Determine the relation of the acquisition and payment cycle and the inventory and warehousing cycle in the audit of the manufacturing company. And enlist the several audit procedures in the acquisition and payment cycle to support the explanation.

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Answer 1

Question

Chapter 21, Problem 1RQ

To determine

Determine the relation of the acquisition and payment cycle and the inventory and warehousing cycle in the audit of the manufacturing company. And enlist the several audit procedures in the acquisition and payment cycle to support the explanation.

Expert Solution & Answer

Explanation of Solution

The inventory and warehousing cycle has a unique relation with the acquisition and payment cycle in the audit of manufacturing company. In manufacturing firm, the raw materials enter the inventory and warehousing cycle after going through the acquisition and payment cycle.

The auditing of the inventory and warehousing cycle is divided into five parts:

1. Acquisition and recording of raw material, labor and overheads.
2. Transfer of costs and assets internally.
3. Shipment of goods and recording of costs and revenue.
4. Physical verification of inventory.
5. Pricing and compiling of inventories.

The first three parts of audit function includes processing of purchase order, receiving raw materials and warehousing them which is a part of the acquisition and payment cycle. Thus in the audit of the manufacturing concern both inventory and warehousing and acquisition and payment cycle are inter-related.

The list audit procedure in the acquisition and payment cycle:

Obtaining evidence regarding the accuracy of raw materials and all the manufacturing overhead cost.
Verification of the inventory acquired and its acquisition cost.
In case of perpetual inventory master file, auditor performs test of control and substantive tests of transaction procedure.
In case the manufacturing costs are assigned to individual process of job, then these are test as part of the acquisition and payment cycle.

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Students have asked these similar questions

1. When auditing a manufacturing concern, what major inquiries might be made by the auditor about the cost accounting system? 2. In the audit of inventory the auditor must perform important procedures prior to the actual observation. Identify the steps the auditor must take prior to the day the inventory is actually counted.

Following are audit procedures commonlyperformed in the inventory and warehousing cycle for a manufacturing company:1. Read the client’s physical inventory instructions and observe whether they are beingfollowed by those responsible for counting the inventory.2. Account for a sequence of inventory tags and trace each tag to the physical inventoryto make sure it actually exists.3. Compare the client’s count of physical inventory at an interim date with the perpetualinventory master file.4. Trace the auditor’s test counts recorded in the audit files to the final inventorycompilation and compare the tag number, description, and quantity.5. Compare the unit price on the final inventory summary with vendors’ invoices.6. Account for a sequence of raw material requisitions and examine each requisitionfor an authorized approval.7. Trace the recorded additions on the finished goods perpetual inventory master fileto the records for completed production.a. Identify whether each of the procedures…

The purpose of an audit trail is to be able to trace a transaction from its origin through source documents to the final output or backwards from the final output to the original source documents to prove the accuracy and validity of ledger postings. Describe in detail the audit trail for the following in a manufacturing business: a. Shipping an order to a customer b. Customer returns defective goods c. Employee payroll for employee wages (using time cards or time sheets) With the aid of visual diagrams, describe in detail the audit trail for the following in a manufacturing business: Shipping an order to a customer Customer returns defective goods c. Employee payroll for employee wages (using time cards or time sheets)

Answer 2

Question

Chapter 21, Problem 1RQ

To determine

Determine the relation of the acquisition and payment cycle and the inventory and warehousing cycle in the audit of the manufacturing company. And enlist the several audit procedures in the acquisition and payment cycle to support the explanation.

Expert Solution & Answer

Explanation of Solution

The inventory and warehousing cycle has a unique relation with the acquisition and payment cycle in the audit of manufacturing company. In manufacturing firm, the raw materials enter the inventory and warehousing cycle after going through the acquisition and payment cycle.

The auditing of the inventory and warehousing cycle is divided into five parts:

1. Acquisition and recording of raw material, labor and overheads.
2. Transfer of costs and assets internally.
3. Shipment of goods and recording of costs and revenue.
4. Physical verification of inventory.
5. Pricing and compiling of inventories.

The first three parts of audit function includes processing of purchase order, receiving raw materials and warehousing them which is a part of the acquisition and payment cycle. Thus in the audit of the manufacturing concern both inventory and warehousing and acquisition and payment cycle are inter-related.

