Question

T/F

6. In determining which vendor to order goods from, the purchasing department should always use its customary vendor.

T/F

7. Confirmation of accounts payable is generally mandatory.

T/F

8. The purchase cutoff test involves determining that purchase transaction occurring near the balance sheet data are recorded in the proper time period.

T/F

9. In a review of financial statements under SSARS, the accountant must obtain an understanding of the clients internal control, but need not perform test of controls.

T/F

10. Your client, ABC. INC mails a positive confirmation request to customer A. The confirmation states that the balance receivable is $1,000. Customer A replies that the balance is only $900. A valid explanation for this difference might be that there is a payment in transit from customer A.

Answer 1

6. F  

In determining which vendor to order goods from, the purchasing department should not always use its customary vendor

7. F

The external confirmations from the accounts payable are the additional procedures which may be taken on sampling but it is not mandatory. it is used as additional audit evidence.

8. T

The Purchase cut off test involves determining that ourchase transaction occuring near the balancesheet date are recorded in proper time period.

9. F

In review of financial statements under SSARS, the accountant must obtain an understanding of the clients internal control, if requires, test of controls also need to be performed

10. T

Payment in transit also might be the reason for the difference between the balance receivables between both books i.e., ABC.INC and his customer A