31)

Failure to capitalize a fixed asset at the correct amount would impact which financial statements?

A)

the balance sheet only

B)

the income statement only

C)

the cash flow statement only

D)

both the income statement and the balance sheet

32)

In connection with a review of the prepaid insurance account, which of the following audit procedures would you be least likely to use?

A)

Recompute the portion of the premium that expired during the year.

B)

Prepare excerpts of insurance policies for audit working papers.

C)

Confirm premium rates with an independent insurance broker.

D)

Examine support for premium payments.

33)

The inventory and warehousing cycle can be thought of as having two separate but closely related systems, one involving the actual physical flow of goods, and the other the

A)

related costs.

B)

storage of the goods.

C)

internal control over those goods.

D)

prevention of waste, obsolescence, and theft.

34)

An auditor selects a random sampling of tag numbers and identifies the tag with that number attached to the actual inventory. The purpose of the procedure is to

A)

obtain proper cutoff information.

B)

uncover the inclusion of nonexistent items as inventory.

C)

determine if the client has adequately priced the inventory item.

D)

verify that the client has not changed the recorded counts after the auditor left the premises.