Chương 19.

Bài 19.2: Explain the relationship between the substantive test of transactions, for the
acquisition and payment cycle and test of details of balances for the verification of property,
plant and equipment. Which aspects of propertu, p;ant and equipment are directly affected by the
test of controls and subtanstive tests of transactions and which are not.
Answer:
Since the debits in the asset account stem from the acquisitions journal (or a similar record), the
property, plant, and equipment acquisitions for the current period have already received partial
verification during the acquisition and payment cycle. This testing would have covered aspects
such as the occurrence, completeness, accuracy, cutoff, posting and summarization,
classification, and presentation of property, plant, and equipment acquisitions. However, the
disposal of assets, depreciation, and accumulated depreciation are not examined within the
acquisition and payment cycle

Bài 19.14:
List the factors that should affect the auditor’s decision whether to ânlyze an account balance.
Answer:
1. Analytical procedures show that there’s probably a misstatement
2. The test of controls and subtanstive test of transactions shows the same above
3. The analysis of the account might disclose a contigency

Bài 19.20
A, Purpose:
1. Minimize accounting classification misstatesment. (classification)
2. To assure that asset misstatements are reduced. (existence completeness)
3. To minimize improper purchases. (existence)
4. To provide a record of fixed assets and protect agaisnt their loss (completeness existence)

5 To minimize the unsuitable valuation of equipment

6 To minimize dep and recording misstatement
B
1. Verify that written policies
exist.
2 Verify that master file exists
3 Examine the purchase invoices
4. Examnine the company’d phsical count
5. Examine evidence of management’s review of fixed assets
6. Examine records for indication of periodic verification of master file

C,
1. Examine supporting documentation for transactions to determine if policies are followed
for account classification.
2. Physically examine fixed assets and trace to master file
3. Examine a sample of purchase invoices of fixed assets for propriety and reasonableness.’
4. Trace a sample of recorded equipment to the related equipment to make sure it exists.
5. Identify assets likely to be impaired and test management‘s review and analysis for
impairment.
6. Test calculations and postings of depreciation charges.
Bài 19.22
A, The figures presented in the beginning balance column would be cross-checked by reviewing
the final audited balances documented in the previous year's audit files. Each concluding balance
for assets such as land, office buildings, production equipment, office equipment, and IT
hardware would undergo verification, along with ensuring the mathematical accuracy of the
beginning balance column.
B, document such as invoices, purchase contracts, receiving reports, r legal documents and
contracts for purchases of
land and buildings ( for equipment account)

C. shipping document, cash receipt for disposal

D,