Deck 8 Flashcards

1
Q

In establishing the existence and ownership of long-term investments in the form of publicly traded stock, an auditor most likely would inspect the securities or

A

Confirm the number of shares owned that are held by an independent custodian

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2
Q

In testing long-term investments, an auditor ordinarily would use analytical procedures to ascertain the reasonableness of the

A

Completeness of recorded investment income

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3
Q

To satisfy the valuation assertion when auditing an investment accounted for by the equity method, an auditor most likely would

A

Examine the audited financial statements of the investee company

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4
Q

A client has a large and active investment portfolio that is kept in a bank safe deposit box. If the auditor is unable to count the securities at the balance sheet date, the auditor most likely will

A

Request the client to have the bank seal the safe deposit box until the auditor can count the securities at a subsequent date.

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5
Q

An auditor testing long-term investments would ordinarily use analytical procedures to ascertain the reasonableness of the

A

Completeness of recorded investment income

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6
Q

In testing for unrecorded retirements of equipment, an auditor most likely would

A

Select items of equipment from the accounting records and then locate them during the plant tour

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7
Q

Determining that proper amounts of depreciation are expensed most likely provides assurance about which management assertion about account balances related to fixed assets at the end of the period?

A

Valuation and allocation

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8
Q

Which of the following procedures would an auditor most likely complete to test the existence assertion of property, plant and equipment?

A

Obtaining a listing of all current-year additions, vouching significant additions to original invoices, and determining that they have been placed in service.

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9
Q

An analysis of which of the following accounts would best aid in verifying that all fixed assets have been capitalized

A

Repairs and maintenance

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10
Q

When auditing prepaid insurance, an auditor discovers that the original insurance policy on plant equipment is not available for inspection.
The policy’s absence most likely indicates the possibility of a(n)

A

Lien on the plant equipment

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11
Q

When using confirmations to provide evidence about the completeness assertion for accounts payable, the appropriate population most likely would be

A

Vendors with whom the entity has previously done business

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12
Q

procedures would an auditor least likely perform before the balance sheet date?

A

Confirmation of accounts payable

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13
Q

Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities

A

Vouch a sample of cash disbursements recorded just after year end to receiving reports and vendor invoices

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14
Q

When searching for unrecorded liabilities at year end, an auditor most likely would examine

A

Cash disbursements recorded in the period subsequent to year end.

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15
Q

In auditing accounts payable, an auditor’s procedures most likely would focus primarily on management’s assertion of

A

Completeness.

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16
Q

Which of the following procedures would an auditor most likely perform in searching for unrecorded payables?

A

Compare cash payments occurring after the balance sheet date with the accounts payable trial balance.

17
Q

Which of the following audit procedures is best for identifying unrecorded trade accounts payable?

A

Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period.

18
Q

An auditor’s program to examine long-term debt most likely would include steps that require

A

Correlating interest expense recorded for the period with outstanding debt

19
Q

In auditing long-term bonds payable, an auditor most likely would

A

Compare interest expense with the bond payable amount for reasonableness

20
Q

When control risk is assessed as low for assertions related to payroll, substantive tests of payroll balances most likely would be limited to applying analytical procedures and

A

Recalculating payroll accruals.