Exam 18: Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

The auditor is performing tests of transactions for individual accounts payable transactions with vendors.Which document provides more reliable information about individual transactions with vendors?

A vendor's statement is unreliable and auditors rarely use it.

The extent of a search for unrecorded liabilities largely depends on:

When reviewing the controls and procedures in the acquisition and payment cycle:

A company recorded an acquisition of merchandise and its related liability, but failed to include the merchandise in ending inventory.The effect on the financial statements was to:

What are the three most important controls over cash disbursements?

The auditor's internal control objective to determine that "recorded acquisitions are for goods and services received" satisfies the audit objective of:

To test for cutoff errors which overstate liabilities, the auditor should trace, to vendors' invoices, the receiving reports issued:

An auditor is gathering evidence on the completeness assertion.To do so she performs a test to verify that all goods received by the company have been recorded properly.The document population for this test would consist of all:

Which of the following accounts is not included in the acquisitions class of transactions?

Absent disputed amounts and minor timing differences, the vendor's statements should reconcile to the:

Which one of the following duties should not be assigned the purchases department?

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:

The overall objective in the audit of accounts payable is to determine whether accounts payable:

A substantive tests of transactions for acquisitions that would be used to provide evidence regarding the occurrence assertion would be to:

Since there are a large number of accounts involved in the acquisition and payment cycle, there is the potential for classification misstatements, some of which are likely to affect income.

The "rights "aspect of the "rights and obligations" objective is not applicable to liabilities.

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

An auditor performs a test to determine whether all merchandise for which the client was billed was received.The population for this test consists of all:

The cash account is not part of the acquisitions and payment cycle.