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Auditing the Expenditure Cycle

True/False

REQUIRED: For each of the following items, indicate whether it is (T) True or (F) False. For those marked False, identify the error(s) and indicate the change or changes that are needed to make the statement true.

1. The expenditure cycle includes payroll transactions.
2. All purchase cycle disclosures that should have been included in the financial statements have been included is a balance objective.
3. The net operating cycle represents the time from using cash to purchase goods or services to collecting cash from the sale of goods or services.
4. Vendors tardy in sending invoices resulting in cutoff problems in recording payables lead to overstatement of expenditures and payables.
5. The expenditure cycle is especially prone to a risk of employee fraud through unauthorized disbursement of cash.

Solution Preview

1. The expenditure cycle includes payroll transactions.

(T)

2. All purchase cycle disclosures that should have been included in the financial statements have been ...

Solution Summary

REQUIRED: For each of the following items, indicate whether it is (T) True or (F) False. For those marked False, identify the error(s) and indicate the change or changes that are needed to make the statement true.

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