Audit and Accounting Quiz

Which of the following accounts is not associated with the acquisition and payment cycle?

• common stock

• property, plant and equipment

• accrued property taxes

• income tax expense

Which of the following expenses is not typically evaluated as part of the audit of the acquisition and payment cycle?

• depreciation expense

• insurance expense

• estimated liability for warranties

• property tax expense

Which is not one of the tests that would be used in the audit of equipment, depreciation expense, and accumulated depreciation?

• Verify the ending balance in the asset account.

• Send confirmations to the sales personnel who sold the equipment to the company.

• Perform substantive analytical procedures.

• Verify current year acquisitions.

One of the primary objectives in examining the repairs and 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.

Which balance-related audit objective is not relevant to an audit of prepaid expenses?

• rights

• accuracy

• detail tie-in

• realizable value

Receipt of ordered materials by the receiving department will generate the completion of a form called the

• bill of lading.

• receiving report.

• materials requisition.

• inventory acquisition summary.

_______ is normally characterized as a difficult and complex account to audit.

• Property, plant and equipment

• Cash

• Inventory

• Prepaid insurance

Inventory is a complex area to audit for all except which of the following reasons?

• Inventory is often in different locations.

• There are several acceptable valuation methods and some entities use different methods for different types of inventory.

• Inventory is often the largest account on the balance sheet.

• Inventory valuation includes few estimates.

In most manufacturing companies, the inventory and warehousing cycle begins with the

• receipt of a customer's order.

• completion of production of a customer's order.

• initiation of production of a customer's order.

• acquisition of raw materials for production.

______ accumulate costs by individual jobs as material is issued into production and labor costs are incurred.

• Just-in-time production systems

• Job cost systems

• Process cost systems

• Manufacturing systems