Question
In class, we discussed the notion of an audit philosophy of tests of accounts for overstatement and understatement to gain audit efficiencies. Consider the following
In class, we discussed the notion of an audit philosophy of tests of accounts for overstatement and understatement to gain audit efficiencies. Consider the following statements: I. Testing Sales for UNDERstatement, conceptually, also tests Accounts receivable for UNDERstatement. II. Assume that company management made the following journal entry: Capital Asset (i.e. Building) XX Repairs and Maintenance Expense XX If the auditor tests the asset account for Overstatement, then conceptually: Expenses are also tested for Overstatement.
a. I is true; II is true. b. I is true; II is false. c. I is false; II is true. d. I is false; II is false.
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