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

The auditor's physical examination of property, plant, and equipment is commonly used when verifying the existence objective for acquisitions of property, plant, and equipment.

The test of details of balance procedure which requires the auditor to foot the loans payable list for loans payable and accrued interest satisfies which audit objective?

The audit objective which requires the auditor to determine that loans payable on the loans payable schedule are properly classified can be tested with the following procedure:

Which of the following balance-related objectives is NOT a problem when auditing the general cash account?

The audit procedure 'examine due dates on duplicate copies of loans payable to determine whether all or part of the loans are a noncurrent liability' is performed when verifying the classification objective for loans payable.

Which of the following misstatements will normally be discovered as part of the audit of the bank reconciliation?

The audit objective to determine that existing loans payable are included in the loans payable schedule (completeness)is accomplished by the following test of balances procedure:

Examining company policies is an example of an audit procedure in auditing accrued liabilities.

One typical difference between the asset prepaid expenses and other assets, such as accounts receivable and inventory, is the immateriality of the former in many audits.Because of this immateriality, frequently the only audit procedure necessary to perform is:

Which one of the following ratio and trend analysis procedures might identify a possible misstatement of expensing amounts that should be capital items?

The general cash account is considered insignificant in the audit when the ending balance is immaterial.

Cash account is primarily affected by which transactions in the payroll and personnel cycle?

It is relatively easy to verify the client's reconciliation of the balance in the bank account to the general ledger.

Information typically confirmed on liabilities to the bank includes the:

Which of the following misstatements would normally be discovered as part of the audit of the bank reconciliation?

The record of the issuance and transfer of shares for the life of the corporation is maintained in the:

The failure to capitalise a permanent asset, or the recording of an asset acquisition at the improper amount, affects the balance sheet:

Kiting involves transferring money from one bank to another and incorrectly recording the transaction.

When the results of analytical procedures for loans payable are favourable, tests of details for the related interest expense and accrued interest can frequently be eliminated.

The starting point for the verification of current-year acquisitions (that is, details of the balances)is normally a fixed asset schedule obtained from the client.Discuss the types of information that should be included in this schedule.