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

Depreciation expense is normally verified as a part of tests of details of balances rather than as part of tests of controls or substantive tests of transactions.

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

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?

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

Income statement accounts resulting from allocations are typically verified as a part of:

Describe the audit procedures used to verify the accuracy and detail tie-in objectives for prepaid insurance.

Which of the following audit procedures would be the most correct in determining the audit objective of existence for the equipment account in the fixed asset master file?

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

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

The audit of insurance expense is normally limited to analytical procedures and a brief test of whether charges to insurance expense arose from credits to prepaid insurance.

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?

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

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

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

The emphasis in auditing manufacturing equipment is on the verification of current-period disposals and acquisitions.

You are the in-charge auditor for a long-term client. Which of the following is not a category of tests commonly associated with the audit of manufacturing equipment?

In performing expense account analysis the focus is on substantive tests of transactions. How do these tests of transactions differ from tests to assess control risk.

Which of the following expenses is not typically evaluated as part of the audit of the acquisition and payment cycle?

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.

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