Capital Electronics Departmental Stores sell a high proportion of their merchandise on hire purchase. The system of dealing with HP sales is highly organized and well controlled. The HP debtors ledger is kept on a specially designed microcomputer system. The HP debtors of the company as on 31.3.2007 appear in the accounts at 4.6 lakhs out of gross assets 20.5 lakhs.

Discussion

a. What assertions are the directors implying in stating the HP debtors at 4.6 lakhs?
b. What possible misstatements could occur?
c. What varieties of evidence may be collected regarding this current asset?
d. What basic techniques for collecting evidence can be applied to the item?