20 - 1 ©2006 prentice hall business publishing, auditing 11/e, arens/beasley/elder completing the...

20 - 1©2006 Prentice Hall Business Publishing, ©2006 Prentice Hall Business Publishing, Auditing 11/e,Auditing 11/e, Arens/Beasley/Elder Arens/Beasley/Elder

Completing the Tests in the Completing the Tests in the Acquisition and Payment Acquisition and Payment Cycle: Verification of Cycle: Verification of Selected AccountsSelected Accounts

Chapter 20Chapter 20


Learning Objective 1Learning Objective 1

Recognize the many accountsRecognize the many accounts

in the acquisition andin the acquisition and

payment cycle.payment cycle.


Accounts Associated with the Accounts Associated with the Acquisition and Payment CycleAcquisition and Payment Cycle

CashCash InventoryInventory Supplies Supplies Property, plant, and equipmentProperty, plant, and equipment Patents, trademarks, and copyrightsPatents, trademarks, and copyrights Prepaid rentPrepaid rent Prepaid taxesPrepaid taxes Prepaid insurancePrepaid insurance

CashCash InventoryInventory Supplies Supplies Property, plant, and equipmentProperty, plant, and equipment Patents, trademarks, and copyrightsPatents, trademarks, and copyrights Prepaid rentPrepaid rent Prepaid taxesPrepaid taxes Prepaid insurancePrepaid insurance



Cost of goods soldCost of goods sold Rent expenseRent expense Property taxesProperty taxes Income tax expenseIncome tax expense Insurance expenseInsurance expense Professional feesProfessional fees Retirement benefitsRetirement benefits UtilitiesUtilities

Cost of goods soldCost of goods sold Rent expenseRent expense Property taxesProperty taxes Income tax expenseIncome tax expense Insurance expenseInsurance expense Professional feesProfessional fees Retirement benefitsRetirement benefits UtilitiesUtilities



Accounts payableAccounts payable Rent payableRent payable Accrued professional feesAccrued professional fees Accrued property taxesAccrued property taxes Other accrued expensesOther accrued expenses Income taxes payableIncome taxes payable

Accounts payableAccounts payable Rent payableRent payable Accrued professional feesAccrued professional fees Accrued property taxesAccrued property taxes Other accrued expensesOther accrued expenses Income taxes payableIncome taxes payable


Identify client business risks affecting otherIdentify client business risks affecting otheraccounts.accounts.

Identify client business risks affecting otherIdentify client business risks affecting otheraccounts.accounts.

Methodology for Designing TestsMethodology for Designing Testsof Details of Balances for A/Pof Details of Balances for A/P

Phase IPhase IPhase IPhase I

Set tolerable misstatement and assess inherentSet tolerable misstatement and assess inherentrisk for accounts.risk for accounts.

Set tolerable misstatement and assess inherentSet tolerable misstatement and assess inherentrisk for accounts.risk for accounts.

Assess control risk for accounts.Assess control risk for accounts.Assess control risk for accounts.Assess control risk for accounts.



Design and perform tests of controls andDesign and perform tests of controls andsubstantive tests of transactions for thesubstantive tests of transactions for theacquisition and payment cycle.acquisition and payment cycle.

Design and perform tests of controls andDesign and perform tests of controls andsubstantive tests of transactions for thesubstantive tests of transactions for theacquisition and payment cycle.acquisition and payment cycle.

Phase IIPhase IIPhase IIPhase II


TimingTimingTimingTimingItems toItems toselectselect

Items toItems toselectselect

SampleSamplesizesize

SampleSamplesizesize

AuditAuditproceduresprocedures

AuditAuditproceduresprocedures


Design and perform analytical procedures for theDesign and perform analytical procedures for theacquisition and payment cycle.acquisition and payment cycle.

Design and perform analytical procedures for theDesign and perform analytical procedures for theacquisition and payment cycle.acquisition and payment cycle.

Phase IIIPhase IIIPhase IIIPhase III

Design tests of details of account balances toDesign tests of details of account balances tosatisfy balance-related audit objectives.satisfy balance-related audit objectives.

Design tests of details of account balances toDesign tests of details of account balances tosatisfy balance-related audit objectives.satisfy balance-related audit objectives.



Design and perform audit tests of Design and perform audit tests of

property, plant, and equipmentproperty, plant, and equipment

and related accounts.and related accounts.


Classifications of Property, Plant,Classifications of Property, Plant,and Equipment Accountsand Equipment Accounts

Land and land improvementsLand and land improvements Buildings and building improvementsBuildings and building improvements Manufacturing equipmentManufacturing equipment Furniture and fixturesFurniture and fixtures Autos and trucksAutos and trucks Leasehold improvementsLeasehold improvements Construction-in-process for property,Construction-in-process for property, plant, and equipmentplant, and equipment

Land and land improvementsLand and land improvements Buildings and building improvementsBuildings and building improvements Manufacturing equipmentManufacturing equipment Furniture and fixturesFurniture and fixtures Autos and trucksAutos and trucks Leasehold improvementsLeasehold improvements Construction-in-process for property,Construction-in-process for property, plant, and equipmentplant, and equipment


Manufacturing Equipment and Manufacturing Equipment and Related AccountsRelated Accounts

ManufacturingManufacturing EquipmentEquipment

AccumulatedAccumulatedDepreciatedDepreciated

BeginningBeginningbalancebalance

BeginningBeginningbalancebalance

DepreciationDepreciationExpenseExpense

Gain or LossGain or Losson Disposalson Disposals

Current periodCurrent perioddepreciationdepreciation

Ending balanceEnding balance

DisposalsDisposalsDisposalsDisposals

AcquisitionsAcquisitions

EndingEndingbalancebalance


Auditing Manufacturing Auditing Manufacturing Equipment and Related AccountsEquipment and Related Accounts

Analytical proceduresAnalytical proceduresAnalytical proceduresAnalytical procedures

• Current year acquisitionsCurrent year acquisitions• Current year disposalsCurrent year disposals• Ending balance in the asset accountEnding balance in the asset account• Depreciation expenseDepreciation expense• Ending balance in accumulated depreciationEnding balance in accumulated depreciation

• Current year acquisitionsCurrent year acquisitions• Current year disposalsCurrent year disposals• Ending balance in the asset accountEnding balance in the asset account• Depreciation expenseDepreciation expense• Ending balance in accumulated depreciationEnding balance in accumulated depreciation


Analytical Procedures for Analytical Procedures for Manufacturing EquipmentManufacturing Equipment

Compare accumulatedCompare accumulateddepreciation divided by grossdepreciation divided by grossmanufacturing equipmentmanufacturing equipmentcost with previous years.cost with previous years.

Misstatement inMisstatement inaccumulated depreciation.accumulated depreciation.

Analytical ProcedureAnalytical Procedure

Compare depreciation expenseCompare depreciation expensedivided by gross manufacturingdivided by gross manufacturingequipment cost with previousequipment cost with previousyears.years.

Misstatement inMisstatement indepreciation expensedepreciation expenseand accumulatedand accumulateddepreciation.depreciation.

Possible MisstatementPossible Misstatement


Analytical Procedures for Analytical Procedures for Manufacturing EquipmentManufacturing Equipment

Compare gross manufacturingCompare gross manufacturingcost divided by some measurecost divided by some measureof production with previousof production with previousyears.years.

Idle equipment orIdle equipment orequipment that wasequipment that wasdisposed of but notdisposed of but notwritten off.written off.

Analytical ProcedureAnalytical Procedure

Compare monthly or annualCompare monthly or annualrepairs and maintenance,repairs and maintenance,supplies expense, small toolssupplies expense, small toolsexpense, and similar accountsexpense, and similar accountswith previous years.with previous years.

Expensing amounts thatExpensing amounts thatshould be capitalized.should be capitalized.

Possible MisstatementPossible Misstatement


Verifying Current Year Verifying Current Year AcquisitionsAcquisitions

The proper recording of current year additionsThe proper recording of current year additionsis important because of the long-term effectis important because of the long-term effectthe assets have on the financial statements.the assets have on the financial statements.

The proper recording of current year additionsThe proper recording of current year additionsis important because of the long-term effectis important because of the long-term effectthe assets have on the financial statements.the assets have on the financial statements.

Because of the importance of current periodBecause of the importance of current periodacquisitions, seven of the nine balance-relatedacquisitions, seven of the nine balance-relatedaudit objectives are used as a frame of reference.audit objectives are used as a frame of reference.

Because of the importance of current periodBecause of the importance of current periodacquisitions, seven of the nine balance-relatedacquisitions, seven of the nine balance-relatedaudit objectives are used as a frame of reference.audit objectives are used as a frame of reference.


