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Can someone explain WHY these answers are correct? Thanks Assertions about account balances, and related disclosures 1. Existence 2. Rights and obligations 3. Completeness 4.
Can someone explain WHY these answers are correct? Thanks
Assertions about account balances, and related disclosures 1. Existence 2. Rights and obligations 3. Completeness 4. Accuracy, valuation, and allocation 5. Classification 6. Presentation Assertions about classes of transactions 7. Occurrence 8. Completeness 9. Accuracy 10. Cutoff 11. Classification 12. Presentation Identify the specific assertion (1 through 12) that each of the following specific audit procedures (a through I) satisfies. Choose the BEST single answer for each procedure. Audit Objective a. 8 7 C. 3 5 2 AUDIT PROCEDURE Reconcile recorded cash disbursements with the cash disbursements on the bank statement. b. Examine canceled check for authorized signature, proper endorsement, and cancellation by the bank. Examine vendors' invoices of closely related accounts, such as repairs expense, to uncover items that should be property, plant, and equipment. d. Examine vendors' invoices in various property, plant, and equipment accounts to ensure that such invoices are classified, properly, as building, manufacturing, office equipment, or repairs. e. Examine any lease agreements associated with property, plant, and equipment to determine if the lease qualifies as a finance or an operating lease. f. Examine the record of the last check number used on the last day of the year and subsequently trace to the outstanding checks and the cash disbursements records. g. Compare recorded transactions in the acquisitions journal with the vendor's invoice, receiving report, and other supporting documentation. h. Review the Board of Director minutes and loan agreements for any restrictions on cash. i. Determine whether the client followed a consistent depreciation policy from period to period, and the client's depreciation calculations are correct. j. Determining if the financial instruments included in the schedule of investment activity at year-end are stated at appropriate amounts in accordance with accounting standards. k. Physically examine assets. 10 9 6 4 4 1 I. Trace the receiving reports issued after year-end to vendors' invoices. 10 Assertions about account balances, and related disclosures 1. Existence 2. Rights and obligations 3. Completeness 4. Accuracy, valuation, and allocation 5. Classification 6. Presentation Assertions about classes of transactions 7. Occurrence 8. Completeness 9. Accuracy 10. Cutoff 11. Classification 12. Presentation Identify the specific assertion (1 through 12) that each of the following specific audit procedures (a through I) satisfies. Choose the BEST single answer for each procedure. Audit Objective a. 8 7 C. 3 5 2 AUDIT PROCEDURE Reconcile recorded cash disbursements with the cash disbursements on the bank statement. b. Examine canceled check for authorized signature, proper endorsement, and cancellation by the bank. Examine vendors' invoices of closely related accounts, such as repairs expense, to uncover items that should be property, plant, and equipment. d. Examine vendors' invoices in various property, plant, and equipment accounts to ensure that such invoices are classified, properly, as building, manufacturing, office equipment, or repairs. e. Examine any lease agreements associated with property, plant, and equipment to determine if the lease qualifies as a finance or an operating lease. f. Examine the record of the last check number used on the last day of the year and subsequently trace to the outstanding checks and the cash disbursements records. g. Compare recorded transactions in the acquisitions journal with the vendor's invoice, receiving report, and other supporting documentation. h. Review the Board of Director minutes and loan agreements for any restrictions on cash. i. Determine whether the client followed a consistent depreciation policy from period to period, and the client's depreciation calculations are correct. j. Determining if the financial instruments included in the schedule of investment activity at year-end are stated at appropriate amounts in accordance with accounting standards. k. Physically examine assets. 10 9 6 4 4 1 I. Trace the receiving reports issued after year-end to vendors' invoices. 10Step by Step Solution
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