Discount on Notes Payable is a contra account to Notes Payable on the balance sheet.
Answer: true
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Accounting Chapter 13
- In order to efficiently establish the correctness of the accounts payable cutoff, an auditor will be most likely to
- Which of the following is a question that the auditor would expect to find on the production process section of an internal control questionnaire?
- Which assertion for ending inventory is most likely violated if the gross profit percentage is much greater than last year?
- An auditor concluded that no excessive costs for an idle plant were charged to inventory. This conclusion most likely related to the auditor's objective to obtain evidence about the financial statement assertions regarding inventory, including presentation and disclosure, and
- Which of the following is not one of the independent auditor's objectives regarding the examination of inventories?
- When an auditor tests an entity's cost accounting system, the auditor's tests are primarily designed to determine that
- Observing an entity's inventory held on consignment by others tests the assertion of
- To gain assurance that all inventory items in an entity's inventory listing schedule are valid, an auditor most likely would trace
- The element of the audit planning process most likely to be agreed upon with the entity before implementation of the audit strategy is the determination of the
- In an audit of inventories, an auditor would least likely verify that
- The physical count of inventory of a retailer was higher than shown in its perpetual records. Which of the following could explain the difference?
- Which of the following is the best audit procedure for the discovery of damaged merchandise in an entity's ending inventory?
- When outside firms of non-accountants specializing in physical inventory counts are used to count, list, price, and subsequently compute the total dollar amount of inventory on hand at the date of the physical count, the auditor will ordinarily
- Which one of the following procedures would not be appropriate for an auditor in discharging his or her responsibilities concerning the entity's physical inventories?
- Purchase cutoff activities should be designed to test that merchandise is included in the inventory of the entity company if the company
- The auditor tests the quantity of materials charged to work in process by tracing these quantities to
- Tracing costs used to price inventory to vendors' invoices test which of the following assertions?
- An inventory turnover analysis is useful to the auditor because it may detect
- Which of the following control activities would most likely be used to maintain accurate perpetual inventory records?
- For several years, an entity's physical inventory count has been lower than what was shown on the books at the time of the count so that downward adjustments to the inventory account were required. Contributing to the inventory problem could be weaknesses in internal controls that led to the failure to record some
- In obtaining an understanding of a manufacturing entity's internal control concerning inventory balances, an auditor most likely would
- An entity maintains perpetual inventory records in both quantities and dollars. If the assessed level of control risk is high, an auditor would probably
- When perpetual inventory records are maintained in quantities and in dollars and internal control over inventory is weak, the auditor would probably
- An auditor generally tests physical security controls over inventory by
- Key segregations of duties in the inventory management process include all of the following except separating:
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