FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 18: Audit of the Acquisition and Payment Cycle: Tests of Controls and Substantive Tests of Transactions, and Accounts Payable

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

Multiple Choice

Review LaterAdd Note

Review Later

Cutoff procedures for inventory purchased should be designed by companies to assure the company that:

A) inventory owned by the company has been received.
B) inventory included in the year end inventory count has been paid.
C) inventory received before year end was recorded before year end.
D) inventory was correctly valued at year end.

Correct Answer

verified

Show Answer

Question 22

Multiple Choice

Review LaterAdd Note

Review Later

When a client uses perpetual inventory records, the tests of details of balances for inventory can be significantly reduced if the auditor believes the records are accurate. The controls over the acquisitions included in the records are normally tested as a part of the:

A) tests of controls.
B) tests of controls and tests of transactions.
C) tests of details of balances.
D) analytical procedures and tests of controls.

Correct Answer

verified

Show Answer

Question 23

Essay

Review LaterAdd Note

Discuss each of the four business functions that comprise the acquisition and payment cycle.

The auditor gets highly reliable evidence about individual transactions by examining:

You are performing the audit of Jenkins and Company. Your tests of controls and tests of transactions for accounts payable demonstrate that the controls are operating effectively. This would normally allow you to:

What typically initiates the acquisitions and payment cycle?

Match seven of the terms for documents and records (a-m) used in the acquisitions and cash disbursement cycle with the descriptions provided below (1-7): a. Purchase requisition b. Purchase order c. Receiving report d. Acquisitions journal e. Summary acquisitions report f. Vendor's invoice g. Debit memo h. Voucher i. Accounts payable master file j. Accounts payable trial balance k. Vendor's statement l. Check m. Cash disbursements journal ________ 1. A document indicating a reduction in the amount owed to a vendor because of returned goods or an allowance granted. ________ 2. A document that specifies the details of an acquisition transaction and amount of money owed to the vendor for an acquisition. ________ 3. A document prepared by the purchasing department indicating the description, quantity, and related information for goods and services that the company intends to purchase. ________ 4. A listing of the amount owed to each vendor at a point in time. ________ 5. A document used to establish a formal means of recording and controlling acquisitions; it includes a cover sheet and a package of relevant documents. ________ 6. A document used to request goods and services by an authorized employee. ________ 7. The listing or report that includes all cash payments for a given period.

You are performing an audit of Hawk Company. In evaluating the accounts payable balance you are concerned with the completeness assertion. Which of the following audit procedures best satisfy your concern?

The test of transactions which requires one to "reconcile recorded cash disbursements with the cash disbursements on the bank statement" satisfies the objective of:

When performing tests of controls or substantive tests of transactions for acquisitions, vendors' invoices are more useful than vendors' statements.

In searching for unrecorded liabilities the purpose of the audit procedure to "examine underlying documentation for subsequent cash disbursements" is to:

The extent of a search for unrecorded liabilities largely depends on:

The internal control that requires that "checks are prenumbered and accounted for" satisfies the objective of:

An auditor is gathering evidence on the completeness assertion. To do so she performs a test to verify that all goods received by the company have been recorded properly. The document population for this test would consist of all:

Discuss the key internal controls that should be present in the processing purchase orders function in the acquisitions and payment cycle.

In the course of your audit over the acquisitions cycle you need to determine whether the client billings from vendors were received by the client. You have decided to perform a sample test. The population for the sample would be comprised of:

Describe the audit procedures typically used to test for out-of-period liabilities (also referred to as the search for unrecorded accounts payable).

An auditor performs a test to determine whether all merchandise for which the client was billed was received. The population for this test consists of all:

An inventory acquisition is received late in the afternoon of December 31 after the physical inventory is completed. If the acquisition is included in accounts payable and purchases, but excluded from inventory, the result:

Smaller privately held companies may not maintain an accounts payable master file by vendor. These companies pay on the basis of: