Question

1. In testing controls over cash disbursements, an auditor most likely would determine that the person who signs the check also:

Group of answer choices

Is denied access to the supporting documents.

Approves the voucher for payment.

Stamps, perforates or otherwise cancels supporting documents.

Returns the checks to accounts payable.

2.

After making inquiries about credit granting policies, an auditor selects a sample of sales transactions and examines evidence of credit approval. This test of controls most likely supports management's financial statement assertion(s) of:

	Rights and obligations	Allocation and valuation
I	Yes	Yes
II	Yes	No
III	No	Yes
IV	No	No

Answer 1

Ans 1

Stamps, perforates or otherwise cancels supporting documents.

Reason:-

The person signing the check should stamps, perforate to ensure the integrity of the check.

Ans 2

III

No

Yes

Reason:-

It makes sure that accounts receivable are collectible. This comes under allocation and valuation.

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