Exam 19: Completing the Tests in the Acquisition and Payment Cycle:

The auditor normally does not need to test the accuracy or classification of fixed assets recorded in prior periods if they are the continuing auditor because

You are auditing Manufacturing Company and testing the audit related objective of completeness for the equipment accounts.Which of the following audit procedures is most likely to achieve your objective?

The approach to auditing patents and copyrights is similar to that used for property,plant,and equipment accounts.

What are several substantive analytical procedures used in the audit of prepaid insurance and insurance expense?

When auditing insurance expense,auditors normally rely on analytical procedures and limited testing of the debits to ensure that they arose from credits to prepaid insurance.

A major consideration in verifying the ending balance in fixed assets is the possibility of existing legal encumbrances.Tests to identify possible legal encumbrances would satisfy the audit objective of

Completeness and existence are the auditor's primary objectives in auditing manufacturing equipment.

The auditor receives the client's schedule of recorded disposals and then performs detail tie-in tests of the recorded disposals schedule.What procedures does the auditor perform on the client's schedule of recorded disposals?

In determining the reasonableness of the client's amount for depreciation expense the auditor is primarily concerned that the client has followed a consistent policy and the calculations are correct.Which of the following audit objectives best addresses the above concerns?

One very useful method of auditing depreciation is to use an analytical procedure to test for reasonableness.

When auditing depreciation expense,the two major concerns related to the accuracy audit objective are

The auditor's main objectives in the verification of the sale,trade-in,or abandonment of equipment are to gather sufficient appropriate evidence that all disposals are ________ and at the ________.

The primary accounting record for manufacturing equipment and other fixed assets is the

The most common audit test to verify equipment additions is to

Controls over the acquisition and recording of insurance are a part of which of the following transaction cycles?

The primary accounting record for property,plant,and equipment accounts is the fixed asset master file.What is included for each fixed asset in the master file?

Depreciation expense results from the allocation of accounting data rather than discrete transactions.

The realizable value audit objective is not applicable when auditing prepaid insurance or insurance expense.

Which type of audit procedure would normally be sufficient for purposes of auditing prepaid expenses and deferred charges?

Failure to capitalize a fixed asset at the correct amount would impact which financial statements?