One unique characteristic of the capital acquisition and repayment cycle is that relatively few transactions affect the account balances, but each transaction is often highly material in amount.

The capital acquisition and repayment cycle is a transaction cycle that involves acquiring capital resources and repaying the capital. Capital resources can come in the form of interest-bearing debt and owners' equity.  The acquisition and payment cycle is made up of two groups of transactions: the acquisition class and the cash disbursements. The acquisition class typically involves a debit to inventory or a cost and a credit to accounts payable. The cash disbursements class typically involves a debit to accounts payable and a credit to cash.  The five phases of the acquisition and payment... Show more

The capital acquisition and repayment cycle is a transaction cycle that involves acquiring capital resources and repaying the capital. Capital resources can come in the form of interest-bearing debt and owners' equity. 

The acquisition and payment cycle is made up of two groups of transactions: the acquisition class and the cash disbursements. The acquisition class typically involves a debit to inventory or a cost and a credit to accounts payable. The cash disbursements class typically involves a debit to accounts payable and a credit to cash. 
The five phases of the acquisition and payment process are: Requisition for goods or services, Purchase of goods or services according to company policies, Receipt of goods or services, Approval of items for payment, and Cash disbursements. 

The audit of the capital acquisition and repayment cycle may include:
Comparing individual notes outstanding with those of the prior year
Comparing total balance in notes payable, interest expense, and accrued interest with prior-year balances 

Related Tests:

Auditing & Assurance 101 Practice Test: Audit of the Payroll and Personnel Cycle

Auditing & Assurance 101 Practice Test: Audit of the Inventory and Warehousing Cycle

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