Question

Chapter 14 Completion Questions

Select the necessary words from the list of possibilities to complete the following statements.

Use accrued liabilities, an adjusting journal entry, completeness, less, receiving report, related parties, representations, understatement, zero.

1. An ___ of liabilities will exaggerate the financial strength of a company.

2. Auditors are primarily concerned with establishing the ___ of recorded accounts payable.

3. In comparison to the confirmation of accounts receivable, the confirmation of accounts payable is performed ___ frequently.

4. Accounts payable from important vendors should be confirmed, even though the accounts have ___ balances at year-end.

5. When unrecorded liabilities are discovered by the auditors, they should evaluate whether the omission is sufficiently material to want ___.

6. When observing the taking of a physical inventory at year-end, the auditors will record the serial number of the last ___ issued to verify the accuracy of the cutoff of accounts payable.

7. Proper balance sheet presentation of accounts payable requires that any material amounts payable to ____ such as directors and officers, be disclosed separately from other accounts payable.

8. Auditors often obtain written ___ from management regarding the existence of unrecorded payables.

9. Most ___ represent obligations payable sometime during the succeeding period for services of a continuing nature received before the balance sheet date.

10. Because the auditors are primarily concerned with the ___ of recorded payables, much of the audit work on accounts payable is performed after the year-end date.

Answer 1

1. An understatement of liabilities will exaggerate the financial strength of a company.

2. Auditors are primarily concerned with establishing the completeness of recorded accounts payable.

3. In comparison to the confirmation of accounts receivable, the confirmation of accounts payable is performed _less frequently.

4. Accounts payable from important vendors should be confirmed, even though the accounts have zero balances at year-end.

5. When unrecorded liabilities are discovered by the auditors, they should evaluate whether the omission is sufficiently material to want an adjusting journal entry___.

6. When observing the taking of a physical inventory at year-end, the auditors will record the serial number of the last receiving report___ issued to verify the accuracy of the cutoff of accounts payable.

7. Proper balance sheet presentation of accounts payable requires that any material amounts payable to related parties____ such as directors and officers, be disclosed separately from other accounts payable.

8. Auditors often obtain written representation___ from management regarding the existence of unrecorded payables.

9. Most accrued liabilities___ represent obligations payable sometime during the succeeding period for services of a continuing nature received before the balance sheet date.

10. Because the auditors are primarily concerned with the completeness___ of recorded payables, much of the audit work on accounts payable is performed after the year-end date.