Production Cycle Quiz 2

Quiz 9.
42:
According to the audit objective stating that all inventory on Balance and reconcile detailed production cost sheets to
hand is reflected in the ending inventory balance, which work-in-process inventory control account.
management assertion is the auditor most likely testing?
Assertion: Completeness
a. The entity has rights to the inventory
b. Inventory is properly valued

Scan closed production cost sheets for missing numbers in the
c. Inventory is properly presented in the financial statements sequence.
d. Inventory is complete Assertion: Completeness
Correct Answer: d. Inventory is complete Vouch a sample of open and closed production cost sheet
entries to (a) labor reports and (b) issue forms and materials
used reports.
Quiz 9.43:
Assertions: (a) Existence/Occurrence; (b)
For a portion of the client's inventory located in public Existence/Occurrence
warehouses, which method is the most efficient for acquiring
evidence of the existence of this merchandise?
Locate the material issue forms and determine whether they
a. Observation
are (a) prenumbered (b) kept in a secure location, and (c)
b. Confirmation available to unauthorized persons.
c. Calculation Assertions: (a) Completeness; (b) Existence/Occurrence; (c)

Existence/Occurrence
d. Inspection
Select several summary journal entries in the work-in-process

Correct Answer: b. Confirmation inventory and (a) vouch them to weekly labor and material
reports and to production cost sheets and (b) trace them to
the control account.
Quiz 9.44:
Assertions: (a) Existence/Occurrence; (b) Classification
When tracing a sample of inventory tags to a client's
computerized listing of inventory items, the purpose is to
determine whether the inventory items: Select a sample of the material issue forms in the production
department file and examine them for:
a. Represented by tags were included on the listing
a. Issue date and materials used report date
b. Included on the listing were properly counted
b. Production order number
c. Represented by tags were reduced to the lower of cost or
market c. Floor supervisor's signature or initials
d. Included in the listing were properly valued d. Name and number of material
e. Raw materials stores clerk's signature or initials

Correct Answer: a. Represented by tags were included on the f. Material requisition in raw materials stores file, noting the
listing date of the requisition
Assertions: a. Cut-off/Valuation-Allocation; b. Completeness;

c. Existence/Occurrence; d. Accuracy; e. Accuracy/Valuation-
Quiz 9.46 - Test of Controls:
Allocation; f. Cut-off/Valuation-Allocation
Identify the assertion being addressed for each procedure:
Determine by inquiry and inspection whether cost clerks d. Reconciliation of work-in-process inventory with periodic
review dates on reports of units completed for accounting in cost budgets
the proper period.
Assertions: Cut-off; Valuation/Allocation; Completeness

Correct Answer: a. Use of time tickets to record actual labor
worked on production orders
Quiz:
An auditor generally tests the segregation of duties related to

inventory by:
a. Test counts and cutoff procedures
b. Document inspection and reconciliation
c. Analytical procedures and invoice recomputation
d. Personal inquiry and observation
Correct Answer: d. Personal inquiry and observation
Quiz:
While observing a client's annual physical inventory, an

auditor recorded test counts for several items and noticed
that certain test counts were higher than the recorded
quantities in the client's perpetual records. This situation
could be the result of the client's failure to record:
a. Sales returns
b. Purchase discounts
c. Sales
d. Purchase returns
Correct Answer: a. Sales returns
Quiz:
Which of the following internal controls most likely would

prevent direct labor hours from being charged to
manufacturing overhead?
a. Use of time tickets to record actual labor worked on

production orders
b. Periodic independent counts of work-in-process for

comparison to recorded amounts
c. Comparison of daily journal entries with approved

production orders

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Quiz 9.

b. Inventory is properly valued

d. Inventory is complete Assertion: Completeness

c. Calculation Assertions: (a) Completeness; (b) Existence/Occurrence; (c)

Select several summary journal entries in the work-in-process

e. Raw materials stores clerk's signature or initials

Assertions: a. Cut-off/Valuation-Allocation; b. Completeness;

Assertions: Cut-off; Valuation/Allocation; Completeness

An auditor generally tests the segregation of duties related to

a. Test counts and cutoff procedures

b. Document inspection and reconciliation

c. Analytical procedures and invoice recomputation

d. Personal inquiry and observation

Correct Answer: d. Personal inquiry and observation

While observing a client's annual physical inventory, an

Correct Answer: a. Sales returns

Which of the following internal controls most likely would

a. Use of time tickets to record actual labor worked on

b. Periodic independent counts of work-in-process for

c. Comparison of daily journal entries with approved

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