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

In determining the reasonableness of the client's amount for depreciation expense the auditor is primarily concerned that the client has followed a consistent policy and the calculations are correct.Which of the following audit objectives best addresses the above concerns?

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?

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

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?

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.

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

Depreciation expense results from the allocation of accounting data rather than discrete transactions.

The audit procedure "foot the schedule of fixed assets acquisitions and trace the total to the general ledger" relates most closely to the completeness objective for fixed assets acquisitions.

Which balance-related audit objective is not relevant to an audit of prepaid expenses?

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

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?

The audit procedures used to verify accrued liabilities differ from those employed for the verification of accounts payable because:

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.

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.

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?

Explain the audit objective allocation and why it is important to have accurate allocation within the financial statements, particularly for property, plant, and equipment

The test of details of balances procedure to "examine vendors' invoices of closely related accounts such as repairs to uncover items that should be property, plant, and equipment" satisfies the audit objective of:

Completeness and existence are the auditor's primary objectives in auditing manufacturing equipment.

The most important audit objective for depreciation expense is detail tie-in.

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