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Auditing & Assurance 101 Practice Test: Auditing Tests in the Acquisition and Payment Cycle - Verification of Selected Accounts
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The audit of the acquisition and payment cycle involves: - Identifying business functions, transactions, accounts affected, and documents and records - Identifying potential misstatements in acquisition and payment transactions - Assessing control risk and designing tests of controls and substantive tests of transactions for acquisitions and payments  Auditors test a company's internal controls, which are the steps that a company has in place to reduce the possibility of theft, fraud, or mistakes. Auditors will pull a sample of financial transactions and review them for mistakes or signs... Show more
Auditing & Assurance 101 Practice Test: Auditing Tests in the Acquisition and Payment Cycle - Verification of Selected Accounts
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25 Questions

1. The auditor's starting point for verifying disposals of property, plant, and equipment is the:
2. Which of the following would generally not be a component of the audit of the acquisition and payment cycle?
3. The balance in the property tax expense account is most similar to:
4. A set of records for each piece of equipment that includes descriptive information, date of acquisition, original cost, current year depreciation, and accumulated depreciation is the:
5. A record of insurance policies in force and the due date of each policy is contained in the:
6. When auditing insurance expense, auditors normally rely on analytical procedures and limited testing of the debits to ensure that they arose from credits to prepaid insurance.
7. Confirmations are commonly used to verify additions of property, plant, and equipment.
8. Completeness and existence are the auditor's primary objectives in auditing manufacturing equipment.
9. The auditor is testing for unrecorded retirements/disposals of equipment. Which of the following audit procedures would the auditor most likely use?
10. The audit procedure that requires an auditor to 'foot the acquisition schedule' relates to which balance-related audit objective?
11. Insurance expense for the period is a function of which of the following?
12. Which of the following expenses is not typically evaluated as part of the audit of the acquisition and payment cycle?
13. Failure to capitalize a fixed asset at the correct amount would impact which financial statements until the company disposes of the asset?
14. The auditor is examining the accounting entries made to the accumulated depreciation account during the year and notices a significant amount of debits to the account. Which of the following provides the most logical explanation?
15. You are the in-charge auditor for a long-term client. Which of the following is not a category of tests commonly associated with the audit of manufacturing equipment?
16. One very useful method of auditing depreciation is to use an analytical procedure to test for reasonableness.
17. The most effective and efficient audit approach in the examination of the income statement would be which of the following?
18. You are auditing the acquisition and payment cycle and the presence of excessive recurring losses on retired assets. You may conclude that:
19. Changing circumstances may require a change in the useful life of an asset. When this occurs, it involves a change in:
20. The company's choices for fixed asset on the assets useful life and residual value impact the amount of depreciation recorded.
21. Which of the following explanations might satisfy an auditor who discovers significant debits to an accumulated depreciation account?
22. Ordinarily, if you are auditing a continuing client, it is unnecessary to test the accuracy objective or the classification objective for fixed assets acquired in prior years.
23. A major consideration in verifying the ending balance in fixed assets is the possibility of existing legal encumbrances. Tests to identify possible legal encumbrances would satisfy the audit objective of:
24. Which of the following would indicate a deficiency in internal controls in the acquisition and payment cycle?
25. Which of the following audit procedures would be least likely to lead the auditor to find an unrecorded fixed asset disposal?

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