a.
Concept introduction:
To indicate: Type of audit procedure insending a written request to the client's customers requesting that they report the amount owed to the client represents.
a.
Answer to Problem 5.32P
Confirmation.
Explanation of Solution
Type of audit procedure in Sending a written request to the client's customers requesting that they report the amount owed to the client represents is confirmation. Confirmation can be internal confirmation and external confirmation. An external confirmation represents audit evidence obtained by auditor as a direct response from a third party.
b.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of auditprocedure in examining large sales invoices for a period of two days before and after year-end to determine if sales are recorded in the proper period represents.
b.
Answer to Problem 5.32P
Inspection of records or documents.
Explanation of Solution
Type of audit Examining large sales invoices for a period of two days before and after year-end to determine if sales are recorded in the proper period represents is Inspection of records or documents. Inspection involves examining the records or documents, whether internal or external, in paper form or electronic form, or other media. Inspection of records and documents provides audit evidence of varying degrees of reliability.
c.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in agreeing the total of the accounts receivable subsidiary ledger to the accounts receivable general ledger account represents.
c.
Answer to Problem 5.32P
Inspection of records or documents and reperformance.
Explanation of Solution
Type of audit procedures in agreeing the total of the accounts receivable subsidiary ledger to the accounts receivable general ledger account represents is inspection of records or documents and representation. Inspection involves examining the records or documents, whether internal or external, in paper form or electronic form, or other media. Inspection of records and documents provides audit evidence of varying degrees of reliability.
d.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in discussing the adequacy of the allowance for doubtful accounts with the credit manager represents.
d.
Answer to Problem 5.32P
Inquiry.
Explanation of Solution
Type of audit procedures in discussing the adequacy of the allowance for doubtful accounts with the credit manager represents is Inquiry. Inquiry consist of seeking information of knowledgeable person within the entity or outside of the entity. Inquiry is used throughout the audit in addition to other audit procedure.
e.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in comparing the current-year gross profit percentage with the gross profit percentage for the last four yearsrepresents.
e.
Answer to Problem 5.32P
Analytical procedure.
Explanation of Solution
Type of audit procedures in comparing the current-year gross profit percentage with the gross profit percentage for the last four years represents is Analytical procedures. Analytical procedures consist of evaluation of financial information made by a study or financial and non-financial data.
f.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in examining a new plastic extrusion machine to ensure that this major acquisition was received represents.
f.
Answer to Problem 5.32P
Inspection of tangible asset.
Explanation of Solution
Type of audit procedures in examining a new plastic extrusion machine to ensure that this major acquisition was received represents is Inspection of tangible data. Inspection involves examining the records or documents, whether internal or external, in paper form or electronic form, or other media. Inspection of records and documents provides audit evidence of varying degrees of reliability.
g.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in watching the client's warehouse personnel count the raw materials inventory represents.
g.
Answer to Problem 5.32P
Observation.
Explanation of Solution
Type of audit procedures in watching the client's warehouse personnel count the raw materials inventory represents is observation. Observation consists of looking at a process or procedure performed by others.
h.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in performing test counts of the warehouse personnel's count of the raw materialrepresents.
h.
Answer to Problem 5.32P
Reperforming.
Explanation of Solution
Type of audit procedures in performing test counts of the warehouse personnel's count of the raw material represents is Reperforming. Reperforming involves the auditor’s independent execution of procedures or controls that were originally performed as part of the entity’s internal control.
i.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in obtaining a letter from the client's attorney indicating that there were no lawsuits in progress against the clientrepresents.
i.
Answer to Problem 5.32P
Confirmation.
Explanation of Solution
Type of audit procedures in obtaining a letter from the client's attorney indicating that there were no lawsuits in progress against the client represents is confirmation. Confirmation can be internal confirmation and external confirmation. An external confirmation represents audit evidence obtained by auditor as a direct response from a third party.
j.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in tracing the prices used by the client's billing program for pricing sales invoices to the client's approved price listrepresents.
j.
Answer to Problem 5.32P
Inspection of records or documents and reperforming.
Explanation of Solution
Type of audit procedures in tracing the prices used by the client's billing program for pricing sales invoices to the client's approved price list represents is inspection of records or documents and representation. Inspection involves examining the records or documents, whether internal or external, in paper form or electronic form, or other media. Inspection of records and documents provides audit evidence of varying degrees of reliability.
k.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures reviewing the general ledger for unusual
k.
Answer to Problem 5.32P
Scanning.
Explanation of Solution
Type of audit procedures reviewing the general ledger for unusual adjusting entries represents is scanning. Scanning is checking the data’s again for mistakes.
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Chapter 5 Solutions
AUDITING LL W/ CONNECT <C>
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- For the calculation of equity weights, the Blank______ value is used. Multiple choice question. historical average book marketarrow_forwardA firm needs to raise $950,000 but will incur flotation costs of 5%. How much will it pay in flotation costs? Multiple choice question. $50,000 $55,000 $55,500 $47,500arrow_forwardQuestion Mode Multiple Choice Question The issuance costs of new securities are referred to as Blank______ costs. Multiple choice question. exorbitant flotation sunk reparationarrow_forward
- What will happen to a company's tax bill if interest expense is deducted? Multiple choice question. The company's tax bill will increase. The company's tax bill will decrease. The company's tax bill will not be affected. The company's tax bill for the next year will be affected.arrow_forwardThe total market value of a firm is calculated as Blank______. Multiple choice question. the number of shares times the average price the number of shares times the future price the number of shares times the share price the number of shares times the issue pricearrow_forwardAccording the to the Blank______ approach for project evaluation, all proposed projects are placed into several risk categories. Multiple choice question. pure play divisional WACC subjectivearrow_forward
- To invest in a project, a company needs $50 million. Given its flotation costs of 7%, how much does the company need to raise? Multiple choice question. $53.76 million $46.50 million $50.00 million $53.50 millionarrow_forwardWhile determining the appropriate discount rate, if a firm uses a weighted average cost of capital that is unique to a particular project, it is using the Blank______. Multiple choice question. economic value added method pure play approach subjective approach security market line approacharrow_forwardWhat are flotation costs? Multiple choice question. They are the costs incurred to issue new securities in the market. They are the costs incurred to insure the payment due to bondholders. They are the costs incurred to meet day to day expenses. They are the costs incurred to keep a project in the business.arrow_forward
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