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

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

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

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

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

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.

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

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

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

Cutoff for acquisitions of insurance is normally not a significant problem for the auditors.

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

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

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

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.

The most common audit test to verify equipment additions is to:

Confirmations are commonly used to verify additions of property, plant, and equipment.

One of the reasons that auditors verify equipment differently from current assets is the amount of any given equipment acquisition is often material.

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?

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

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

A major consideration in verifying the ending balance in fixed assets is the possibility of existing legal encumbrances.Tests to identify possible legal encumbrances would satisfy the audit objective of: