Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Question
Chapter 15, Problem 5RQ
To determine
Provide the source of information that the auditor should use in preparing the working paper analysis of notes payable.
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Which of the following is the best audit procedure for determining the existence of unrecorded liabilities?a. Examine confirmation requests returned by creditors whose accounts are on a subsidiary trial balance of accounts payable.b. Examine a sample of cash disbursements in the period subsequent to year-end.c. Examine a sample of invoices a few days prior to and subsequent to the year-end to ascertain whether they have been properly recorded.d. Examine unusual relationships between monthly accounts payable and recorded purchases.
Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities? *A. Scan the cash disbursements entries recorded just before year end for indications of unusual transactions.B. Compare a sample of purchase orders issued just after year end with the year-end accounts payable trial balance.C. Obtain a copy of the receiving report until year end and its related sales invoice and trace them to the purchases journal.D. Compare the entries recorded in the purchases journal and the cash disbursements journal just before year end.
Which of the following provides the highest-quality evidence regarding the Valuation of recorded accounts payable?
Question 5 options:
Inspecting invoices for all cash disbursements during the year.
Performing analytical procedures.
Confirming balances with creditors and suppliers.
Recalculating the balance of accounts payable.
Chapter 15 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 15 - What does the trust indenture used by a...Ch. 15 - Long-term creditors often insist upon placing...Ch. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQ
Ch. 15 - Mansfield Corporation has outstanding an issue of...Ch. 15 - Prob. 12RQCh. 15 - Prob. 13RQCh. 15 - What do you consider to be the most important...Ch. 15 - What is the primary responsibility of an...Ch. 15 - In the audit of a small corporation that issues...Ch. 15 - Prob. 17RQCh. 15 - Prob. 18RQCh. 15 - Prob. 19RQCh. 15 - Corporations sometimes issue their own capital...Ch. 15 - Prob. 21RQCh. 15 - Prob. 22RQCh. 15 - Prob. 23RQCh. 15 - Prob. 24RQCh. 15 - Prob. 25RQCh. 15 - Prob. 26RQCh. 15 - Prob. 27QRACh. 15 - Prob. 28QRACh. 15 - Prob. 29QRACh. 15 - You are retained by Columbia Corporation to audit...Ch. 15 - Prob. 31QRACh. 15 - Prob. 32AOQCh. 15 - Prob. 32BOQCh. 15 - Prob. 32COQCh. 15 - Prob. 32DOQCh. 15 - Prob. 32EOQCh. 15 - When a client uses paper stock certificates, an...Ch. 15 - Prob. 32GOQCh. 15 - The auditors can best verify a clients bond...Ch. 15 - Prob. 32IOQCh. 15 - All corporate capital stock transactions should...Ch. 15 - Prob. 32KOQCh. 15 - Prob. 32LOQCh. 15 - Prob. 32MOQCh. 15 - Prob. 32NOQCh. 15 - Prob. 32OOQCh. 15 - An auditor most likely would inspect loan...Ch. 15 - Prob. 32QOQCh. 15 - Match the following definitions (or partial...Ch. 15 - Prob. 34PCh. 15 - Prob. 35PCh. 15 - Prob. 36PCh. 15 - Prob. 37P
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- An auditor is likely to perform each of the below procedures to obtain evidence regarding the potential understatement of accounts payable at year-end (i.e., the Completeness assertion) except… Question options: Inspect purchase orders and receiving reports for accounts payable recorded at year-end. Inspect the open invoice file for invoices to be paid after year-end. All options describe procedures that can be used to identify a potential understatement of accounts payable. Analyze cash disbursements made during the first few weeks of the subsequent year and inspect supporting documentation for each disbursement.arrow_forwardThe auditors have determined that each of the following objectives will be a part of the audit of SSC Corporation. While several procedures will ordinarily address an audit objective, select the procedure most directly related to the audit objective. Each procedure may be used once, more than once, or not at all. 1. All receivables that should be recorded are recorded as of year-end. 2. Recorded receivables are at appropriate net realizable values. 3. Recorded receivables exist. 4. The client has rights to recorded year-end receivables. 5. The presentation and disclosure of receivables are adequate. Trace a sample of sales invoiced from late in December to the sales journal and to postings in accounts receivable and sales amounts. Review the aged trial balance for significant past due accounts. Review board of director minutes and underlying contracts and sales terms with customers. Vouch year-end accounts…arrow_forwardWhich of the following would provide an auditor with the most reliable evidence reguarding the existence of accounts receivable? A. A copy of the invoice sent to the customer. B. Acopy of the customer's sales order held by the client. C. An accounts receivable confirmation received by the auditor from the client's customer. D. An aging schedule showing the composition of the year-end-accounts receivable balance.arrow_forward
- Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities? O Compare a sample of purchase orders issued just after year-end with the year-end accounts payable trial balance. Trace a sample of accounts payable entries recorded just before year-end to the unmatched receiving report file. O Scan the cash disbursements entries recorded just before year-end for indications of unusual transactions. O Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices.arrow_forwardWhich 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. B. Compare a sample of purchase orders issued just after year-end with the year-end accounts payable balance. C. Scan the cash disbursement entries recorded just before year end for indications of unusual transactions. D. Vouch a sample of accounts payable entries recorded just before year end to the unmatched receiving report file.arrow_forwardWhen an auditor sends out bank confirmations at the year-end audit, they are performing a(n) O analytical procedure. O test of the details of balances. O key item test. O test of the details of transactions.arrow_forward
- For each of the following audit procedures, state which type of evidence-gathering technique is being used: (1) inspection or (2) computation or (3) confirmation or (4) analytical procedures or (5) enquiries or (6) observation. Agreeing the total of the accounts receivable subsidiary ledger to the accounts receivable general ledger Discussing the adequacy of the allowance for doubtful debts with the credit manager. Comparing the current year gross margin with the gross margin for the last four years. Examining a new machine to ensure that this major acquisition was Watching the client’s warehouse personnel count the raw materials Performing test counts of the warehouse personnel’s count of the raw Obtaining a letter from the client’s solicitor indicating that there were no lawsuits in progress against the Tracing the prices used by the client’s billing program for pricing sales invoices to the client’s approved price Sending a written request to the client’s customers requesting that…arrow_forwardThe audit step most likely to reveal the existence of contingent liabilities is(1) a review of vouchers paid during the month following the year-end.(2) mortgage-note confirmation.(3) accounts payable confirmations.(4) an inquiry directed to legal counsel.arrow_forwardDetermine the following as a result of your audit:a. What is the correct balance of the accounts receivable as of June 30, 2022? b. What is the balance of the allowance for bad debts as of June 30, 2022? c. What is the balance of bad debts expense in its income statement for year ended June 30, 2022?arrow_forward
- Milton Chambers CIA was retained by Hall Corporation to perform an audit of its financial statements for the year ending December 31. In a preliminary meeting with company officials, Chambers learned that the corporation customarily accepted numerous notes receivable from its customers. At December 31, the client company’s controlled provided Chamber with a list of the individual notes receivable owned at that date. The list showed for each note the date of the note, amount, interest rate, maturity date, and name and address of the maker. After a careful consideration of the internal control relating to notes receivable, Chambers turned his attention to the list of notes receivable provided to him by the controller. Chambers proved the footing of the list and determined that the total agreed with the general ledger control account for notes receivable and also with the amount shown in the balance sheet. Next he selected 20 of the larger amounts on the list of notes receivable for…arrow_forwardWorking papers document the audit evidence collected by the auditors during the financial statement audit. The lead schedule for accounts payable will appear at the beginning of the accounts payable section of the audit file. Which of the following would be included on the lead schedule? (Several choices may be correct.) ✔ Pre-adjusted current year's balance and prior year's balance ☐ Details of transactions tested for payables ☐ Conclusion reached on the overall opinion of the balance in accounts payable ✓ Agreement of current year's balance to payables balance on trial balance ✓ Difference between pre-adjusted balance and prior year balance ☐ Documentation showing the vouching of specific accounts payable balancesarrow_forwardAn auditor is required to confirm accounts receivable if the accounts receivable balances area. Older than the prior year.b. Material to the financial statements.c. Smaller than expected.d. Subject to valuation estimates.arrow_forward
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