Essay on Acc 492 Final Exam Answers

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ACC 492 Final Exam Answers 1) The bonding of employees will normally be expected to: A. “weed out” dishonest employees already hired.
B. serve as a deterrent to dishonesty.
C. guarantee that all employee fraud will be prevented.
D. eliminate the need for separation of duties in the cash receipts area. 2) All sales, cash receipts, and sales adjustments are accurately valued using GAPP and correctly journalized, summarized, and posted.
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C. randomly select all test items.
D. test all high dollar items. 7) Observation of inventories is a required audit procedure whenever:
A. inventories are material.
B. the auditor considers it to be necessary.
C. it is practicable and reasonable.
D. inventories are material and it is practicable and reasonable. 8) With a manufacturer, wholesaler, or retailer, however, inherent risk for inventory may be assessed at or near the maximum level for all of the following reasons EXCEPT:
A. inventories are often stored at multiple sites, adding to the difficulties associated with maintaining physical controls over theft and damages, and properly accounting for goods in transit between sites.
B. the volume of purchases, manufacturing, and sales transactions that affects these accounts is generally high, decreasing the opportunities for misstatements to occur.
C. inventories are vulnerable to spoilage, obsolescence, and other factors such as general economic conditions that may affect demand and salability, and thus the proper valuation of the inventories.
D. the wide diversity of inventory items may present special problems in determining their quality and market value. 9) During the observation of the inventory, the auditor has NO responsibility to:
A. observe the taking of the inventory by client personnel.
B. make inquiries of the client concerning the inventories.
C. supervise the taking of the inventory.

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