Exam 8: Acquisition and Expenditure Cycle

Record keeping is performed by payroll and cost accounting personnel who do not make authorizations or distribute pay.

For the copy of the purchase order that goes to the receiving department,it is best to

Which of the following procedures is least likely to be performed before the balance-sheet date?

The ____________________________________ is the primary original record for payroll accounting.

This question requires knowledge of specific account balance assertions,general audit procedures,and trade accounts payable. You are assigned to audit the accounts payable of Green Corporation whose business is wholesale and retail trade.The company purchases products from 1,002,000 manufacturers ("vendors")and sells the products to its retail and wholesale customers.The general ledger shows the Accounts Payable control balance as of the balance-sheet date in the amount of $42 million (which is 70 percent of current liabilities,50 percent of total liabilities,and 35 percent of total liabilities and owners' equity).Green's management accountants post the summary entries from the purchases journal and from the cash disbursements journal each month to the Accounts Payable control account.The accounts payable manager gave you a detailed trial balance that lists all recorded unpaid invoices (recording date,vendor name,vendor invoice number,invoice date,and amount)subtotaled by vendor. Other members of the audit team have already decided to assess control risk at the maximum for the accounts payable work.The engagement manager gave you last year's audit working papers but said the audit plan was missing (!).Thus,the first part of your assignment is to write the audit plan for audit of the Green Corporation trade accounts payable. Required: For each of the balance assertions (existence,completeness,and valuation or and allocation),write two or more specific audit procedures designed to produce evidence related to the accounts payable balance of $42 million. (Hints: [1] For each of the three balance assertions,think about a specific assertion before you write a procedure to gather evidence.[2] Write specific procedures as adaptations of the general audit procedures: recalculation,observation,confirmation,document examination,inquiry,scanning,analytical procedures.[3] Most procedures are two-part statements: "Select a sample of...[identify the population]...and "do something"...[specify an action].)

Which of the following would not typically be a specific relevant assertion about fixed asset accounts?

Which of the following situations represents an internal control weakness in the payroll department?

If personnel in the organization are not performing their control activities very well,auditors will need to design substantive procedures to try to detect whether control failures have produced misleading financial statement account balances.

When auditing PP&E,the auditor's approach is generally to

Which of the following expense accounts would not normally be tested by listing all debits and examining any significant items?

An audit plan for accounts payable would not include which of the following procedures?

Evidence is much easier to obtain to verify the completeness assertion for liabilities than the existence assertion for assets.

A voucher typically does not have attached to it a copy of which of the following documents?

The payroll bank account cannot be reconciled like the other bank accounts.

After checks are signed for vendor invoices,why should vouchers be marked PAID or otherwise mutilated?

When verifying debits to the perpetual inventory records of a nonmanufacturing company,auditors would be most interested in examining a sample of purchase

Auditors can inspect the "unmatched invoice file" and compare it to the "unmatched receiving report" file to determine whether liabilities are unrecorded.

Which of the following accounts would most likely be reviewed by the auditor to gain reasonable assurance that additions to the equipment account are not understated?

A furniture company ordered 84 tables from a supplier.The supplier accidentally sent only 48 tables,but the receiving department at the furniture company accepted the tables.The invoice was eventually received but was for the 84 tables ordered.The furniture company paid the entire amount.Which of the following controls would have been least likely to have prevented this erroneous payment?

Matthew Corp.has changed from a system of recording time worked on clock cards to a computerized payroll system in which employees record time in and out with magnetic cards.The computerized system automatically updates all payroll records.Because of this change,