Below Are Five Audit Procedures,all of Which Are Tests of Transactions

question 105

Short Answer

Below are five audit procedures,all of which are tests of transactions associated with the audit of the acquisition and payment cycle.Also below are the six general transaction-related audit objectives and the five management assertions.For each audit procedure,indicate (1)its audit objective,and (2)the management assertion being tested.

1.Foot the purchases journal and trace the totals to the related general ledger accounts.
(1)________
(2)________
2.Recompute the cash discounts taken by the client.
(1)________
(2)________
3.Compare dates on cancelled checks with the bank cancellation date.
(1)________
(2)________
4.Trace from a sample of cancelled checks to the cash disbursements journal.
(1)________
(2)________
5.Examine supporting documentation for a sample of transactions for authorized payee and amount and to determine services or goods were received.
(1)________
(2)________

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Definitions:

Producer Surplus

is the difference between what producers are willing to accept for a good or service versus what they actually receive, due to market prices.

Consumer Surplus

The difference between the total amount that consumers are willing to pay and the actual amount they pay for a good or service.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price in a market.

Car Market

The industry related to the manufacturing, selling, and buying of automobiles.