Chapter 19
Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable.
Chapter 19
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
19 - 1
Learning Objective 1
Identify the accounts and the classes of transactions in the acquisition and payment cycle.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
19 - 2
Transactions in the Acquisition and Payment Cycle
1. Acquisitions of goods and services 2. Cash disbursements
3. Purchase returns and allowances and purchase discounts
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
19 - 3
Accounts in the Acquisition and Payment Cycle
Cash in Bank Accounts Payable Cash Acquisitions disbursements of goods and services Purchase returns and allowances Purchase discounts Raw Material Purchases
Purchase Returns and Allowances
Property, Plant and Equipment
Purchase Discounts
Prepaid Expenses
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
19 - 4
Accounts in the Acquisition and Payment Cycle
Manufacturing Expense Control Account Subsidiary accounts Repair and maintenance Taxes, Supplies Freight in, Utilities
Accounts Payable
Acquisitions of goods and services
Selling Expense Control Account
Subsidiary accounts Commissions Travel, delivery expenses Repairs, Advertising Administrative Expense Control Account Subsidiary accounts Supplies, Officers’ travel Legal fees Auditing fees, Taxes
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
19 - 5
Learning Objective 2
Describe the business functions and the related documents and records in the acquisition and payment cycle.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
19 - 6
Classes of Transactions and Accounts
Acquisitions:
Inventory Property, plant, and equipment Prepaid expenses
Chapter 19
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
19 - 1
Learning Objective 1
Identify the accounts and the classes of transactions in the acquisition and payment cycle.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
19 - 2
Transactions in the Acquisition and Payment Cycle
1. Acquisitions of goods and services 2. Cash disbursements
3. Purchase returns and allowances and purchase discounts
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
19 - 3
Accounts in the Acquisition and Payment Cycle
Cash in Bank Accounts Payable Cash Acquisitions disbursements of goods and services Purchase returns and allowances Purchase discounts Raw Material Purchases
Purchase Returns and Allowances
Property, Plant and Equipment
Purchase Discounts
Prepaid Expenses
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
19 - 4
Accounts in the Acquisition and Payment Cycle
Manufacturing Expense Control Account Subsidiary accounts Repair and maintenance Taxes, Supplies Freight in, Utilities
Accounts Payable
Acquisitions of goods and services
Selling Expense Control Account
Subsidiary accounts Commissions Travel, delivery expenses Repairs, Advertising Administrative Expense Control Account Subsidiary accounts Supplies, Officers’ travel Legal fees Auditing fees, Taxes
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
19 - 5
Learning Objective 2
Describe the business functions and the related documents and records in the acquisition and payment cycle.
©2008 Prentice Hall Business Publishing, Auditing 12/e, Arens/Beasley/Elder
19 - 6
Classes of Transactions and Accounts
Acquisitions:
Inventory Property, plant, and equipment Prepaid expenses