Management and Organizational Studies 3363A/B Chapter Notes - Chapter 16: General Ledger, Purchase Order, Accounts Payable

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3363A/B
• Professor: Michelle Loveland

Document Summary

Inventory + raw materials: accounts payable, purchases + purchase returns and discounts, cash, property, plant and equipment, expenses commission, advertising, insurance, etc. Capital acquisition and payment: share capital (not capital assets, deals with dividends, financing, etc, not discussed in this chapter. A&p functions: acquisition, processing purchase orders, vendor master file changes, receiving goods and services, recognizing the liability, payment, recording cash disbursements. Typical tests include: three way match - test of acquisition, purchase order, invoice & shipping document, price and quantity should match, strong internal controls will increase reliability, authorization of payment test of payment. Tests of controls: attribute sampling is common in the area of tests of control, because of the number of accounts affected, the auditor may choose a low tolerance rate. It is also common for the auditor to stratify so that large dollar or unusual amounts are segregated and separately tested.