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Chapter 17: Completing the Tests in the...

1 .       With respect to an internal control measure that will ensure accountability for fixed asset retirements, management should implement internal control that includes 

2 .       The auditors may conclude that depreciation charges are insufficient by noting 

3 .       Which of the following is an internal control weakness related to factory equipment?  

4 .       Which of the following controls is most likely to prevent the improper disposition of equipment?  

5 .       An auditor could most efficiently test for misclassification of capital expenditures by  

6 .       To achieve effective internal control over fixed asset additions, a company should establish procedures that require 

7 .       Which of the following is the most important internal control procedure over acquisitions of property, plant, and equipment? 

8 .       An auditor is verifying that a company owns the equipment shown in its financial statements. What is the best evidence of ownership? 

9 .       An internal control measure that will assure accountability for fixed asset retirements is a system that includes 

10 .       The controller of Excello Manufacturing, Inc. wants to use ratio analysis to identify the possible existence of idle equipment or the possibility that equipment has been disposed of without having been written off. Which of the following ratios would best accomplish this objective? 

11 .       A normal audit procedure is to analyze the current year's repairs and maintenance accounts to provide evidence in support of the audit proposition that 

12 .       Which of the following audit procedures is least likely to lead the auditor to find unrecorded fixed asset disposals? 

13 .       In the examination of property, plant, and equipment, the auditor tries to determine all of the following except the 

14 .       The auditor is most likely to seek information from the plant manager about the 

15 .       Which of the following accounts is most likely to be reviewed by the auditor to gain reasonable assurance that additions to the equipment account are not understated? 

16 .       Footing the acquisitions schedule and tracing the total to the general ledger is a test of the completeness objective. [Hint]


17 .       Verification of additions to manufacturing equipment is commonly done through confirmation. [Hint]


18 .       Verification of depreciation expense is usually conducted as part of the regular tests of controls and substantive tests of transactions in the acquisition and payment cycle. [Hint]


19 .       Because of their immateriality, accounts such as prepaid expense are often tested sufficiently by analytical procedures, so tests of details of balances are often not performed on these accounts. [Hint]


20 .       Normally, when internal control is adequate, only analytical procedures and tests to determine that charges to insurance expense resulted from credits to prepaid insurance are necessary to verify the insurance expense account balance. [Hint]


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