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

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

The failure to capitalize a permanent asset,or the recording of an asset acquisition at the improper amount,affects the balance sheet:

The auditor needs to gain reasonable assurance that the equipment accounts in the fixed asset master file are not understated.Which of the following accounts would most likely be reviewed in making that determination?

The auditor must know the client's capitalization policies to determine whether acquisitions are:

When performing the test of details of balances,the balance-related audit objective of classifications is closely related to the objective of:

Which of the following tests are typically not necessary when auditing a client's schedule of recorded disposals?

Typically,analytical procedures are the primary means of verifying income statement accounts resulting from allocations.

When auditors verify accrued property taxes two audit objectives are especially significant.These are:

The auditor's starting point for verifying disposals of property,plant,and equipment is the:

________ expense is rarely analyzed unless analytical procedures indicate high potential for material misstatement.

Improperly classifying a fixed asset by recording the amount in the repairs and maintenance expense account will have an effect on which of the following financial statements until the asset would normally have been depreciated?

Property,plant,and equipment is normally audited in a different manner than current asset accounts.State three reasons why this is so,and discuss the differences in how property,plant,and equipment is audited compared to current assets.

One of the primary objectives in examining the repairs and maintenance accounts is to obtain evidence that:

The most effective and efficient audit approach in the examination of the income statement would be which of the following?

Which of the following would generally not be a component of the audit of the acquisition and payment cycle?

The starting point for the verification of current-year acquisitions of property,plant,and equipment is normally a client-prepared schedule of all acquisitions recorded in the general ledger during the year.

Recording an acquisition of a fixed asset at an improper amount affects the balance sheet until the company disposes of the asset,but the income statement is not affected.

Because the failure to record disposals of property,plant,and equipment can significantly affect the financial statements,the search for unrecorded disposals is essential.Which of the following is not a procedure used to verify disposals?

When auditing acquisitions of property,plant,and equipment,the auditor's review of lease and rental agreements most closely relate to the cutoff objective.

The company's choices for determining the fixed asset's useful life and residual value impact the amount of depreciation recorded.