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

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

When determining the methodology for designing tests of details of balances for accounts payable:

Auditors examine supporting documentation for cash disbursements subsequent to the balance sheet date in order to determine whether the cash disbursement was for a current period liability. Describe at least two audit procedures the auditor would perform to provide evidence that the cash disbursement was made for a current period liability.

You have been assigned to the accounts payable transaction cycle as part of your auditing responsibilities.You have decided to vouch a sample of entries in the accounts payable master file to supporting documents.Which assertion is this test of controls most likely to support?

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:

Auditor confirmation of accounts payable balances at the balance sheet date may not need to be performed by the auditor because:

Listed below are some management assertions made for the acquisition and payment cycle.For each one give an example of how the auditor by using the documents normally found in the process can apply an auditing procedure to test the assertion. Completeness Timing Accuracy

The accounts payable department usually has responsibility for approving acquisitions for payment by comparing the details on the:

For effective internal control purposes,the vouchers payable department generally should:

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

The test of transactions which requires one to "reconcile recorded cash disbursements with the cash disbursements on the bank statement" satisfies the objective of:

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

To test for overstatement cutoff amounts when auditing accounts payable,the auditor should trace receiving reports issued before year-end to related vendors' invoices to make sure they are not recorded as accounts payable.

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

An auditor is using audit sampling to test transactions in the acquisition and payment cycle.She would normally set the tolerable exception rate at what level?

Failure to record the acquisition of goods is a violation of which audit objective?

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

Which of the following business functions is not considered to be part of the acquisitions class of transactions?

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

The acquisition and payment cycle consists of one class of transactions.