control risk for accounts receivable is high, the number of
A.
small balances is many, and the consideration by the recipient is likely
assess level of control risk for accounts receivable is high, the number of
B.
small balances is few, and the consideration by the recipient is likely
assess level of control risk for accounts receivable is low, the number of
C.
small balances is many, and the consideration by the recipient is likely
assess level of control risk for accounts receivable is low, the number of
D.
small balances is many, and the consideration by the recipient is unlikely
16. Which of the following most likely would be detected by an auditor's review of a
client's sales cutoff?
A. unrecorded sales for the year
B. lapping of year-end accounts receivable
C. excessive sales discounts
D. unauthorized goods returned for credit
17. Which of the following most likely would give the most assurance concerning the
valuation assertion of accounts receivable?
A. Tracing amounts in the subsidiary ledger to details on shipping documents.
Comparing receivable turnover ratios to industry statistics for
B.
reasonableness.
C. Inquiring about receivables pledged under loan agreements.
D. Assessing the allowance for uncollectable accounts for reasonableness.
18. Cutoff tests designed to detect credit sales made before the end of the year that have
been recorded in the subsequent year provide assurance about management's
assertion of
A. presentation.
B. completeness.
C. rights.
D. existence.

20
19. When sending positive confirmations, which of the following would NOT be an
appropriate way to address non-response by a customer?
A. Search for evidence of subsequent cash receipt from the customer.
B. Match open invoices to underlying bills of lading and customer's orders.
C. Send negative confirmations in the place of positive confirmations
Assume that the non-response is 100% in error and project the misstatement
D.
on the population.

21
LATIHAN CHAPTER 15.

1. Which of the following industries would have the greatest concerns about purchases
cutoff at month end, unrecorded liabilities, and accounting for advertising allowances
provided by vendors?
A. manufacturer of construction equipment.
B. retail grocer
C. a hotel
D. a local school district
2. If the auditor is concerned about the risk of fraud in the expenditure cycle, which of
the following best describes auditor concerns about the potential for fraud in the
expenditure cycle?
A. management fraud – high risk; employee fraud – high risk
B. management fraud – high risk; employee fraud – low risk
C. management fraud – low risk; employee fraud – high risk
D. management fraud – low risk; employee fraud – low risk
3. The auditor is studying a ratio of accounts payable turn days. Which of the following
indicates a potential risk of unrecorded liabilities?
Accounts payable turn days increased from 28 days to 45 days from year one
A.
to year two.
Accounts payable turn days increased from 28 days to 30 days from year one
B.
to year two.
Accounts payable turn days decreased from 28 days to 15 days from year one
C.
to year two.
Accounts payable turn days decreased from 30 days to 25 days from year one
D.
to year two.
4. The internal document commonly used to authorize the recording and payment of a
credit purchase in the purchases journal is a:
A. purchase requisition.
B. purchase order.
C. vendor's invoice.
D. voucher.
5. When goods are received, the computer would compare receiving information with
information from which of the following documents and generate an exception report
of any discrepancies?

22
 A. purchase order and purchase requisition information
B. vendor's invoice information
C. vendor's shipping document and purchase order information
D. vendor's shipping document and vendor's invoice information
6. Describe the programmed control procedure that provides assurance that all the
merchandise for which the client was billed was received. Assume that the computer
prepares an exception report and that follow-up procedures are effective.
Programmed edit checks compare:
quantities and prices on the voucher with quantities and prices on the
A.
purchase order.
B. quantities on the voucher with quantities entered in receiving.
quantities and prices on the voucher with quantities and prices on the
C.
vendor's invoice.
D. quantities times price on the voucher with the amount of cash disbursements.
7. Internal control is strengthened when the quantity of merchandise ordered is omitted
from the purchasing information that can be accessed through the computer by the
A. department that initiated the requisition.
B. receiving department.
C. purchasing agent.
D. accounts payable department.
8. Which of the following programmed control procedure would be most effective in
assuring that recorded purchases are accurately recorded for transactions that actually
occurred?
The computer compares the quantity ordered from purchase order
A.
information with the quantity received from the receiving department.
B. Vendor invoice information is compared with purchase order information.
Receiving reports require the signature of the individual who authorized the
C.
purchase.
The computer matches voucher information with information supporting
D.
purchase orders, receiving reports, and vendor's invoices.
9. Which of the following programmed control procedures would be most effective in
identifying unrecorded liabilities?
An exception report identifies all purchase orders that have not been
A.
received.
An exception report identifies all vendors' invoices that do not have a
B.
voucher.

