ACCT 555-HW week 7-Chapter 18: 21, 24, 28(e) Chapter 19: 4, 12, 21, 22, 26 Chapter 21: 8, 10, 24, 27, 30 Chapter 24: 12, 13, 30, 28, 27ALL ANSWERS CORRECT,100%

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18-21 (Objective 18-3) Questions 1 through 8 are typically found in questionnaires used by auditors to obtain an understanding of internal control in the acquisition and payment cycle. In using the ... questionnaire for a client, a “yes” response to a question indicates a possible internal control, whereas a “no” indicates a potential deficiency. 1. Is the purchasing function performed by personnel who are independent of the receiving and shipping functions and the payables and disbursing functions? ­ Recorded acquisitions and payments are for goods and services received, consistent with the best interests of the client (occurrence). ­ Observe and inquire about personnel performing purchasing, shipping, payables and disbursing functions. ­ Goods received and not recorded or recorded and not received. Disbursements made for goods not received. 2. Are all vendors’ invoices routed directly to accounting from the mailroom? ­ Acquisitions are recorded on the correct dates (timing).Existing acquisitions are recorded (completeness). ­ Observe and inquire about the procedure performed by mail clerk. Compare date mail is received to date accounting received invoices ­ Late recording or non­recording of liabilities to suppliers. 3. Are all receiving reports prenumbered and the numerical sequence checked by a person independent of check preparation? ­ Existing acquisitions are recorded (completeness). ­ Account for numerical sequence of receiving reports and determine that all were recorded. ­ Receiving reports are misplaced and acquisitions not recorded. ­ Vendor statement reconciliation 4. Are all extensions, footings, discounts, and freight terms on vendors’ invoices checked for accuracy? ­ Acquisitions are recorded at the proper amounts (accuracy). -Examine cancelled invoices for indication of checking for clerical accuracy. ­ Test extensions, footings, discounts, and freight terms on vendors' invoices.­ Test extensions, footings, discounts, and freight terms on vendors' invoices. 5. Does a responsible employee review and approve the invoice account distribution before the transaction is entered in the computer? ­ Acquisition transactions are properly classified (classification).­ ­ Examine indication of approval. ­ Acquisitions are recorded in the wrong account. ­ Examine supporting invoice for reasonableness of accounting distribution. 6. Are checks automatically posted in the cash disbursements journal as they are prepared? - Payments are recorded on the correct dates (timing).Existing payments are recorded (completeness). ­ Observe whether the system automatically posts checks when they are prepared. ­ Checks are disbursed and not recorded or they are recorded in the wrong time period. ­ Examine checks clearing the bank prior to year­end to determine that they were recorded in the cash disbursements journal prior to year­end. 7. Are all supporting documents properly cancelled at the time the checks are signed? ­ Acquisitions are for goods and services received, consistent with the best interests of the client (occurrence) ­ Examine invoices for which checks have been disbursed to determine that they have been cancelled. ­ Invoices are recorded and paid more than once. ­ Examine vendor statements, noting any unrecorded payments appearing on the statement. 8. Is the custody of checks after signature and before mailing handled by an employee independent of all payable, disbursing, cas [Show More]

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