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

In deciding on the reasonableness of the useful lives assigned to newly acquired assets, the auditor must consider which of the following factors?

The audit procedure 'foot the loans payable list and trace the totals to the general ledger' is performed when verifying the accuracy objective for loans payable.

The audit procedure which requires the auditor to record the last cheque number used on the last day of the year and subsequently trace to the outstanding cheques and the cash payments journal is performed to satisfy which audit objective?

The amount of time spent verifying owners' equity is frequently minimal for private companies because:

Most companies are unlikely to have significant client business risks affecting cash balances.

A shareholders' master file is a record of the issuance and redemption of shares over the life of the corporation.

The audit objective to determine that loans payable in the schedule exist is verified by the tests of balances procedure to:

Discuss how analytical review can be a useful audit technique in the audit of cash balances.

Information typically confirmed on liabilities to the bank would NOT include:

Cash account is primarily affected by which transactions in the capital acquisition and repayment cycle?

The two most important audit procedures for prepayments are:

What are the most important objectives when auditing dividends payable?

The tests of details of balances procedure which requires the auditor to examine duplicate copies of loans for authorisation is an attempt to satisfy which audit objective?

Examples of cash equivalents include time deposits, certificates of deposit, and marketable securities.

The auditor must know the client's capitalisation policies to determine whether acquisitions are treated:

Which one of the following errors would be LEAST likely to be discovered during the tests of the bank reconciliation?

Explain the purpose of testing the client's bank reconciliation, and discuss the major audit procedures involved.

Discuss two analytical procedures commonly performed during the audit of the cash account.

One unique characteristic of the capital acquisition and repayment cycle is that relatively few transactions affect the account balances, but each transaction is often highly material in amount.

State three examples of errors or irregularities that would normally be uncovered during the audit of the bank reconciliation.