23
 C. An exception report identifies all receivings that do not have a voucher.
An exception report identifies all receivings that do not have a vendor's
D.
invoice.
10. An accounts payable terminal operator at a subsidiary company fabricated false
invoices from a fictitious vendor, and entered them in the parent company's accounts
payable / cash disbursement system. Ten checks totaling $155,000 were issued to the
vendor. What internal control objective was not achieved to allow the fraudulent
misstatement discussed above?
A. completeness
B. cutoff
C. occurrence
D. classification
E. accuracy
11. Which of the following control procedures 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
12. Which of the following programmed control procedures would be most effective in
preventing duplicate payments?
A. No checks can be made payable to “cash” or “bearer.”
Prenumbered checks are used and the computer prints an exception report of
B.
any breaks in sequence.
After cash disbursement information is compared with uncanceled voucher
C.
information the voucher is electronically canceled.
Run-to-run totals compare the beginning balance of the accounts payable
D.
file, less cash disbursements, with the ending accounts payable file.
13. Which of the following auditing procedures is best for identifying unrecorded trade
accounts payable?
examining unusual relationships between monthly accounts payable
A.
balances and recorded cash payments
reconciling vendors' statements to the file of receiving reports to identify
B.
items received just prior to the balance sheet date
investigating payables recorded just prior to and just subsequent to the
C.
balance sheet date to determine whether they are supported by receiving

24
 reports
reviewing cash disbursements recorded subsequent to the balance sheet date
D.
to determine whether the related payables apply to the prior period
14. Which of the following best describes the auditor's responsibility to confirming
accounts payable?
Confirmation of accounts payable is required by generally accepted auditing
A.
standards.
Confirmation of accounts payable is a matter of professional judgment and
B.
would normally be performed when detection risk is low.
Confirmation of accounts payable is a matter of professional judgment and
C.
would normally be performed when detection risk is high.
Confirmation of accounts payable is a matter of professional judgment and
D.
would normally be performed when control risk is low.
15. An auditor decided to confirm accounts payable to accomplish a low level of
detection risk for the completeness assertion. Which of the following is the most
reasonable sampling plan?
Confirm accounts payable with an emphasis on all vendors including zero
A.
and small balances.
B. Confirm accounts payable with an emphasis on the largest account payables.
C. Confirm accounts payable using probability-proportionate-to-size sampling.
Confirm accounts payable with an emphasis on new vendors, irrespective of
D.
the size of the account balance.
16. Which of the following procedures is least likely to be performed before the balance
sheet date?
A. testing of internal control over cash
B. confirmation of receivables
C. search for unrecorded liabilities
D. observation of inventory

25
LATIHAN Chapter 16

1. For which of the following companies would the auditor have the LEAST concern
about the existence of inventory?
A. manufacturer of construction equipment
B. a retail grocer
C. a computer manufacturer
D. a hotel
2. Which of the following would NOT be a signal that an audit client might have a
possible problem with phantom inventory (the existence assertion)?
A. inventory increasing faster than sales
B. decreasing inventory turnover
C. cost of goods sold on the books not agreeing with tax returns
D. shipping cost increasing as a percentage of inventory
3. Which of the following is NOT an important document that supports the recording of
inventory in the production process?
A. daily production reports
B. material move tickets
C. time tickets
D. material issue slips
4. Which of the following is an important control over the valuation of inventory?
The computer accounts for prenumbered materials issues slips and reconciles
A.
slips with recording in daily production reports.
The computer accounts for hours worked and hours charged to daily
B.
production reports.
Signed inventory move tickets are used to control movement of goods
C.
through production department, with tickets reconciled to daily production
reports and completed production reports.
D. Production planning and control approves all production orders.
5. Which one of the following controls will be most likely to discover that production
costs are not recorded?
The computer generates a report of all material issue slips, time tickets, and
A.
inventory move tickets that are not included in the daily production reports.
The company has designed independent checks on the agreement of entries
B.
for the allocation of manufacturing costs to work in process with data on

26
 materials and labor usage in daily production activity reports.
The company has designed independent checks on the agreement of entries
C.
for the transfer of work in process to finished goods with data in completed
production reports.
D. Management approves all overhead rates and standard costs
6. A client maintains perpetual inventory records in both quantities and dollars. If the
assessed level of control risk is low, an auditor would probably
insist that the client perform physical counts of inventory items several times
A.
during the year.
B. apply gross profit tests to ascertain the reasonableness of the physical counts.
C. increase the extent of tests of controls of the inventory cycle.
request the client to schedule the physical inventory count at the end of the
D.
year.
7. The primary objective of a CPA's observation of a client's physical inventory count is
to
discover whether a client has counted a particular inventory item or group of
A.
items.
obtain direct knowledge that the inventory exists and has been properly
B.
counted.
provide an appraisal of the quality of the merchandise on hand on the day of
C.
the physical count.
allow the auditor to supervise the conduct of the count to obtain assurance
D.
that inventory quantities are reasonably accurate.
8. Which one of the following procedures would NOT be appropriate for an auditor in
discharging his or her responsibilities concerning the client's physical inventories?
A. confirmation of goods in the hands of public warehouses
B. supervising the taking of the annual physical inventory
C. carrying out physical inventory procedures at an interim date
obtaining written representation from the client as to the existence, quality,
D.
and dollar amount of the inventory
9. Assume that the auditor has observed the physical inventory and concluded that all
inventory quantities are valid. Which of the following procedure represents the best
test of the valuation of inventory at FIFO?
The auditor randomly selects vendor's invoices for tracing prices from
A.
vendor's invoices at the beginning of the year to prices on the extended
inventory listing.
The auditor focuses primarily on prices that have changed by more than 10%
B.
since the last year end, and on the pricing of all new products in inventory,
and vouches prices on the extended inventory listing back to vendor's invoices

