2. An important task in the audit of the revenue cycle is determining whether a client has appropriately recognized revenue.

a. What is the five-step process that companies should use in recognizing revenue?

b. What are the management assertions applicable to revenue recognition - list them and explain why you chose them (be specific as to your reasoning)

3. Choose the best answer and explain your answer.

An auditor most likely would make inquiries of production and sales personnel concerning possible obsolete or slow-moving inventory to support managements financial statement assertion of:

1. presentation and disclosure.
2. rights and obligations.
3. valuation or allocation.
4. existence or occurrence.