Exam 15: Audit of transaction cycles and financial statement balances I

The internal control which requires that 'cheques are prenumbered and accounted for' satisfies which transaction-related audit objective for cash payments?

The purpose of the audit procedure 'examine underlying documentation for subsequent cash payments' is to:

Discuss the four aspects of the audit of cost accounting with which the auditor is most concerned.

Discuss each of the four business functions that comprise the acquisition and payment cycle.

When labour is a material factor in inventory valuation, the auditor should place special emphasis on testing the internal controls concerning:

State five specific balance-related audit objectives for inventory pricing and compilation, and, for each objective, describe one common test of details of balances related to that objective.

When auditing accounts payable, auditors are usually especially concerned about the:

Discuss the key documents used in the processing of purchase orders and receiving goods and services functions in the acquisitions and payment cycle.

For proper internal control, the person(s)responsible for signing the payroll cheques should not have access to timekeeping or be otherwise involved in the preparation of payroll.

After the payroll total has been agreed upon, often a separate bank account is set up to pay the amount.This account is referred to as:

The audit procedure 'compare pay rates with the workplace agreement' is normally performed when testing the completeness objective for payroll.

Cost accounting controls are those related to the physical inventory and the consequent costs from the point at which:

For good internal control, the payroll function should be independent of the personnel department.

An inventory acquisition is received late in the afternoon of December 31 after the physical inventory is completed.If the acquisition is included in accounts payable and purchases, but excluded from inventory, the result:

When inventory is shipped on an FOB origin basis, title passes to the buyer when it is received by the buyer.

The classes of transactions in the acquisition and payment cycle include acquisition of goods:

By tracing receiving reports issued at and before year-end to vendors' invoices and making sure they are included in accounts payable, the auditor is testing for:

Examining inventory descriptions on tags and comparing to actual inventory relates to which audit objective?

What is the overall objective in the audit of accounts payable?

A major difficulty in the verification of inventory cost records is determining the reasonableness of cost allocations.