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

One of the auditor's primary objectives when auditing manufacturing equipment is completeness.

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

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?

Which of the following explanations might satisfy an auditor who discovers significant debits to an accumulated depreciation account?

Normally it may be unnecessary to examine supporting documentation for each addition to property,plant,and equipment,but it would be customary to verify:

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

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.

After the accrual and property tax expense for each piece of property has been recalculated,the totals are added and compared with the general ledger.

The estimated unpaid obligations for services or benefits that have been received before the balance sheet date are:

A record of insurance policies in force and the due date of each policy is contained in the:

In testing acquisitions the auditor needs to understand the appropriate accounting guidance related to acquisition accounting.Which of the following is not an accounting consideration for the auditor as regards to acquisition cost?

In the analysis of expense accounts,the auditor verifies transactions in specific accounts to determine whether the transactions are properly classified and accurately recorded.

You are auditing the acquisition and payment cycle and note the presence of excessive recurring losses on retired assets.You may conclude that:

Methods used to determine if there are legal encumbrances related to fixed assets include all but which of the following?

A set of records for each piece of equipment that includes descriptive information,date of acquisition,original cost,current year depreciation,and accumulated depreciation is the:

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?

In testing acquisitions,the auditor must understand the relevant accounting standards to insure the client adheres to accepted accounting practices for property,plant,and equipment.Describe three of the auditor's concerns in this area.

Depreciation amounts are determined by exchange transactions with outside parties.

Ordinarily,if you are auditing a continuing client,it is unnecessary to test the accuracy objective or the classification objective for fixed assets acquired in prior years.