Major Balance-Related Audit Major Balance-Related Audit ObjectivesObjectives

Current acquisitions agreeCurrent acquisitions agreewith the master file.with the master file.

Current acquisitions agreeCurrent acquisitions agreewith the master file.with the master file.

Detail tie-inDetail tie-inDetail tie-inDetail tie-in

1.1. Foot the acquisition schedule.Foot the acquisition schedule.2.2. Trace the individual acquisitionsTrace the individual acquisitions to the master file.to the master file.3.3. Trace the total to the general ledger.Trace the total to the general ledger.

1.1. Foot the acquisition schedule.Foot the acquisition schedule.2.2. Trace the individual acquisitionsTrace the individual acquisitions to the master file.to the master file.3.3. Trace the total to the general ledger.Trace the total to the general ledger.



Current acquisitions as listed exist.Current acquisitions as listed exist.Current acquisitions as listed exist.Current acquisitions as listed exist.

ExistenceExistenceExistenceExistence

1.1. Examine vendors’ invoices andExamine vendors’ invoices andreceiving reportsreceiving reports

2.2. Physically examine assets.Physically examine assets.

1.1. Examine vendors’ invoices andExamine vendors’ invoices andreceiving reportsreceiving reports

2.2. Physically examine assets.Physically examine assets.



Existing acquisitions are recorded.Existing acquisitions are recorded.Existing acquisitions are recorded.Existing acquisitions are recorded.

CompletenessCompletenessCompletenessCompleteness

1.1. Examine vendors’ invoices of closelyExamine vendors’ invoices of closelyrelatedrelated accounts to uncover items thataccounts to uncover items thatshould be manufacturing equipment.should be manufacturing equipment.

2.2. Review lease and rental agreements.Review lease and rental agreements.

1.1. Examine vendors’ invoices of closelyExamine vendors’ invoices of closelyrelatedrelated accounts to uncover items thataccounts to uncover items thatshould be manufacturing equipment.should be manufacturing equipment.

2.2. Review lease and rental agreements.Review lease and rental agreements.



Current year acquisitions asCurrent year acquisitions aslisted are accurate.listed are accurate.

Current year acquisitions asCurrent year acquisitions aslisted are accurate.listed are accurate.

AccuracyAccuracyAccuracyAccuracy

1. Examine vendors’ invoices.1. Examine vendors’ invoices.1. Examine vendors’ invoices.1. Examine vendors’ invoices.



Current year acquisitions as listed are properlyCurrent year acquisitions as listed are properlyclassified.classified.

Current year acquisitions as listed are properlyCurrent year acquisitions as listed are properlyclassified.classified.

ClassificationClassificationClassificationClassification

Examine:Examine:1. Vendors’ invoices in mfg. equipment account.1. Vendors’ invoices in mfg. equipment account.2. Vendors’ invoices of closely related accounts.2. Vendors’ invoices of closely related accounts.3. Rent and lease expense for capitalizable leases.3. Rent and lease expense for capitalizable leases.

Examine:Examine:1. Vendors’ invoices in mfg. equipment account.1. Vendors’ invoices in mfg. equipment account.2. Vendors’ invoices of closely related accounts.2. Vendors’ invoices of closely related accounts.3. Rent and lease expense for capitalizable leases.3. Rent and lease expense for capitalizable leases.


Current year acquisitions are recordedCurrent year acquisitions are recordedin the proper period.in the proper period.

Current year acquisitions are recordedCurrent year acquisitions are recordedin the proper period.in the proper period.


CutoffCutoffCutoffCutoff

1.1. Review transactions near the balanceReview transactions near the balancesheet date for proper period.sheet date for proper period.

1.1. Review transactions near the balanceReview transactions near the balancesheet date for proper period.sheet date for proper period.


The client has rights toThe client has rights tocurrent year acquisitions.current year acquisitions.

The client has rights toThe client has rights tocurrent year acquisitions.current year acquisitions.


RightsRightsRightsRights

1. Examine vendors’ invoices.1. Examine vendors’ invoices.1. Examine vendors’ invoices.1. Examine vendors’ invoices.


Verifying Current Year DisposalsVerifying Current Year Disposals

Review whether newly acquired assetsReview whether newly acquired assetsreplace existing assets.replace existing assets.

Review whether newly acquired assetsReview whether newly acquired assetsreplace existing assets.replace existing assets.

