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

The auditor's main objectives in the verification of the sale,trade-in,or abandonment of equipment are to gather sufficient appropriate evidence that all disposals are ________ and at the ________.

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

The auditor needs to be aware that most users of financial statements rely most heavily on the ________ for making decisions.

When an auditor recomputes the unexpired portion of prepaid insurance,they are satisfying which audit objective?

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

When auditing accrued property taxes:

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.

Which of the following is an analytical procedure to determine if there is idle equipment or equipment that was disposed of but not written off?

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.

Describe the two tests auditors can perform to test for the existence and omissions of insurance policies in force.

The primary characteristic that distinguishes property,plant,and equipment from inventory,prepaid expenses,and investments is the intention to use property,plant,and equipment as a part of the operations of the client's business over their expected life.

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

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

Insurance expense for the period is a function of which of the following?

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

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

Tests of controls provide an indication of the likelihood of misstatements in both the income statement and the balance sheet,simultaneously.

The source of debits in the equipment account is the:

When auditing disposals of property,plant,and equipment,the search for unrecorded disposals is essential.State the four audit procedures frequently used for verifying disposals.

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?