The letter B only. Learning Activity 1For each of the following controls, determine whether the control leaves an audittrail and identify a relevant audit procedure to test the control. Explain youranswers.All mail is opened and cash is prelisted daily by the president's assistant whohas no other responsibility for handling assets or recording accounting data.b. Vendor's invoices are approved by the controller after he examines thepurchase order and receiving report attached to each invoice.а.As employees check in daily by using time clocks, a supervisor observes tomake certain that no employee "punches in" more than one time card.С.

Auditing is the investigation, inspection, or examination of the financial statements of an…

Answered: ,determine whether th procedure to test…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter4: Journalizing And Posting Transactions

Section: Chapter Questions

Problem 1SEA

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Determine whether the following statements are True or False and provide an essay worthy explanation. A user who logs in to the computer-based accounting system to enter invoices should also have access to the portion of the system that would allow her/him to order goods. It is necessary that managers remember that they are stewards of funds expended by a business - that the funds are not owned by the managers.
An IT auditor is conducting data analysis procedures on an employee expense report file and notices several expenses for $24.99 from the same individual. The company’s policy requires that any expenses that are under $25.00 do not require a receipt. The IT auditor should: [SELECT ALL THAT APPLY a) Maintain professional skepticism and investigate these transactions further b) Pass on investigating these items further, focusing on higher dollar amounts c) Evaluate the business process approval controls, and related procedures d) Discuss fraud awareness and detection programs with management to gain an understanding of management’s commitment to fraud prevention and related entity-level anti-fraud controls.
For each of the following, give two examples of physical control that the client can use to protect the asset or the record:1. Small Tools Inventory2. Blank Checks or checkbooks3. Previous years transaction, accounting records and documents
Background: Some of Crown Company’s cash receipts from customers are received by the company with the regular US mail. The company’s recordkeeper opens these letters and deposits the cash received each day. Required: Part 1a. Identify any internal control problem(s) with this arrangement. Explain your answer(s). Part 1b. What changes to Crown's internal control system do you recommend? Explain your answer(s). Question #2 – Internal Control Recommendations: What internal control procedures would you recommend in each of the following two situations? Required: Part 2a. A concession company has one employee who sells towels, coolers, and sunglasses at the beach. Each day, the employee is given enough towels, coolers, and sunglasses to last through the day and enough cash to make change. The money is kept in a box…
MULTIPLE CHOICE: 1. The general cash account is considered a significant account in almost all audits A. Where the ending balance is material B. Even when the ending balance is immaterial C. Except those of not-for-profit organizations D. Where either the beginning or ending balance is material 2. The primary audit objective for cash is to establish that the balance is properly stated. This involves determining : A B C D That cash on hand as shown in the general ledger is represented by currency and coins on hand YES YES YES YES Ownership and proper accountabilities YES NO NO YES That cash balances are available without restrictions YES NO YES NO An auditor for a large service company is performing an audit of the company’s cash balance. The auditor is considering the most appropriate audit procedure to use to ensure that the amount of cash is accurately recorded on…
A. Occurrence B. Completeness C. Rights and obligationsD. Allocation or valuationE. ClassificationF. ExistenceG. CutoffH. AccuracyI. UnderstandabilityFor each of the following control activities, identify the management assertion that best applies by placing the correct letter in the blank space below.___ 1. Match shipping documents with sales invoices before a sale is recorded.___ 2. Balance total of individual customers' receivables with the control account.___ 3. Sales manager approves taking discounts.___ 4. Computer check for billing the quantity shipped, list price, and total.___ 5. Account for numerical sequence of pre-numbered shipping documents.
For each transaction, suggest two internal controls you would implement. Justify your response. Here's an example to guide you: · A. Transaction: Big Marker purchased supplies on account, $100. B. Business process: Acquisition/ payment. C. Journal entry: Debit Supplies $100. Credit Accounts Payable $100. D. Elements: Supply is an asset; accounts payable, a liability E. Forms: Purchase requisition and purchase order. F. Additional information: name of the primary contact person at the vendor, specific type and quantity of supplies purchased (e.g., 10 boxes of paper clips) G. Internal controls: Transaction authorizations would ensure that only the purchasing department can issue purchase orders. Sending a blind copy of the purchase e Receiving department would aid in the segregation of duties.
MULTIPLE CHOICE: 1. An auditor ordinarily sends a standard confirmation request to all banks with which the client has done business during the year under audit, regardless of the year-end balance. A purpose of this procedure to A. request a cutoff bank statements and related checks be sent to the auditor B. Detect kiting activities that may otherwise not be discovered C. Seek information about contingent liabilities and security agreements D. Provide the data necessary to prepare proof of cash 2. As one of the year-end audit procedures , the auditor instructed the client’s personnel to prepare a standard bank confirmation request for a bank account that had been closed during the year. After the client’s treasurer had signed the request , it was mailed by the assistant treasurer. What is the major flaw in this audit procedure? A. The request was mailed by the assistant treasurer B. The CPA did not sign the confirmation request before it was mailed C. Sending the request was…
Cornerstone Exercise 4-18 Adjusting Entry from Bank Reconciliation A customer of Mutare paid for merchandise originally purchased on account with a check that has been erroneously entered into Mutares cash account for $570 (it actually has been issued and paid for $750). Required: Record the appropriate journal entry to correct the error.
Assume you are the senior accountant on an audit engagement of a fictitious business, Pine Street Company (PSC). Assume the instructor is the engagement partner. You are to prepare an audit program for PSC. The firm manufactures and sells bicycles. The audit program must be in one of the following areas of the business: accounts receivable and revenues; inventories and costs of goods sold; accounts payable; payroll; or property, plant and equipment. Assume you are applying for an accounting position at PSC. The controller asks you to prepare the journal entries to record the following transactions for retail store operations of PSC. Assume a perpetual inventory system. April 2 Purchased merchandise from Johns Company under the following terms: $5,900 price, invoice dated April 2Explain credit terms of 2/15/, n/60, and FOB shipping point in a sentence or two. April 3 Paid $330 for shipping charges on April 2 purchases. April 4 Returned to Johns Company unacceptable merchandise that…

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