Question

Review the select balance sheet and income statement for Apple, Inc. (found in the 10-K).For the account assigned, identify assertions which is relevant for the assigned accounts.

1. Account Receivable

2.Allowance for Accounts receivable

3. Debt

4. Operating expenses
Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 29, September 28, 2019 September 30, 2017 2018 $ $ Net sales: Products Services Total net sales 213,883 46,291 260,174 225,847 39,748 265,595 196,534 32,700 229,234 Cost of sales: Products Services Total cost of sales Gross margin 144,996 16,786 161,782 98,392 148, 164 15,592 163,756 101,839 126,337 14,711 141,048 88,186 Operating expenses: Research and development Selling, general and administrative Total operating expenses 16,217 18,245 34,462 14,236 16,705 30,941 11,581 15,261 26,842 Operating income Other income/(expense), net Income before provision for income taxes Provision for income taxes Net income 63,930 1,807 65,737 10,481 55,256 70,898 2,005 72,903 13,372 59,531 61,344 2,745 64,089 15,738 48,351 $ $ $ Earnings per share: Basic Diluted $ $ 11.97 11.89 $ $ 12.01 11.91 $ $ 9.27 9.21 Shares used in computing eamings per share: Basic Diluted 4,617,834 4,648,913 4,955,377 5,000,109 5,217,242 5,251,692 See accompanying Notes to Consolidated Financial Statements. Apple Inc. 2019 Form 10-K | 29

Answer 1

Let us first understand the concept of assertions.

Audit Assertions are the implicit or explicit claims and representations made by the management responsible for the preparation of financial statements regarding the appropriateness of the various elements of financial statements and disclosures.

Audit Assertions are also known as Management Assertions and Financial Statement Assertions.

Types & Examples

Assertions may be classified into the following types:

Assertions relating to classes of transactions
Assertions	Explanation	Examples: Salaries & Wages Cost
Occurrence	Transactions recognized in the financial statements have occurred and relate to the entity.	Salaries & wages expense has been incurred during the period in respect of the personnel employed by the entity. Salaries and wages expense does not include the payroll cost of any unauthorized personnel.
Completeness	All transactions that were supposed to be recorded have been recognized in the financial statements.	Salaries and wages cost in respect of all personnel have been fully accounted for.
Accuracy	Transactions have been recorded accurately at their appropriate amounts.	Salaries and wages cost has been calculated accurately. Any adjustments such as tax deduction at source have been correctly reconciled and accounted for.
Cut-off	Transactions have been recognized in the correct accounting periods.	Salaries and wages cost recognized during the period relates to the current accounting period. Any accrued and prepaid expenses have been accounted for correctly in the financial statements.
Classification	Transactions have been classified and presented fairly in the financial statements.	Salaries and wages cost has been fairly allocated between: -Operating expenses incurred in production activities; -General and administrative expenses; and -Cost of personnel relating to any self-constructed assets other than inventory.

Assertions relating to assets, liabilities and equity balances at the period end
Assertions	Explanation	Examples: Inventory balance
Existence	Assets, liabilities and equity balances exist at the period end.	Inventory recognized in the balance sheet exists at the period end.
Completeness	All assets, liabilities and equity balances that were supposed to be recorded have been recognized in the financial statements.	All inventory units that should have been recorded have been recognized in the financial statements. Any inventory held by a third party on behalf of the audit entity has been included in the inventory balance.
Rights & Obligations	Entity has the right to ownership or use of the recognized assets, and the liabilities recognized in the financial statements represent the obligations of the entity.	Audit entity owns or controls the inventory recognized in the financial statements. Any inventory held by the audit entity on account of another entity has not been recognized as part of inventory of the audit entity.
Valuation	Assets, liabilities and equity balances have been valued appropriately.	Inventory has been recognized at the lower of cost and net realizable value in accordance with IAS 2 Inventories. Any costs that could not be reasonably allocated to the cost of production (e.g. general and administrative costs) and any abnormal wastage has been excluded from the cost of inventory. An acceptable valuation basis has been used to value inventory cost at the period end (e.g. FIFO, AVCO, etc.)

Assertions relating to presentation and disclosures
Assertions	Explanation	Examples: Related Party Disclosures
Occurrence	Transactions and events disclosed in the financial statements have occurred and relate to the entity.	Transactions with related parties disclosed in the notes of financial statements have occurred during the period and relate to the audit entity.
Completeness	All transactions, balances, events and other matters that should have been disclosed have been disclosed in the financial statements.	All related parties, related party transactions and balances that should have been disclosed have been disclosed in the notes of financial statements.
Classification & Understandability	Disclosed events, transactions, balances and other financial matters have been classified appropriately and presented clearly in a manner that promotes the understandability of information contained in the financial statements.	The nature of related party transactions, balances and events has been clearly disclosed in the notes of financial statements. Users of the financial statements can clearly determine the financial statement captions affected by the related party transactions and balances and can easily ascertain their financial effect.
Accuracy & Valuation	Transactions, events, balances and other financial matters have been disclosed accurately at their appropriate amounts.	Related party transactions, balances and events have been disclosed accurately at their appropriate amounts.

Answer:

1) Account Receivable: As this is a asset. Existence , Completeness , Valuation , Rights and Obligations.

2) Allowance for Account Receivable: As this is a liability item. Existence , Rights Completeness Valuation, Rights and Obligations.

3)Debt: As this is a Liability. Existence , Completeness, Valuation, Rights and Obligations

Operating Expenses: As this is a Profit and Loss item. Occurance , Completeness , Accuracy and Valuation , Classification & Understandability.