Exam 14: Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditors can usually gather sufficient,competent evidence on prepaid insurance by performing substantive analytical procedures.Why is this?

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Question 1

Correct Answer:

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The audit of prepaid insurance should ordinarily take a relatively small amount of audit time because the balance in prepaid insurance is normally immaterial,there are ordinarily few transactions made during the year,and these transactions are ordinarily not complex.

Which of the following is the most important control activity over acquisitions of property,plant,and equipment?

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Question 2

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Testing a sample of repairs and maintenance items to ensure that they were properly classified as repairs as opposed to property,plant,and equipment tests which of the following assertions for the property,plant,and equipment account?

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Question 3

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To achieve effective control over fixed asset additions,a company should establish activities that require

(Multiple Choice)

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Question 4

By selecting a sample of additions to property,plant,and equipment and then examining the related vendor invoices,the auditor is testing which of the following assertions for property,plant,and equipment?

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Question 5

In testing for unrecorded retirements of equipment,an auditor most likely would

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Question 6

Prepaid expenses provide economic benefit for longer than a year.

(True/False)

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Question 7

In testing plant and equipment balances,an auditor examines new additions listed on an analysis of plant and equipment.This procedure most likely obtains evidence concerning management's assertion of

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Question 8

Which of the following constitutes a control weakness related to factory equipment?

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Question 9

Recomputing the unexpired portion of insurance policies in effect tests which of the following assertions are for prepaid insurance?

(Multiple Choice)

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Question 10

Property,plant,and equipment is often a significant portion of a company's assets.Describe the inherent risk factors that can affect the audit of this account.

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Question 11

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

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Question 12

Equipment acquisitions that are misclassified as maintenance expenses most likely would be detected by a control activity that provides for

(Multiple Choice)

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Question 13

Which of the following explanations most likely would satisfy an auditor who questions management about significant debits to the accumulated depreciation accounts?

(Multiple Choice)

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Question 14

Substantive analytical procedures should not be used in the audit of property,plant,and equipment.

(True/False)

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Question 15

A normal audit procedure is to analyze the current year's repairs and maintenance accounts to provide evidence in support of the audit proposition that

(Multiple Choice)

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Question 16

In auditing intangible assets,an auditor most likely would review or recompute amortization and determine whether the amortization period is reasonable in support of management's financial statement assertion of

(Multiple Choice)

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Question 17

The auditor is least likely to learn of retirement of equipment through which of the following?

(Multiple Choice)

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Question 18

There are a number of important disclosure items to consider when auditing the property management process.List two.Where in the financial statements can some of the disclosures relating to property,plant,and equipment be found?

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Question 19

When there are numerous property and equipment transactions during the year,an auditor planning to set control risk at the minimum level usually plans to obtain an understanding of internal control and to perform

(Multiple Choice)

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Question 20

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Exam 14: Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditors can usually gather sufficient,competent evidence on prepaid insurance by performing substantive analytical procedures.Why is this?

Which of the following is the most important control activity over acquisitions of property,plant,and equipment?

Testing a sample of repairs and maintenance items to ensure that they were properly classified as repairs as opposed to property,plant,and equipment tests which of the following assertions for the property,plant,and equipment account?

To achieve effective control over fixed asset additions,a company should establish activities that require

By selecting a sample of additions to property,plant,and equipment and then examining the related vendor invoices,the auditor is testing which of the following assertions for property,plant,and equipment?

In testing for unrecorded retirements of equipment,an auditor most likely would

Prepaid expenses provide economic benefit for longer than a year.

In testing plant and equipment balances,an auditor examines new additions listed on an analysis of plant and equipment.This procedure most likely obtains evidence concerning management's assertion of

Which of the following constitutes a control weakness related to factory equipment?

Recomputing the unexpired portion of insurance policies in effect tests which of the following assertions are for prepaid insurance?

Property,plant,and equipment is often a significant portion of a company's assets.Describe the inherent risk factors that can affect the audit of this account.

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

Equipment acquisitions that are misclassified as maintenance expenses most likely would be detected by a control activity that provides for

Which of the following explanations most likely would satisfy an auditor who questions management about significant debits to the accumulated depreciation accounts?

Substantive analytical procedures should not be used in the audit of property,plant,and equipment.

A normal audit procedure is to analyze the current year's repairs and maintenance accounts to provide evidence in support of the audit proposition that

In auditing intangible assets,an auditor most likely would review or recompute amortization and determine whether the amortization period is reasonable in support of management's financial statement assertion of

The auditor is least likely to learn of retirement of equipment through which of the following?

There are a number of important disclosure items to consider when auditing the property management process.List two.Where in the financial statements can some of the disclosures relating to property,plant,and equipment be found?

When there are numerous property and equipment transactions during the year,an auditor planning to set control risk at the minimum level usually plans to obtain an understanding of internal control and to perform

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning,Types of Audit Tests,and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,and Internal Auditing Services

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