SOLVED

Learning Objective 19-3 1) Which of the following accounts would normally not be a part of the acquisition and payment cycle of Prepaid Insurance? A) Cash B) Insurance Payable C) Insurance Expense D) Prepaid Insurance 2) Which type of audit procedure would normally be sufficient for purposes of auditing prepaid expenses and deferred charges? A) Tests of controls. B) Tests of transactions. C) Tests of details of balances. D) Analytical procedures. 3) When the auditor recomputes the unexpired portion of prepaid insurance, she is satisfying which audit objective? A) Completeness B) Existence C) Accuracy and detail tie-in D) Rights 4) A record of insurance policies in force and the due date of each policy is contained in the: A) voucher register. B) insurance register. C) insurance expense account. D) prepaid insurance account. 5) Insurance expense for the period is a function of which of the following? A) The beginning prepaid balance, current premium payments and the ending prepaid balance. B) The beginning prepaid balance and the current period premium payments. C) The current period premium payments. D) The current period premium payments and the ending prepaid balance. 6) 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. 7) Controls over the acquisition and recording of insurance are a part of which of the following transaction cycles? A) Inventory and warehousing cycle B) Capitalization cycle C) Treasury cycle D) Acquisition and payment cycle 8) Which balance-related audit objective is not relevant to an audit of prepaid expenses? A) Rights B) Accuracy C) Detail tie-in D) Realizable value 9) Describe two ways the verification of existence and tests for omissions of the client’s insurance policies in force can be performed.