The list audit procedure in the acquisition and payment cycle:

Obtaining evidence regarding the accuracy of raw materials and all the manufacturing overhead cost.
Verification of the inventory acquired and its acquisition cost.
In case of perpetual inventory master file, auditor performs test of control and substantive tests of transaction procedure.
In case the manufacturing costs are assigned to individual process of job, then these are test as part of the acquisition and payment cycle.

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Answer 3

Question

Chapter 21, Problem 1RQ

To determine

Determine the relation of the acquisition and payment cycle and the inventory and warehousing cycle in the audit of the manufacturing company. And enlist the several audit procedures in the acquisition and payment cycle to support the explanation.

Expert Solution & Answer

Explanation of Solution

The inventory and warehousing cycle has a unique relation with the acquisition and payment cycle in the audit of manufacturing company. In manufacturing firm, the raw materials enter the inventory and warehousing cycle after going through the acquisition and payment cycle.

The auditing of the inventory and warehousing cycle is divided into five parts:

1. Acquisition and recording of raw material, labor and overheads.
2. Transfer of costs and assets internally.
3. Shipment of goods and recording of costs and revenue.
4. Physical verification of inventory.
5. Pricing and compiling of inventories.

The first three parts of audit function includes processing of purchase order, receiving raw materials and warehousing them which is a part of the acquisition and payment cycle. Thus in the audit of the manufacturing concern both inventory and warehousing and acquisition and payment cycle are inter-related.

The list audit procedure in the acquisition and payment cycle:

Obtaining evidence regarding the accuracy of raw materials and all the manufacturing overhead cost.
Verification of the inventory acquired and its acquisition cost.
In case of perpetual inventory master file, auditor performs test of control and substantive tests of transaction procedure.
In case the manufacturing costs are assigned to individual process of job, then these are test as part of the acquisition and payment cycle.

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Answer 4

Question

Chapter 21, Problem 1RQ

To determine

Determine the relation of the acquisition and payment cycle and the inventory and warehousing cycle in the audit of the manufacturing company. And enlist the several audit procedures in the acquisition and payment cycle to support the explanation.

Expert Solution & Answer

Explanation of Solution

The inventory and warehousing cycle has a unique relation with the acquisition and payment cycle in the audit of manufacturing company. In manufacturing firm, the raw materials enter the inventory and warehousing cycle after going through the acquisition and payment cycle.

The auditing of the inventory and warehousing cycle is divided into five parts:

1. Acquisition and recording of raw material, labor and overheads.
2. Transfer of costs and assets internally.
3. Shipment of goods and recording of costs and revenue.
4. Physical verification of inventory.
5. Pricing and compiling of inventories.

The first three parts of audit function includes processing of purchase order, receiving raw materials and warehousing them which is a part of the acquisition and payment cycle. Thus in the audit of the manufacturing concern both inventory and warehousing and acquisition and payment cycle are inter-related.

The list audit procedure in the acquisition and payment cycle:

Obtaining evidence regarding the accuracy of raw materials and all the manufacturing overhead cost.
Verification of the inventory acquired and its acquisition cost.
In case of perpetual inventory master file, auditor performs test of control and substantive tests of transaction procedure.
In case the manufacturing costs are assigned to individual process of job, then these are test as part of the acquisition and payment cycle.

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Answer 5

Chapter 21, Problem 1RQ

To determine

Determine the relation of the acquisition and payment cycle and the inventory and warehousing cycle in the audit of the manufacturing company. And enlist the several audit procedures in the acquisition and payment cycle to support the explanation.

Expert Solution & Answer

Explanation of Solution

The inventory and warehousing cycle has a unique relation with the acquisition and payment cycle in the audit of manufacturing company. In manufacturing firm, the raw materials enter the inventory and warehousing cycle after going through the acquisition and payment cycle.

The auditing of the inventory and warehousing cycle is divided into five parts:

1. Acquisition and recording of raw material, labor and overheads.
2. Transfer of costs and assets internally.
3. Shipment of goods and recording of costs and revenue.
4. Physical verification of inventory.
5. Pricing and compiling of inventories.

