Exam 18: Audit of the Acquisition and Payment Cycle: Tests of Controls,

Because of the importance of tests of controls and substantive tests of transactions for acquisitions and cash disbursements,attributes sampling is commonly used when testing the acquisitions and cash disbursements cycle.

At what point in the acquisition and payment cycle do most companies first recognize the acquisition and related liability on their records?

When the client's physical inventory occurs before the last day of the year,it is still necessary to perform an accounts payable cutoff at the time of the count.In addition,the auditor must verify whether all acquisitions taking place between the count and the end of the year were added to

In determining that the accounts payable cutoff is correct,it is essential that the cutoff tests be coordinated with the

The overall objective in the audit of the acquisition and payment cycle is

The auditors ultimate substantive tests depend on the relative effectiveness of internal controls related to accounts payable.

Auditors primarily emphasize the understatement of liabilities in the audit of accounts payable because they are concerned about potential legal liability.

Which of the following is not a key control in the acquisition and payment cycle?

Auditing the acquisition and payment cycle often takes more time than any other cycle.

Checks should be prenumbered to make it easier to account for all checks.

What typically ends the acquisitions and payment cycle?

Describe purchase requisitions and purchase orders.What is a key difference between the two documents?

Which of the following is a key internal control for the posting and summarization transaction-related audit objective?

A CPA learns that his client has paid a vendor twice for the same shipment,once based upon the original invoice and once based upon the monthly statement.A control procedure that should have prevented this duplicate payment is

When assets are being verified,auditors focus much of their attention on making sure that the accounts are not overstated.Alternatively,auditors focus their efforts on understatement when auditing liabilities.What is the primary reason for this difference in focus?

Under which of the following circumstances would it be advisable for the auditor to confirm accounts payable with creditors?

A document received from the vendor indicating such things as the description and quantity of goods and services received,price including freight,cash discount terms,and date of billing is called the voucher.

Failure to record the acquisition of goods and services received overstates both accounts payable and net income.

Which of the following tests of controls is least useful in assessing the transaction-related audit objective related to occurrence?