12/16/21, 10:22 AM Chapter 18 & 19 Final - Audit Flashcards | Quizlet

Chapter 18 & 19 Final - Audit Study

Social Sciences / Economics / Finance

Chapter 18 & 19 Final - Audit

Terms in this set (15)

You have been assigned to the Occurrence

accounts payable transaction
cycle as part of your auditing
responsibilities. You have
decided to vouch a sample of
entries in the accounts payable
master file to supporting
documents. Which assertion is
this test of controls most likely
to support?

Accuracy

Classification

Completeness

Occurrence

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12/16/21, 10:22 AM Chapter 18 & 19 Final - Audit Flashcards | Quizlet

Chapter 18 & 19 Final

When an acquisition is on an- Audit shipped on or before the balance sheet date. Study

FOB origin basis, the inventory

and related accounts payable
must be recorded in the
current period if the goods
were:

received prior to the balance

sheet date.

shipped on or before the

balance sheet date.

both shipped and received

prior to the balance sheet date.

paid for in advance.

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12/16/21, 10:22 AM Chapter 18 & 19 Final - Audit Flashcards | Quizlet

Chapter
A company18 & 19 Final
recorded an - Audit understate net income. Study

acquisition of merchandise and

its related liability, but failed to
include the merchandise in
ending inventory. The effect on
the financial statements was to:

understate liabilities.

understate net income.

overstate net income.

have no impact on the financial

statements since the errors
cancel each other out.

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12/16/21, 10:22 AM Chapter 18 & 19 Final - Audit Flashcards | Quizlet

Chapter 18are
When assets & being
19 Final - Audit
verified, Auditors' legal liability Study

auditors focus much of their

attention on making sure that
the accounts are not
overstated. Alternatively,
auditors focus their efforts on
understatement when auditing
liabilities. What is the primary
reason for this difference in
focus?

Auditors' legal liability

GAAP

GAAS requirements

All of these

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12/16/21, 10:22 AM Chapter 18 & 19 Final - Audit Flashcards | Quizlet

Chapter
The auditor18
has&decided
19 Final - Audit
to use Existence and completeness Study

accounts payables
confirmations when testing
substantive testing for
balances. Which two
management assertions is she
testing?

Existence and completeness

Existence and occurrence

Existence only

Completeness only

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12/16/21, 10:22 AM Chapter 18 & 19 Final - Audit Flashcards | Quizlet

Chapter
The auditor18 & 19 Final - Audit
is performing Vendors' statements Study

substantive tests of balances

for accounts payable. What
documentation would provide
the best evidence for the
ending balance?

Vendors' invoices

Vendors' statements

Receiving reports

Purchase orders

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12/16/21, 10:22 AM Chapter 18 & 19 Final - Audit Flashcards | Quizlet

Chapter 18used
A document & 19byFinal - Audit voucher. Study

organizations to establish a
formal means of recording and
controlling acquisitions which
usually contains a package of
documents about the
acquisition is the:

voucher.

purchase order.

receiving report.

purchase requisition.

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12/16/21, 10:22 AM Chapter 18 & 19 Final - Audit Flashcards | Quizlet

Chapter 18 tests
A substantive & 19ofFinal - Audit review the acquisitions journal for large or unusual
Study

transactions for acquisitions amounts.

that would be used to provide
evidence regarding the
occurrence assertion would be
to:

compare the classification with

the chart of accounts by
referring to vendors' invoices.

recompute the clerical

accuracy on the vendors'
invoice.

review the acquisitions journal

for large or unusual amounts.

trace from a file of receiving

reports to the acquisition
journal.

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12/16/21, 10:22 AM Chapter 18 & 19 Final - Audit Flashcards | Quizlet

Chapter
Improperly18 & 19 Final
classifying - Audit
a fixed Both the income statement and the balance sheet
Study

asset by recording the amount

in the repairs and maintenance
expense account will have an
effect on which of the
following financial statements
until the asset would normally
have been depreciated?

The balance sheet

The income statement

The cash flow statement

Both the income statement and

the balance sheet

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12/16/21, 10:22 AM Chapter 18 & 19 Final - Audit Flashcards | Quizlet

Chapter
One of the 18 & 19objectives
primary Final - Audit expenditures of equipment have not been charged
Study

in examining the repairs and to expense.

maintenance accounts is to
obtain evidence that:

expenditures of equipment
have not been charged to
expense.

the actual amount recorded is

the same as the budgeted
amount.

expenditures for equipment

have been recorded in the
proper period.

revenue expenditures made on

behalf of equipment have been
recorded in the proper period.

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12/16/21, 10:22 AM Chapter 18 & 19 Final - Audit Flashcards | Quizlet

Chapter 18 &depreciation
When auditing 19 Final - Audit correctness of calculations and consistent Study

expense, the two major application of depreciation policies.

concerns related to the
accuracy audit objective are:

consistent application of
depreciation method and
useful lives.

consistent application of
depreciation method and
classification of assets.

correctness of calculations and

consistent application of
depreciation policies.

cost of the fixed asset and

useful lives.

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12/16/21, 10:22 AM Chapter 18 & 19 Final - Audit Flashcards | Quizlet

Chapter 18main
The auditor's & 19objectives
Final - inAudit recorded, correct amounts Study

the verification of the sale,

trade-in, or abandonment of
equipment are to gather
sufficient appropriate evidence
that all disposals are ________ and
at the ________.

verified, historical cost

recorded, correct amounts

accurate, proper gain or loss

amount

classified properly, net

realizable value

The audit of insurance expense True

is normally limited to analytical
procedures and a brief test of
whether charges to insurance
expense arose from credits to
prepaid insurance.

True or False

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12/16/21, 10:22 AM Chapter 18 & 19 Final - Audit Flashcards | Quizlet

Chapter 18 & 19 aFinal

Failure to capitalize fixed - Audit Both the income statement and the balance sheet
Study

asset at the correct amount

would impact which financial
statements until the company
disposes of the asset?

The balance sheet only

The income statement only

The cash flow statement only

Both the income statement and

the balance sheet

The most important audit False

objective for depreciation
expense is detail tie-in.

True or False

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