Analyze gains and losses on disposal.Analyze gains and losses on disposal.Analyze gains and losses on disposal.Analyze gains and losses on disposal.

Review documents for indications ofReview documents for indications ofdeletion of equipment.deletion of equipment.

Review documents for indications ofReview documents for indications ofdeletion of equipment.deletion of equipment.

Make inquiries about the possibility ofMake inquiries about the possibility ofthe disposal of assets.the disposal of assets.

Make inquiries about the possibility ofMake inquiries about the possibility ofthe disposal of assets.the disposal of assets.


Verifying Ending BalanceVerifying Ending Balanceof Asset Accountsof Asset Accounts

1. All equipment owned is recorded.1. All equipment owned is recorded.1. All equipment owned is recorded.1. All equipment owned is recorded.

2. All recorded equipment physically2. All recorded equipment physically exists on the balance sheet date.exists on the balance sheet date.

2. All recorded equipment physically2. All recorded equipment physically exists on the balance sheet date.exists on the balance sheet date.


Verifying Depreciation ExpenseVerifying Depreciation Expense

The most important objective is accuracy.The most important objective is accuracy.The most important objective is accuracy.The most important objective is accuracy.

Consistent depreciation policyConsistent depreciation policyConsistent depreciation policyConsistent depreciation policy

Correct calculationsCorrect calculationsCorrect calculationsCorrect calculations


Verifying Ending Balance in Verifying Ending Balance in Accumulated DepreciationAccumulated Depreciation

1.1. Accumulated depreciation as statedAccumulated depreciation as statedin the property master file agreesin the property master file agreeswith the general ledger.with the general ledger.

1.1. Accumulated depreciation as statedAccumulated depreciation as statedin the property master file agreesin the property master file agreeswith the general ledger.with the general ledger.

2.2. Accumulated depreciation in theAccumulated depreciation in themaster file is accurate.master file is accurate.

2.2. Accumulated depreciation in theAccumulated depreciation in themaster file is accurate.master file is accurate.



Design and perform audit testsDesign and perform audit tests

of prepaid expenses.of prepaid expenses.


Audit of Prepaid ExpensesAudit of Prepaid Expenses

• Prepaid rentPrepaid rent• Organization costsOrganization costs• Prepaid taxesPrepaid taxes• PatentsPatents

• Prepaid rentPrepaid rent• Organization costsOrganization costs• Prepaid taxesPrepaid taxes• PatentsPatents

• Prepaid insurancePrepaid insurance• TrademarksTrademarks• Deferred chargesDeferred charges• CopyrightsCopyrights

• Prepaid insurancePrepaid insurance• TrademarksTrademarks• Deferred chargesDeferred charges• CopyrightsCopyrights


Prepaid Insurance and Related Prepaid Insurance and Related AccountsAccounts

Prepaid InsurancePrepaid Insurance

BeginningBeginning balancebalance

AcquisitionsAcquisitions

EndingEnding balancebalance

Current periodCurrent period insuranceinsurance expense expense

Insurance ExpenseInsurance Expense


Internal ControlsInternal Controls

1. Acquisition and recording of insurance1. Acquisition and recording of insurance1. Acquisition and recording of insurance1. Acquisition and recording of insurance

2.2. Insurance registerInsurance register2.2. Insurance registerInsurance register

3.3. Insurance expenseInsurance expense3.3. Insurance expenseInsurance expense


Audit TestsAudit Tests

Compare total prepaid insurance andCompare total prepaid insurance andinsurance expense with previous years.insurance expense with previous years.

Compare total prepaid insurance andCompare total prepaid insurance andinsurance expense with previous years.insurance expense with previous years.

Compute the ratio of prepaid insuranceCompute the ratio of prepaid insuranceto insurance expense and compareto insurance expense and compareit with previous years.it with previous years.

Compute the ratio of prepaid insuranceCompute the ratio of prepaid insuranceto insurance expense and compareto insurance expense and compareit with previous years.it with previous years.

Compare the individual insurance policyCompare the individual insurance policycoverage on the schedule of insurancecoverage on the schedule of insuranceobtained with the preceding year’s schedule.obtained with the preceding year’s schedule.

Compare the individual insurance policyCompare the individual insurance policycoverage on the schedule of insurancecoverage on the schedule of insuranceobtained with the preceding year’s schedule.obtained with the preceding year’s schedule.


