For each management assertion noted above, indicate an example of a misstatement that could occur for revenue transactions

For each management assertion noted above, indicate an example of a misstatement that could occur for revenue transactions.

Concept Reinforcement Test 2 – Audit Spring 2016

 

 

1. Management Assertions about classes of transactions are
   1. Occurrence
   2. Completeness
   3. Authorization
   4. Accuracy
   5. Cutoff
   6. Classification

Required: For each management assertion noted above, indicate an example of a misstatement that could occur for revenue transactions. (Chapter 5)

2. Sarah is auditing the sales of a new client. In one procedure Sarah performs, she begins with the original sales documents and then searches the accounting records to find the corresponding entry. What test is Sarah performing and what management assertion is she testing?
3. Sarah is auditing the sales of another client. In one procedure Sarah performs, she begins with a sample of sales transactions from the sales journal and finds the corresponding sales document. What test is Sarah performing and what management assertion is she testing? (Chapter 5)

 

3. For each of the following specific audit procedures, indicate the type of audit procedure it represents: (1) inspection of records, (2) inspection of tangible assets, (3) observation, (4) inquiry, (5) confirmation, (6) recalculation, (7) reperformance, (8) analytical procedures, (9) scanning (Chapter 5)
4. Sending a written request to the entitys customers requesting that they report the amount owed to the entity
5. Examining large sales invoices for a period of two days before and after year-end to determine if sales are recorded in the proper period
6. Agreeing the total of the accounts receivable subsidiary ledger to the accounts receivable general ledger accounts
7. Discussing the adequacy of the allowance for doubtful accounts with the credit manager
8. Comparing the current year gross profit percentage with the gross profit percentage of the last four years
9. Examining a new plastic extrusion machine to ensure that this major acquisition was received
10. Watching the entitys warehouse personnels count of the raw material inventory
11. Performing test counts of the warehouse personnels count of the raw material
12. Obtaining a letter from the entitys attorney indicating that there were no lawsuits in progress against the entity
13. Tracing the prices used by the entitys attorney indicating that there were no lawsuits in progress against the entity
14. Reviewing the general ledger for unusual adjusting entries

 

4. According to the text, what are the main functions of working papers? (Chapter 5)

 

5. The text gives four categories of Control Activities. Please list the first three and provide an example of each. For the examples you provide, it may be helpful to think in terms of the transaction cycles (i.e expenditure, revenue, etc..)  (Chapter 6)

 

For each management assertion noted above, indicate an example of a misstatement that could occur for revenue transactions