Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

16-26(Objective16-3)The following misstatements are sometimes found in the sales and collection cycle's account balances: Several cash receipts were posted to the incorrect customer accounts. A

16-26(Objective16-3)The following misstatements are sometimes found in the sales and collection cycle's account balances:

  1. Several cash receipts were posted to the incorrect customer accounts.
  2. A shipment made in the subsequent period is recorded as a current period sale.
  3. The allowance for uncollectible accounts is inadequate because of the client's failure to reflect depressed economic conditions in the allowance.
  4. Several accounts receivable are in dispute as a result of claims of defective merchandise.
  5. The pledging of accounts receivable to the bank for a loan is not disclosed in the financial statements.
  6. Goods were returned for credit on the last day of the fiscal year but the sales return was not recorded until the following fiscal year.
  7. Several accounts receivable in the accounts receivable master file are not included in the aged trial balance.
  8. One account receivable in the accounts receivable master file is included on the aged trial balance twice.
  9. Long-term interest-bearing notes receivable from affiliated companies are included in accounts receivable.

Required

  1. For each misstatement, identify the balance-related audit objective to which it pertains.
  2. For each misstatement, list an internal control that should prevent it.
  3. For each misstatement, list one test of details of balances audit procedure that the auditor can use to detect it.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing and Assurance services an integrated approach

Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley

14th Edition

133081605, 132575957, 9780133081602, 978-0132575959

More Books

Students also viewed these Accounting questions