Audit TestsAudit Tests

Compare the computed prepaid insuranceCompare the computed prepaid insurancebalance for the current year on a policy-by-policybalance for the current year on a policy-by-policybasis with that of the preceding year.basis with that of the preceding year.

Compare the computed prepaid insuranceCompare the computed prepaid insurancebalance for the current year on a policy-by-policybalance for the current year on a policy-by-policybasis with that of the preceding year.basis with that of the preceding year.

Review the Review the insurance coverageinsurance coverage listed on listed onthe prepaid insurance schedule with anthe prepaid insurance schedule with anappropriate client official or insurance broker.appropriate client official or insurance broker.

Review the Review the insurance coverageinsurance coverage listed on listed onthe prepaid insurance schedule with anthe prepaid insurance schedule with anappropriate client official or insurance broker.appropriate client official or insurance broker.


Balance-Related Audit ObjectivesBalance-Related Audit Objectives

Existence andExistence andcompletenesscompleteness

Existence andExistence andcompletenesscompleteness

Insurance policiesInsurance policiesin the prepaidin the prepaidinsurance scheduleinsurance scheduleexist and existingexist and existingpolicies are listed.policies are listed.

Insurance policiesInsurance policiesin the prepaidin the prepaidinsurance scheduleinsurance scheduleexist and existingexist and existingpolicies are listed.policies are listed.

RightsRightsRightsRights

The client has rightsThe client has rightsto all insuranceto all insurancepolicies in thepolicies in theprepaid insuranceprepaid insuranceschedule.schedule.

The client has rightsThe client has rightsto all insuranceto all insurancepolicies in thepolicies in theprepaid insuranceprepaid insuranceschedule.schedule.



Accuracy and detailAccuracy and detailtie-intie-in

Accuracy and detailAccuracy and detailtie-intie-in

Prepaid amounts arePrepaid amounts areaccurate and the totalaccurate and the totalis correctly addedis correctly addedand agrees withand agrees withthe general ledger.the general ledger.

Prepaid amounts arePrepaid amounts areaccurate and the totalaccurate and the totalis correctly addedis correctly addedand agrees withand agrees withthe general ledger.the general ledger.

ClassificationClassificationClassificationClassification

Insurance expense isInsurance expense isproperly classified.properly classified.

Insurance expense isInsurance expense isproperly classified.properly classified.



CutoffCutoffCutoffCutoff

Insurance transactionsInsurance transactionsare recorded in theare recorded in theproper period.proper period.

Insurance transactionsInsurance transactionsare recorded in theare recorded in theproper period.proper period.

Presentation andPresentation anddisclosuredisclosure

Presentation andPresentation anddisclosuredisclosure

Prepaid insurance isPrepaid insurance isproperly presentedproperly presentedand disclosed.and disclosed.

Prepaid insurance isPrepaid insurance isproperly presentedproperly presentedand disclosed.and disclosed.



Design and perform audit testsDesign and perform audit tests

of accrued liabilities.of accrued liabilities.


Audit of Accrued LiabilitiesAudit of Accrued Liabilities

• Accrued income taxesAccrued income taxes• Accrued interestAccrued interest• Accrued pension costsAccrued pension costs• Accrued professional feesAccrued professional fees• Accrued rentAccrued rent• Accrued warranty costsAccrued warranty costs

• Accrued income taxesAccrued income taxes• Accrued interestAccrued interest• Accrued pension costsAccrued pension costs• Accrued professional feesAccrued professional fees• Accrued rentAccrued rent• Accrued warranty costsAccrued warranty costs


Accrued Property Taxes and Accrued Property Taxes and Related AccountsRelated Accounts

AccruedAccruedProperty TaxesProperty Taxes

BeginningBeginning balancebalance

Current periodCurrent period property taxproperty tax expenseexpense

EndingEnding balancebalance

Property TaxProperty TaxExpenseExpense

PaymentsPayments(property taxes)(property taxes)



Design and perform audit tests ofDesign and perform audit tests of

income and expense accounts.income and expense accounts.


Approach to Auditing IncomeApproach to Auditing Incomeand Expense Accountsand Expense Accounts

Analytical proceduresAnalytical proceduresAnalytical proceduresAnalytical procedures

Tests of controls and substantive testsTests of controls and substantive testsof transactionsof transactions

Tests of controls and substantive testsTests of controls and substantive testsof transactionsof transactions

Tests of details of account balancesTests of details of account balancesTests of details of account balancesTests of details of account balances


Analytical Procedures for Income Analytical Procedures for Income and Expense Accountsand Expense Accounts

Compare individual asset andCompare individual asset andliability balances with previousliability balances with previousyears.years.

