Exam 16: Audit of transaction cycles and financial statement balances II

In auditing the retained earnings balance for the year, the auditor traces the entry in retained earnings to the net earnings shown in the balance sheet.

(True/False)

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Question 21

Banks are responsible for searching their records for bank balances or loans beyond those included on the confirmation form.

(True/False)

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Question 22

It is not difficult to be sure that each intercompany transfer is correctly handled.

(True/False)

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Question 23

Information typically confirmed on liabilities to the bank includes the:

(Multiple Choice)

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Question 24

The transfer of money from one bank account to another and improperly recording the transfer so that the amount is recorded as an asset in both accounts is referred to as lapping.

(True/False)

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Question 25

The audit of the bank reconciliation will normally lead to the discovery of theft of cash by interception of cash receipts from customers before they are recorded, with the account written off as a bad debt.

(True/False)

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Question 26

It should ordinarily be unnecessary to examine supporting documentation for each addition to property, plant, and equipment, but it is normal to verify:

(Multiple Choice)

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Question 27

The most important objective for depreciation expense is:

(Multiple Choice)

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Question 28

Depreciation expense is one of the few expense accounts that is NOT verified as a part of:

(Multiple Choice)

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Question 29

Which one of the following transaction-related objectives is NOT important when auditing dividends?

(Multiple Choice)

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Question 30

The most important audit objective for depreciation expense is completeness.

(True/False)

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Question 31

Identify three analytical procedures commonly performed for loans payable.

(Essay)

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Question 32

Property, plant, and equipment are assets that:

(Multiple Choice)

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Question 33

In verifying accumulated depreciation, the credits to accumulated depreciation are verified as part of the audit of depreciation expense, whereas the debits are normally tested as a part of the audit of:

(Multiple Choice)

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Question 34

Deposits recorded as cash receipts near the end of the year, deposited in the bank in the same month and included in the bank reconciliation as a deposit in transit, are a type of misstatement in cash that will not normally be discovered as part of the audit of tests of a bank reconciliation.

(True/False)

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Question 35

Discuss what is meant by kiting, and discuss how it is performed.

(Essay)

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Question 36

Typically, bank confirmations in the audit verify:

(Multiple Choice)

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Question 37

When auditing owners' equity, the realisable value objective is not applicable.

(True/False)

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Question 38

The most important objective for depreciation is accuracy.One aspect of this objective is the consistency of depreciation policy.The four considerations in determining this do NOT include:

(Multiple Choice)

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Question 39

Who should prepare the bank reconciliation?

(Multiple Choice)

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Question 40

Showing 21 - 40 of 137

In auditing the retained earnings balance for the year, the auditor traces the entry in retained earnings to the net earnings shown in the balance sheet.

Banks are responsible for searching their records for bank balances or loans beyond those included on the confirmation form.

It is not difficult to be sure that each intercompany transfer is correctly handled.

Information typically confirmed on liabilities to the bank includes the:

The transfer of money from one bank account to another and improperly recording the transfer so that the amount is recorded as an asset in both accounts is referred to as lapping.

The audit of the bank reconciliation will normally lead to the discovery of theft of cash by interception of cash receipts from customers before they are recorded, with the account written off as a bad debt.

It should ordinarily be unnecessary to examine supporting documentation for each addition to property, plant, and equipment, but it is normal to verify:

The most important objective for depreciation expense is:

Depreciation expense is one of the few expense accounts that is NOT verified as a part of:

Which one of the following transaction-related objectives is NOT important when auditing dividends?

The most important audit objective for depreciation expense is completeness.

Identify three analytical procedures commonly performed for loans payable.

Property, plant, and equipment are assets that:

In verifying accumulated depreciation, the credits to accumulated depreciation are verified as part of the audit of depreciation expense, whereas the debits are normally tested as a part of the audit of:

Deposits recorded as cash receipts near the end of the year, deposited in the bank in the same month and included in the bank reconciliation as a deposit in transit, are a type of misstatement in cash that will not normally be discovered as part of the audit of tests of a bank reconciliation.

Discuss what is meant by kiting, and discuss how it is performed.

Typically, bank confirmations in the audit verify:

When auditing owners' equity, the realisable value objective is not applicable.

The most important objective for depreciation is accuracy.One aspect of this objective is the consistency of depreciation policy.The four considerations in determining this do NOT include:

Who should prepare the bank reconciliation?

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances I

Completing the audit

Audit reporting

Other auditing and assurance engagements

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