Exam 13: Audit of the Acquisition and Payment Cycle

When automatic purchase orders are generated, to help make sure that goods are ordered for products that the company still needs, the company should

Discuss the audit tests the auditor would use to audit capital assets acquired in prior years.

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

Before a new supplier is added into the supplier master file (or the purchasing master file), the company should

Internal controls that are likely to prevent the client from including as a business expense those transactions that primarily benefit management or other employees rather than the entity being audited satisfy the control objective that

Describe the two objectives that are most important in auditing accumulated amortization. Explain why these objectives are important.

A set of records for each piece of equipment that includes descriptive information, date of acquisition, original cost, current year amortization, and accumulated amortization is the

Describe the three types of tests that need to be performed by the auditor when auditing a client's data conversion process.

ZyCo has recently converted to a new online accounts payable system. To test that all vendor balances have been converted to the vendor master file (completeness), the auditor would

The internal control that requires an "independent verification of calculations and amounts" satisfies the objective of

The test of transactions that requires the recomputing of cash discounts satisfies the objective of

The purchase order, usually in writing, is a legal document that is

Which of the following situations would indicate increased inherent risk in the accounts payable and acquisition cycle?

The tests of details of balances procedure for manufacturing equipment that requires the auditor to examine vendors' invoices of closely related accounts (such as repairs and maintenance) to uncover items that should be manufacturing equipment would satisfy the audit objective of

The major balance sheet account in the acquisition and payment cycle is

When verifying current-year additions to manufacturing equipment, the two major objectives for this part of the audit are

When an acquisition is on an FOB (freight on board) origin basis, the inventory and related accounts payable must be recorded in the current period if the goods were

Auditor confirmation of accounts payable balances at the balance sheet date may be unnecessary because

The analytical procedure that requires the auditor to "inspect the list of accounts payable for unusual or non-vendor payables" would have the best chance of discovering which possible error?

To ensure that goods and services acquired are for authorized company purposes, and to help acquire only needed items