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Financial Cycle Audit

***Getting ready for a final, please only sign out if confident about the answers that will be provided***

5.Which one of the following financial ratios has a numerator and denominator whose amounts should change by approximately the percentage from year to year?

a.quick ratio.
b.current ratio.
c.accounts payable turn days.
d.payables as a percentage of total assets.
e.cost of goods sold to accounts payable

6.The auditor is concerned that individuals in the purchasing department are initiating purchases on their own to companies in which they have a vested interest. The document the auditor would be most interested in reviewing under these circumstances would be the:

a.purchase order.
b.receiving report.
c.voucher.
d.purchase requisition.
e.bill of lading.

16.The specific financing cycle audit objective, stockholders┬┐ equity balances include the effects of all transactions pertaining to paid-in capital and retained earnings through the balance sheet date, relates to the:

a.rights and obligations assertion.
b.completeness assertion.
c.existence or occurrence assertion.
d.valuation or allocation assertion.
e.presentation or disclosure assertion.

17.Analyzing ratio results relative to expectations based on prior year, budgeted, or other data relates to:

a.initial procedures.
b.analytical procedures.
c.tests of details of transactions.
d.tests of details of balances.
e.presentation and disclosure

29.Organizations that manage risk well are more likely to achieve or exceed their objectives because they have the capacity and ability to do all of the following except:

a. identify and exploit opportunities.
b.identify and manage risks that could affect achieving their objectives.
c.make good decisions quickly.
d.respond and adapt to unexpected events.
e.all of the above.

30.Traditional performance tracking methods focus on all of the following except:

a.sales.
b.net income.
c.needed information to anticipate the future.
d.gross margin.
e.return on assets.

Solution Preview

5.Which one of the following financial ratios has a numerator and denominator whose amounts should change by approximately the same percentage from year to year?

a.quick ratio.
b.current ratio.
c.accounts payable turn days.
d.payables as a percentage of total assets.
e.cost of goods sold to accounts payable
e.cost of goods sold to accounts payable: remember accounts payable are creditors for goods purchased and these are a part of the cost of goods sold.

6.The auditor is concerned that individuals in the purchasing department are initiating purchases on their own to companies in which they have a vested interest. The document the auditor would be most interested in reviewing under these circumstances would be the:

a.purchase order.
b.receiving report.
c.voucher.
d.purchase requisition.
e.bill of ...

Solution Summary

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