27
 near year-end.
The auditor randomly selects items from the inventory list for vouching prices
C.
on an extended inventory listing back to prior year's working papers.
The auditor randomly selects vendor's invoices for tracing prices from
D.
vendor's invoices near the end of the year to prices on the extended inventory
listing.
10. If a client has a strong perpetual inventory system, the auditor is likely to plan:
A. inventory observations at an interim date.
B. inventory price testing at year-end.
C. inventory tests of the lower of cost or market at an interim date.
D. direct confirmations of inventory pledged as collateral for loans.
11. In the audit of inventory, selecting inventory items from a perpetual master file,
going to the location, and obtaining test counts is intended to produce evidence for
which audit objective?
A. the transaction objectives that all transactions occurred
B. the balance objective that inventory exists
C. the balance objective that all inventory is recorded
D. the balance objective that the client has rights to the inventory
12. Which of the following would represent the best evidence for testing the net
realizable value of inventory?
A. Investigate sale prices on sales of inventory made after year-end.
B. Vouch inventory prices to vendor invoices at an interim date.
C. Vouch inventory prices to the perpetual inventory.
D. Investigate all prices that have decreased by more than 5% during the year.
13. Which of the following is NOT a significant concern about fraud in the payroll
cycle?
Employees involved in preparing and paying the payroll may process data
A.
for fictitious employees and then divert the paychecks to their own use.
When there is frequent turnover of personnel in a company, there is the risk
B.
that a terminated employee is continued on the payroll.
C. Management may overstate payroll costs as part of earning management.
Management may overtly misclassify or “pad” labor cost in government
D.
contract work to defraud the agency.
14. A client just read about a business paying employees extraordinary sums of money to
a variety of employees. Explain how the client company would use programmed

28
 controls to prevent this type of valuation problem.
A. Test a check digit embedded in the employee number.
B. Perform a limit test related to the class of employee.
C. Check the employee number against the master payroll file.
Compare the total number of payroll disbursements with a predetermined
D.
batch total.
15. If a programmed control over valuation of individual payroll items is going to be
effective, which of the following controls must also be effective?
A. controls over the completeness of payroll time cards
B. controls over access to payroll reports
C. controls over the processing of payroll taxes
D. controls over access to the employee master file
16. In a computerized payroll system environment, an auditor would be most effective at
finding weaknesses in internal controls over the occurrence of payroll transactions
by submitting test data:
A. incorrect hash totals.
B. with total payroll that exceeds a predetermined limit.
C. with an account number that does not match account numbers on job tickets.
D. incorrect employee numbers that do not contain appropriate check digits.
17. The lower assessed level of control risk approach may be used by the external
auditor in the personnel services cycle because, among other factors:
A. the chance of employee fraud is remote.
outside governmental auditors spend considerable time investigating the
B.
payroll area in most companies.
C. audit risk in the area relates primarily to the hiring of competent personnel.
D. payroll transactions are generally routine and processed in a high volume.
18. Which of the following audit objectives is LEAST LIKELY to be accomplished by
vouching payroll transactions to supporting documentation (e.g., time cards and
employee contracts)?
A. the occurrence of payroll transactions
B. the completeness of payroll transactions
C. the accuracy of payroll transactions
D. proper cutoff related to payroll transactions

29
30
JAWABAN LATIHAN BAB 11- 16

NO CH 11 CH 12 CH 13 CH 14 CH 15 CH 16
1 D A B B B C
2 B B B B A D
3 A C A D C A
4 C D C C C B
5 A C C D A A
6 D C A B B C
7 C D B D B B
8 D D D C D C
9 B C A A C C
10 B D D B C A
11 C A B B C B
12 C A C D C A
13 D B B A D C
14 B C C A B B
15 B A C C B D
16 A B A A C D
17 D B A D D
18 B A C B B
19 C B C
20 C

31