Data Analytics For Accounting
19th Edition
ISBN: 9781260375190
Author: RICHARDSON, Vernon J., Teeter, Ryan, Terrell, Katie
Publisher: Mcgraw-hill Education,
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Question
Chapter 5, Problem 9MCQ
To determine
Identify the correct choice where the transactions are being evaluated on real-time basis.
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An auditor would be most likely to assess control risk at the maximum level in an electronic environment with automated system-generated information when:Select one:
a.
Fixed asset transactions are few in number, but large in dollar amount.
b.
Payables are based on many transactions and large in dollar amount.
c.
Accounts receivable records are based on many transactions and are large in dollar amount.
d.
Sales orders are initiated using predetermined, automated decision rules.
Which of the following describes preventive controls? (Several choices may be correct.)
Expected to be 100% effective.
O Easily verified as to whether the control has worked.
O Designed to stop misstatement from occurring.
O Applied to each transaction prior to entering transactions into the accounting system.
Applied to each transaction after transactions have been processed.
O Designed to detect fraud or errors that have occurred.
Internal controls do each of the following except:
A. Evaluate performance of employees
B. Guarantee the accuracy if account records
C. Protect assets
D. Increase the likelihood that any errors will be caught
Chapter 5 Solutions
Data Analytics For Accounting
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Similar questions
- Which of the following test controls most likely would help assure an auditor that goods shipped are properly billed? A. Scan the sales journal for sequential and unusual entries. B. Examine shipping documents for matching sales invoice. C. Compare the accounts receivalbe ledger to daily sales summaries. D. inspect unused sales invoices for consecutive prenumbering.arrow_forwardIn what way can audit procedures be modified to address assessed fraud risks?a. Obtain more reliable information.b. Perform procedures close to year-end.c. Apply computer-assisted techniques to all items.d. All of these are valid modifications.arrow_forwardAll pre-numbered time cards are accounted for before beginning data entry for preparation of checks. Question: What Misstatement that is likely to be prevented if the control exists and is effective?arrow_forward
- An audit procedure that involves taking a sample of recorded transactions and obtaining original source documents supporting the recorded transactions is referred to as what? a. vouching b. directional testing c. a walk-through d. tracingarrow_forwardof stion For a sample of sales transactions selected from the sales journal, verify that the amount of the transaction has been recorded in the correct customer account in the accounts receivable subledger. Choose the Audit Objective: Choose the specific audit objective →arrow_forwardSandol Corporation has numerous customers. A customer file is kept on disk storage. Each customer file contains name, address, credit limit, and account balance. The auditor wishes to test this file to determine whether credit limits are being exceeded. The best procedure for the auditor to follow would be to: a. Develop test data that would cause some account balances to exceed the credit limit and determine if the system properly detects such situations. O b. Request a printout of a sample of account balances so they can be individually checked against the credit limits. c. Request a printout of all account balances so they can be manually checked against the credit limits. O d. Develop a program to compare credit limits with account balances and print out the details of any account with a balance exceeding its credit limit.arrow_forward
- Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities? *A. Scan the cash disbursements entries recorded just before year end for indications of unusual transactions.B. Compare a sample of purchase orders issued just after year end with the year-end accounts payable trial balance.C. Obtain a copy of the receiving report until year end and its related sales invoice and trace them to the purchases journal.D. Compare the entries recorded in the purchases journal and the cash disbursements journal just before year end.arrow_forward1. In the ________ stage of an operational audit, the auditor measures the actual system against an idealstandard. internal controlevidence collectionevidence evaluationtesting 2. Which of the following is an effective data entry control to ensure that order date isless than or equal to the ship date? A validity check.A range check.A limit check.A reasonableness check. 3. The G/L and the AR Subledger are linked through the use of a Customer numberVendor numberCompany codeReconciliation accountarrow_forwardWhich internal control principle prescribes the use of pre- numbered printed checks? Multiple Choice O Perform regular and independent reviews. Establish responsibilities. Technological controls. Maintain adequate records. Divide responsibility for related transactions.arrow_forward
- The following are commonly performed tests of controls and substantive tests of transactions audit procedures in the sales and collection cycle, acquisition and payment cycle, and inventory and warehousing cycle: Account for a sequence of shipping documents and examine each one to make sure that a duplicate sales invoice is attached. Compare the quantity and description of items on shipping documents with the related duplicate sales invoices. Trace a sample of voucher packages to the acquisitions journal throughout the year to determine that the transaction is included in the acquisitions journal. Determine if the transaction was recorded in the correct month, based on when the goods were received and the terms of the transaction. Required: Identify for each test the related cycle. Identify whether each audit procedure is a test of control or a substantive test of transactions. State which of the six transaction-related audit objectives each of the audit procedures fulfills.arrow_forward"In order to determine whether internal control operated effectively to minimize errors of failure to invoice a shipment, the auditor would select from a sample of transactions from the population represented by the" Customer order file. Bill of lading file. Subsidiary-ledger Sales invoice filearrow_forwardSpreadsheet software would be most useful for which of the following audit activities?a. Testing internal controls over computerized accounting applications.b. Preparing an audit plan.c. Preparing a comparison of current-year expenses with those from the previous year.d. Drafting a planning memorandum.arrow_forward
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