When Using the Cycle Approach to Segmenting the Audit,the Reason
When using the cycle approach to segmenting the audit,the reason for treating capital acquisition and repayment separately from the acquisition of goods and services is that:
A) the transactions are related to financing a company rather than to its operations.
B) most capital acquisition and repayment cycle accounts involve few transactions, but each is often highly material and therefore should be audited extensively.
C) both A and B are correct.
D) neither A nor B is correct.
In describing the cycle approach to segmenting an audit,which of the following statements is not true?
A) All general ledger accounts and journals are included at least once.
B) Some journals and general ledger accounts are included in more than one cycle.
C) The "capital acquisition and repayment" cycle is closely related to the "acquisition of goods and services and payment" cycle.
D) The "inventory and warehousing" cycle may be audited at any time during the engagement since it is unrelated to the other cycles.
The cycle approach to auditing:
A) ties to the way transactions are recorded in journals and then summarized in the general ledger and financial statements.
B) cannot combine transactions recorded in different journals with the general ledger balances that result from those transactions.
C) is the only way of segmenting an audit.
D) assumes that each account has two or more cycles associated with it.
Auditors generally use a financial statement cycle approach when performing a financial statement audit.Describe the transaction flow,using specific examples,from journals to financial statements that produce financial statements.