ch08 - ch08 Student 1 The basic acquisition and expenditure activities are(1 purchasing goods and services(2 receiving the goods or services(3 recording

ch08 - ch08 Student 1 The basic acquisition and expenditure...

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ch08Student: ___________________________________________________________________________1.The basic acquisition and expenditure activities are (1) purchasing goods and services, (2) receiving the goods or services, (3) recording the asset or expense and related liability, and (4) paying the vendors. True False2.Purchases are ordered by a purchasing department that seeks the best prices and quality. True False3.Checks are signed by the accounts payable department after assembling the invoice, purchase order, and receiving report. True False4.Purchase orders are "open" from the time they are issued until the goods are received. True False5.Normally, liabilities should be recorded on the date the goods are received and accepted. True False6.Auditors' "search for unrecorded liabilities" should emphasize the large balances, especially for regular vendors. True False7.Auditors can inspect the "unmatched invoice file" and compare it to the "unmatched receiving report" file to determine whether liabilities are unrecorded. True False8.Proper separation of duties involves authorization of purchases by persons who do not have custody, recording, or reconciliation duties. True False9.If personnel in the organization are not performing their control activities very well, auditors will need to design substantive procedures to try to detect whether control failures have produced misleading financial statement account balances. True False10.If the risk of material misstatement is assessed as very low, it is likely that additional substantive procedures will be required. True False11.The emphasis is on the existence assertion because financial statement users tend to be more concerned about understated expenses and liabilities than overstated. True False12.Evidence is much easier to obtain to verify the completeness assertion for liabilities than the existence assertion for assets. True False13.The search for unrecorded liabilities should normally be performed up to the last day of fieldwork in the period following the audit client's balance sheet date. True False14.The principal goal of the physical inspection of property, plant, and equipment is to determine actual existence and condition of property. True False
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15.All pay base data (hours, job number, absences, etc.) should be approved by an employee's immediate supervisor. True False16.The main feature of custody in the payroll cycle is the possession of the payroll checks. True False17.Persons in charge of authorization and custody payroll functions should notprepare the payroll. True False18.The payroll bank account cannot be reconciled like the other bank accounts. True False19.Record keeping is performed by payroll and cost accounting personnel who do not make authorizations or distribute pay. True False
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  • Spring '12
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  • d., invoice

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