The first three parts of audit function includes processing of purchase order, receiving raw materials and warehousing them which is a part of the acquisition and payment cycle. Thus in the audit of the manufacturing concern both inventory and warehousing and acquisition and payment cycle are inter-related.

The list audit procedure in the acquisition and payment cycle:

Obtaining evidence regarding the accuracy of raw materials and all the manufacturing overhead cost.
Verification of the inventory acquired and its acquisition cost.
In case of perpetual inventory master file, auditor performs test of control and substantive tests of transaction procedure.
In case the manufacturing costs are assigned to individual process of job, then these are test as part of the acquisition and payment cycle.

Answer 6

Chapter 21, Problem 1RQ

To determine

Determine the relation of the acquisition and payment cycle and the inventory and warehousing cycle in the audit of the manufacturing company. And enlist the several audit procedures in the acquisition and payment cycle to support the explanation.

Expert Solution & Answer

Explanation of Solution

The inventory and warehousing cycle has a unique relation with the acquisition and payment cycle in the audit of manufacturing company. In manufacturing firm, the raw materials enter the inventory and warehousing cycle after going through the acquisition and payment cycle.

The auditing of the inventory and warehousing cycle is divided into five parts:

1. Acquisition and recording of raw material, labor and overheads.
2. Transfer of costs and assets internally.
3. Shipment of goods and recording of costs and revenue.
4. Physical verification of inventory.
5. Pricing and compiling of inventories.

The first three parts of audit function includes processing of purchase order, receiving raw materials and warehousing them which is a part of the acquisition and payment cycle. Thus in the audit of the manufacturing concern both inventory and warehousing and acquisition and payment cycle are inter-related.

The list audit procedure in the acquisition and payment cycle:

Obtaining evidence regarding the accuracy of raw materials and all the manufacturing overhead cost.
Verification of the inventory acquired and its acquisition cost.
In case of perpetual inventory master file, auditor performs test of control and substantive tests of transaction procedure.
In case the manufacturing costs are assigned to individual process of job, then these are test as part of the acquisition and payment cycle.

Answer 7

Chapter 21, Problem 1RQ

To determine

Determine the relation of the acquisition and payment cycle and the inventory and warehousing cycle in the audit of the manufacturing company. And enlist the several audit procedures in the acquisition and payment cycle to support the explanation.

Answer 8

Expert Solution & Answer

Explanation of Solution

The inventory and warehousing cycle has a unique relation with the acquisition and payment cycle in the audit of manufacturing company. In manufacturing firm, the raw materials enter the inventory and warehousing cycle after going through the acquisition and payment cycle.

The auditing of the inventory and warehousing cycle is divided into five parts:

1. Acquisition and recording of raw material, labor and overheads.
2. Transfer of costs and assets internally.
3. Shipment of goods and recording of costs and revenue.
4. Physical verification of inventory.
5. Pricing and compiling of inventories.

The first three parts of audit function includes processing of purchase order, receiving raw materials and warehousing them which is a part of the acquisition and payment cycle. Thus in the audit of the manufacturing concern both inventory and warehousing and acquisition and payment cycle are inter-related.

The list audit procedure in the acquisition and payment cycle:

Obtaining evidence regarding the accuracy of raw materials and all the manufacturing overhead cost.
Verification of the inventory acquired and its acquisition cost.
In case of perpetual inventory master file, auditor performs test of control and substantive tests of transaction procedure.
In case the manufacturing costs are assigned to individual process of job, then these are test as part of the acquisition and payment cycle.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 21 - Prob. 1RQ Ch. 21 - Prob. 2RQ Ch. 21 - Prob. 3RQ Ch. 21 - Prob. 4RQ Ch. 21 - Prob. 5RQ Ch. 21 - Prob. 6RQ Ch. 21 - Prob. 7RQ Ch. 21 - Prob. 8RQ Ch. 21 - Prob. 9RQ Ch. 21 - Prob. 10RQ

Determine the relation of the acquisition and payment cycle and the inventory and warehousing cycle in the audit of the manufacturing company. And enlist the several audit procedures in the acquisition and payment cycle to support the explanation.

Concept explainers

Determine the relation of the acquisition and payment cycle and the inventory and warehousing cycle in the audit of the manufacturing company. And enlist the several audit procedures in the acquisition and payment cycle to support the explanation.

Explanation of Solution

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