22. Auditors consider financial statement assertions to identify appropriate audit procedures. For items i through vi,...
22. Auditors consider financial statement assertions to identify appropriate audit procedures. For items i through vi, match each assertion with the statement that most closely approximates its meaning. Each statement may be used only once. (Use letters a. – f. below.)
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a.The company legally owns the assets, and are legally on the line for paying liabilities.
b. Accounts receivable and PP&E is recorded at proper amounts taking into account allowance for bad debt expense and depreciation.
c.All assets and liabilities have should have been recorded were recorded on the Balance Sheet.
d.Revenue is recorded in the correct accounting period.
e.Reported sales have really happened, and inventory is actually at the company’s inventory location.
f.Assets are properly classified as short term and long term assets, and all related party transactions are disclosed as such on the financial statements.
Homework Answers
(i) Completeness : (c) All assets and liabilities have should have been recorded were recorded on the Balance Sheet
(ii) Cutoff : (d) Revenue is recorded in the correct accounting period.
(iii) Existence and Occurence : (e) Reported sales have really happened, and inventory is actually at the company’s inventory location
(iv) Presentation and Disclosure : (f) Assets are properly classified as short term and long term assets, and all related party transactions are disclosed as such on the financial statements.
(v) Rights and Obligation : (a) The company legally owns the assets, and are legally on the line for paying liabilities.
(vi) Valuation : (b) Accounts receivable and PP&E is recorded at proper amounts taking into account allowance for bad debt expense and depreciation.
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22. Auditors consider financial statement assertions to identify
appropriate audit procedures. For items i through
vi,...
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