audit ch8

When testing other accrued liabilities, auditors may independently calculate the amount and ______ it to management's estimate.

compare

Accounts payable _______ can be mailed to vendors from whom substantial purchases have been made.

confirmations

_____considering information about the client and its environment, the auditors must assess the risks of material misstatement related to assertions about inventory.

After

Which of the following would the auditor NOT be testing for by examining lease agreements?

Estimates

The entity has legal right to property and equipment acquired during the year.

Examine deeds and title insurance certificates.

Levels of authority in the manufacturing process need to be clearly

communicated

Recorded property and equipment represent assets that actually exist at the balance-sheet date.

Physically examine all major property and equipment additions

Net property and equipment are properly valued at the balance-sheet date

Review the provision for depreciation expense and determine whether depreciable lives and methods used in the current year are consistent with those used in the prior year.

When searching for unrecorded liabilities, the auditors consider transactions recorded _____ year-end.

after

Retirements may also be tested for ________ and supporting work orders.

authorization

Auditors test effectiveness of controls to ensure they can justify their planned levels of ______ risk.

control

Inventories are often a large _____ asset of a company's balance sheet

current

As repairs on warranty items take place, the accrual account is ________

debited

Tax guidelines do not allow the ______ of the accrual for warranty claims

deduction

Auditors must confirm that the ____________ of property, plant, and equipment agree with the general ledger.

detail ledgers

The determination of the value of ending inventory ____ affects net income.

directly

When all of a company's products are sold with warranties, the balance in the accrual account should move ____ the balance in sales

directly with

select major additions for the year and a random sample of other assets and inspect physical presence

existence

Purchasing and cash disbursements can provide lots of opportunity for ______ by employees

fraud

Purchasing and cash disbursements can provide opportunity for ______ by employees.

fraud

It is important for the auditor to verify that the controls described by the employees during the auditor's survey of controls over property, plant, and equipment have actually been _____.

implemented

After obtaining an understanding of the client and its environment, auditors must identify the ______ risks related to the accounts.

inherent

If purchasing agents accept _______, the entire purchasing cycle is compromised.

kickbacks

Income taxes withheld from employees but not yet submitted to the government are considered to be a(n) _______.

liability

When testing customer deposits, auditors typically review a(n) ______ of the individual deposits.

list

A commitment to competence with respect to plant personnel is important to ensure that the ______ process is both effective and efficient.

manufacturing

When auditors find unrecorded liabilities, before adjusting they must consider _______.

materiality

Inventories with a high risk of ______ may be warranted as a significant risk.

obsolescence

An important step of testing controls is comparing quantity and _______ in the invoice, purchase order, and receiving report

price

With respect to auditing product warranty accruals, auditors should be alerted to changes in the client's _______ sold.

products

When testing controls around inventory, auditors are considering the ________transaction cycle

purchasing

To gain overall assurance as to the reasonableness of accounts payable, the auditor may consider ________.

ratios

Audit procedures for consignment inventory could include a comparison of the physical inventory with the client's _________.

records

Federal and state governments do not specify the exact _____ to be maintained, but do specify the amounts to be withheld.

records

A summary analysis of the property accounts indicates additions and

retirements

inspect title document for auto and real estate purchases

rights

study loan documents for for terms and securities of loa s obtained for purchase of ppe

rights and obligations

Auditors need to compare the percentage of claims accrued to current-year ______.

sales

Auditors need to consider _____ terms for determining ownership and whether a liability should be recorded.

shipping

Auditors need to confirm that the ______ ledgers agree in total to the general ledgers.

subsidiary

Auditors need to test ______ from construction in progress to property.

transfers

The accounting profession allows various methods for the _______ of inventory.

valuation

for a sample of capitalised PPE examine construction work orders in detail

valuation

Auditors may _______ the beginning balance of plant assets by reference to the prior-year audit.

verify