1- Which is not the reason that maintenance expense should be examined?Maintenance expense can be signification for companies in certain industriesMaintenance parts that are purchased should have the best qualityCapitalization of maintenance expense is often used for fraudulent financial reportingPotential kickbacks during purchase of maintenance parts 2- To verify the value of Apple stock held by client and classified as trading securities, auditors need toCheck public website for the stock price at the day when auditors arrive at the clientCheck the original purchasing documents of the stockCheck public website for the stock price at the day of the audit period endCheck the original purchasing documents of the stocks as well as the payment record from the bank3- Which of the following statements about auditing cash account is trueAuditors may confirm with the bank whether there are changes in the terms of the bank loanPetty cash is usually not examined because the amount is usually lowAuditors usually obtain bank statements that is printed out by their clientBanks are responsible for the ending balance of deposits if they respond to auditors’ bank confirmation4- What do auditors do if a positive confirmation for accounts receivableDouble check the monthly statements sent to the customerSend another confirmation, and if still no receive, examine the cash receipts from this very the customer after period endDelete this customer from sample list and pick another customer to send confirmation so the sample size is the sameCall the customer to obtain an oral confirmation5- Which of the following audit procedures does NOT address exist receivables and salesGoing through the prenumbered bill of landing to examine whether any bills are missingConfirm balances of unpaid invoices with customersExamine the subsequent cash from the customer after period endExamine the bills of landing that are associated with the recorded sales

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1- Which is not the reason that maintenance expense should be examined?

Maintenance expense can be signification for companies in certain industries
Maintenance parts that are purchased should have the best quality
Capitalization of maintenance expense is often used for fraudulent financial reporting
Potential kickbacks during purchase of maintenance parts

2- To verify the value of Apple stock held by client and classified as trading securities, auditors need to

Check public website for the stock price at the day when auditors arrive at the client
Check the original purchasing documents of the stock
Check public website for the stock price at the day of the audit period end
Check the original purchasing documents of the stocks as well as the payment record from the bank

3- Which of the following statements about auditing cash account is true

Auditors may confirm with the bank whether there are changes in the terms of the bank loan
Petty cash is usually not examined because the amount is usually low
Auditors usually obtain bank statements that is printed out by their client
Banks are responsible for the ending balance of deposits if they respond to auditors’ bank confirmation

4- What do auditors do if a positive confirmation for accounts receivable

Double check the monthly statements sent to the customer
Send another confirmation, and if still no receive, examine the cash receipts from this very the customer after period end
Delete this customer from sample list and pick another customer to send confirmation so the sample size is the same
Call the customer to obtain an oral confirmation

5- Which of the following audit procedures does NOT address exist receivables and sales

Going through the prenumbered bill of landing to examine whether any bills are missing
Confirm balances of unpaid invoices with customers
Examine the subsequent cash from the customer after period end
Examine the bills of landing that are associated with the recorded sales

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