Audit and Assurance Practice Exam

Which of the following accounts is not part of the acquisition and payment cycle?

1. Accounts Receivable

2. Accounts Payable

3. Inventory

4. Cash

The correct answer is: Accounts Receivable

The acquisition and payment cycle primarily involves transactions related to the purchase of goods and services, focusing on how a company acquires inventory or services and makes payments for them. Within this context, accounts payable, inventory, and cash are all directly linked to the cycle: - Accounts payable represents the obligations that arise when a company purchases goods or services on credit. - Inventory indicates the goods a company has acquired, either to sell or to use in operations. - Cash is involved when making payments for those acquisitions. Accounts receivable, on the other hand, relates to money owed to a business from customers who have purchased goods or services on credit. This aspect is part of the revenue cycle, which deals with the company's sales and collections, rather than the acquisition and payment cycle. Therefore, accounts receivable does not fit into the context of the acquisition and payment cycle, making it the correct answer.