Chapter 19 Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts
6 views 0 purchase
Course
Auditing and Assurance Services 14th Edition
Institution
Auditing And Assurance Services 14th Edition
Chapter 19 Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts
Auditing and Assurance Services 14th Edition Test Bank
chapter 19 completing the tests in the acquisition
auditing and assurance services 14th edition
chapter 19 completing the tests
auditing and assurance services 14th edition
Written for
Auditing and Assurance Services 14th Edition
Auditing and Assurance Services 14th Edition
Auditing and Assurance Services 14th Edition
All documents for this subject (17)
Seller
Follow
ExamsExpert
Reviews received
Content preview
To
To downloaddownload moremore ebooks,ebooks, slides,slides, SMSM andand TBTB visit:visit: http://testbanklancerhtp:/testbanklancer..blogspotblogspot..comcom
Auditing and Assurance Services, 14e (Arens)
Chapter 19 Completing the Tests in the Acquisition and Payment
Cycle: Verification of Selected Accounts
Learning Objective 19-1
1)Which of the following accounts is not associated with the acquisition and
payment cycle? A) Common stock
B) Property, plant and
equipment C) Accrued
property taxes
D) Income tax
expense Answer: A
Terms: Acquisition and payment cycle
Diff: Easy
Objective: LO 19-1
AACSB: Reflective thinking skills
2)Discuss the key internal controls related to the disposal of property, plant, and
equipment.
Answer: The most important internal control over the disposal of property, plant, and
equipment is the existence of a formal method to inform management of the sale, trade-
in, abandonment, or theft of recorded machinery and equipment. Another important
control to protect assets from unauthorized disposal is a provision for authorization for
the sale or other disposal of property, plant, and equipment. Finally, there should be
adequate internal verification of recorded disposals to make sure that assets are correctly
removed from the accounting records.
Terms: Acquisition and payment cycle
Diff: Easy
Objective: LO 19-1
AACSB: Reflective thinking skills
3)The auditor should keep in mind that the amount in insurance expense is a
residual amount. A) True
B) False
Answer:
A
Terms: Acquisition and payment cycle
Diff: Easy
Objective: LO 19-1
AACSB: Reflective thinking skills
, To
To downloaddownload moremore ebooks,ebooks, slides,slides, SMSM andand TBTB visit:visit: http://testbanklancerhtp:/testbanklancer..blogspotblogspot..comcom
Learning Objective 19-2
1)You are auditing the acquisition and payment cycle and the presence of excessive
recurring losses on retired assets. You may conclude that:
A) insured values are greater than book values.
B) there are a large number of fully
depreciated assets. C) depreciation charges
may by insuffient.
D) company has a policy of selling relatively new
assets. Answer: C
Terms: Acquisition and payment cycle; Excessive recurring losses on retired assets
Diff: Easy
Objective: LO 19-2
AACSB: Reflective thinking skills
2)Which of the following expenses is not typically evaluated as part of the audit of the
acquisition and payment cycle?
A) Depreciation
expense B)
Insurance expense
C) Estimated Liability for
Warranties D) Property tax
expense
Answer: C
Terms: Acquisition and payment cycle
Diff: Easy
Objective: LO 19-2
AACSB: Reflective thinking skills
3)Which of the following would generally not be a component of the audit of the acquisition
and
payment cycle?
A) Adequacy of controls over acquisitions of long-lived assets
B) Tracing disposals of long-lived assets to the Fixed Asset Master File
C) Determining the adequacy of the funds available for capital
expenditures D) Reperformance of recorded depreciation
expense
Answer: C
Terms: Acquisition and payment cycle
Diff: Easy
Objective: LO 19-2
AACSB: Reflective thinking skills
4)Normally it may be unnecessary to examine supporting documentation for each
addition to property, plant, and equipment, but it would be customary to verify:
A) all large transactions.
B) all unusual
transactions.
C) a representative sample of typical
additions. D) all three of the above.
Answer: D
Terms: Property, plant, and equipment documentation
Diff: Easy
Objective: LO 19-2
AACSB: Reflective thinking skills
, To
To downloaddownload moremore ebooks,ebooks, slides,slides, SMSM andand TBTB visit:visit: http://testbanklancerhtp:/testbanklancer..blogspotblogspot..comcom
5)The auditor must know the client's capitalization policies to determine whether
acquisitions are: A)
Recorded in accordance
with Treated consistently with
those of the preceding
GAAP year Necessary
Yes Yes Yes
B)
Recorded in accordance
with Treated consistently with
those of the preceding
GAAP year Necessary
Yes No No
C)
Recorded in accordance
with Treated consistently with
those of the preceding
GAAP year Necessary
No No No
D)
Recorded in accordance
with Treated consistently with
those of the preceding
GAAP year Necessary
Yes Yes No
Answer: D
Terms: Acquisitions; Capitalization policy
Diff: Easy
Objective: LO 19-2
AACSB: Reflective thinking skills
6)To be capitalized as part of property, plant and equipment,
assets must: A) have expected useful lives of more than one
year.
B) not be acquired for resale.
C) be useful in multiple productive capacities within the
organization. D) A and B, but not C.
Answer: D
Terms: Property, plant, and equipment; Capitalized
Diff: Easy
Objective: LO 19-2
AACSB: Reflective thinking skills
7)The primary accounting record for manufacturing equipment and other fixed
assets is the: A) depreciation ledger.
B) fixed asset master
file. C) asset
inventory.
D) equipment
roster. Answer: B
Terms: Primary accounting record for equipment
Diff: Easy
Objective: LO 19-2
AACSB: Reflective thinking skills
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ExamsExpert. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.11. You're not tied to anything after your purchase.