Overstatement orOverstatement orunderstatement of aunderstatement of abalance sheet account thatbalance sheet account thatwould also affect an incomewould also affect an incomestatement account.statement account.

Analytical procedureAnalytical procedure

Compare individuals expensesCompare individuals expenseswith previous years.with previous years.

Overstatement orOverstatement orunderstatement of aunderstatement of abalance in an expensebalance in an expenseaccount.account.

Possible misstatementPossible misstatement



Compare gross marginCompare gross marginpercentage with previouspercentage with previousyears.years.

Misstatement of cost ofMisstatement of cost ofgoods sold and inventory.goods sold and inventory.

Analytical procedureAnalytical procedure

Compare individual expensesCompare individual expenseswith budgets.with budgets.

Misstatement of expensesMisstatement of expensesand related balanceand related balancesheet accounts.sheet accounts.

Possible misstatementPossible misstatement



Analytical procedureAnalytical procedure Possible misstatementPossible misstatement

Compare inventory turnoverCompare inventory turnoverrate with previous years.rate with previous years.


Compare prepaid insuranceCompare prepaid insuranceexpense with previous years.expense with previous years.

Misstatement of insuranceMisstatement of insuranceexpense and prepaidexpense and prepaidinsurance.insurance.



Analytical procedureAnalytical procedure Possible misstatementPossible misstatement

Compare commission expenseCompare commission expensedivided by sales withdivided by sales withprevious years.previous years.


Compare individualCompare individualmanufacturing expensesmanufacturing expensesdivided by total manufacturingdivided by total manufacturingexpenses with previous years.expenses with previous years.

Misstatement of individualMisstatement of individualmanufacturing expensesmanufacturing expensesand related balanceand related balancesheet accounts.sheet accounts.


Tests of Controls and SubstantiveTests of Controls and SubstantiveTest of TransactionsTest of Transactions

Understanding internal control and theUnderstanding internal control and therelated tests of controls and substantiverelated tests of controls and substantivetests of transactions to determine thetests of transactions to determine the appropriate assessed control risk areappropriate assessed control risk arethe most important means of verifyingthe most important means of verifyingmany of the income statement accountsmany of the income statement accountsin each of the transaction cycles.in each of the transaction cycles.

Understanding internal control and theUnderstanding internal control and therelated tests of controls and substantiverelated tests of controls and substantivetests of transactions to determine thetests of transactions to determine the appropriate assessed control risk areappropriate assessed control risk arethe most important means of verifyingthe most important means of verifyingmany of the income statement accountsmany of the income statement accountsin each of the transaction cycles.in each of the transaction cycles.


Tests of Details of Account Tests of Details of Account Balances – Expense AnalysisBalances – Expense Analysis

Expense account analysisExpense account analysisExpense account analysisExpense account analysis


Tests of Details of Account Tests of Details of Account Balances – AllocationBalances – Allocation

Several expense accounts result from the allocationSeveral expense accounts result from the allocationof accounting data rather than discrete transactions.of accounting data rather than discrete transactions.

Several expense accounts result from the allocationSeveral expense accounts result from the allocationof accounting data rather than discrete transactions.of accounting data rather than discrete transactions.

These include depreciation, depletion, and theThese include depreciation, depletion, and theamortization of copyrights and catalog cost.amortization of copyrights and catalog cost.

These include depreciation, depletion, and theThese include depreciation, depletion, and theamortization of copyrights and catalog cost.amortization of copyrights and catalog cost.

The allocation of manufacturing overhead betweenThe allocation of manufacturing overhead betweeninventory and cost of goods sold is an example ofinventory and cost of goods sold is an example ofa different type of allocation that affects expenses.a different type of allocation that affects expenses.

The allocation of manufacturing overhead betweenThe allocation of manufacturing overhead betweeninventory and cost of goods sold is an example ofinventory and cost of goods sold is an example ofa different type of allocation that affects expenses.a different type of allocation that affects expenses.


End of Chapter 20End of Chapter 20

20 - 1 ©2006 prentice hall business publishing, auditing 11/e, arens/beasley/elder completing the...

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