Exam 19: Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

The auditor is examining the accounting entries made to the accumulated depreciation account during the year and notices a significant amount of debits to the account.Which of the following provides the most logical explanation?

Free

(Multiple Choice)

5.0/5

(33)

Question 1

Correct Answer:

Verified

You are the in-charge auditor for a company who has been an audit client for several years.Which of the following is not a category of tests commonly associated with the audit of manufacturing equipment?

Free

(Multiple Choice)

4.9/5

(42)

Question 2

Correct Answer:

Verified

Discuss the key internal controls for prepaid insurance that affect the auditor's extent of testing of the prepaid insurance account.

Free

(Essay)

4.9/5

(35)

Question 3

Correct Answer:

Verified

Internal controls for prepaid insurance and insurance expense can be conveniently divided into three categories: controls over the acquisition and recording of insurance,controls over the insurance register,and controls over the charge-off of insurance expense.Controls over the acquisition and recording of insurance are a part of the acquisition and payment cycle and include proper authorization for new insurance policies and payment of insurance premiums.An insurance register,which is a record of insurance policies in force and the expiration date of each policy,is an essential control to make sure that the company has adequate insurance at all times.The control should include a provision for periodic review of the adequacy of the insurance coverage by an independent qualified person.The detailed records of the information in the insurance register should be verified by someone independent of the person preparing them.Companies often have a closely related control which is to have a standard monthly journal entry to reclassify prepaid insurance as insurance expense.

In auditing depreciation expense,one of the auditor's concerns is determining that the client's calculations are correct.In making this determination,the auditor must weigh four considerations.List these four considerations.

(Essay)

4.8/5

(31)

Question 4

Which of the following accounts is not associated with the acquisition and payment cycle?

(Multiple Choice)

4.8/5

(37)

Question 5

Changing circumstances may require a change in the useful life of an asset.When this occurs,it involves a change in:

(Multiple Choice)

4.9/5

(37)

Question 6

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

(True/False)

4.8/5

(35)

Question 7

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

(Multiple Choice)

4.7/5

(37)

Question 8

The auditor's tests for proper cutoff of current year acquisitions of property,plant,and equipment are usually done as part of accounts payable cutoff tests.

(True/False)

4.8/5

(31)

Question 9

The transportation and installation costs for a piece of equipment should be charged to an expense account.

(True/False)

4.8/5

(37)

Question 10

When auditing accrued property taxes:

(Multiple Choice)

4.8/5

(39)

Question 11

The auditor should keep in mind that the amount in insurance expense is a residual amount.

(True/False)

4.9/5

(39)

Question 12

To be capitalized as part of property,plant and equipment,assets must:

(Multiple Choice)

4.8/5

(35)

Question 13

Which of the following accounts would normally not be a part of the acquisition and payment cycle of Prepaid Insurance?

(Multiple Choice)

4.9/5

(37)

Question 14

In connection with a review of the prepaid insurance account,which of the following audit procedures would you be least likely to use?

(Multiple Choice)

4.8/5

(41)

Question 15

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

(Multiple Choice)

4.8/5

(39)

Question 16

The audit procedure that requires an auditor to "foot the acquisition schedule" relates to which balance-related audit objective?

(Multiple Choice)

4.8/5

(33)

Question 17

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

(Multiple Choice)

4.8/5

(29)

Question 18

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

(Essay)

4.9/5

(31)

Question 19

State four of the seven specific balance-related audit objectives for property,plant,and equipment additions and,for each objective,describe one common test of details of balances.

(Essay)

4.7/5

(38)

Question 20

Showing 1 - 20 of 101

Exam 19: Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

The auditor is examining the accounting entries made to the accumulated depreciation account during the year and notices a significant amount of debits to the account.Which of the following provides the most logical explanation?

You are the in-charge auditor for a company who has been an audit client for several years.Which of the following is not a category of tests commonly associated with the audit of manufacturing equipment?

Discuss the key internal controls for prepaid insurance that affect the auditor's extent of testing of the prepaid insurance account.

In auditing depreciation expense,one of the auditor's concerns is determining that the client's calculations are correct.In making this determination,the auditor must weigh four considerations.List these four considerations.

Which of the following accounts is not associated with the acquisition and payment cycle?

Changing circumstances may require a change in the useful life of an asset.When this occurs,it involves a change in:

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

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

The auditor's tests for proper cutoff of current year acquisitions of property,plant,and equipment are usually done as part of accounts payable cutoff tests.

The transportation and installation costs for a piece of equipment should be charged to an expense account.

When auditing accrued property taxes:

The auditor should keep in mind that the amount in insurance expense is a residual amount.

To be capitalized as part of property,plant and equipment,assets must:

Which of the following accounts would normally not be a part of the acquisition and payment cycle of Prepaid Insurance?

In connection with a review of the prepaid insurance account,which of the following audit procedures would you be least likely to use?

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

The audit procedure that requires an auditor to "foot the acquisition schedule" relates to which balance-related audit objective?

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

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

State four of the seven specific balance-related audit objectives for property,plant,and equipment additions and,for each objective,describe one common test of details of balances.

The Assurance Services Market

The Audit Standards Setting Process

Audit Reports

Legal Liability Considerations for Auditors

Ethics and the Audit Profession

Audit Responsibilities and Objectives

Nature and Type of Audit Evidence

Audit Planning

Considering Materiality and Audit Risk

Considering Internal Control

Considering the Risk of Fraud

Implications of Information Technology for the Audit Process

Developing the Overall Audit Plan and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

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

Audit of the Inventory and Warehousing Cycle

Audit of the Payroll and Personnel Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Audit Completion

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

Filters