Part 4 Audit Philosophy and Direction of Tests (30 points)

We considered broad "accounting systems" involving the Sales Cycle AND Inventory Observation to illustrate the direction of testing involving testing for overstatement or understatement. Requirements:

3. The double-entry accounting system conceptually can be used to gain audit efficiencies. Use journal entries [showing the debit and credit] and explain how by testing another account [name the account] one can also test (A) Accounts receivable for UNDERstatement; and, how by testing another account[name the account] one can test

4. Discuss briefly a type of audit evidence used to test sales for UNDERstatement?

3A. JE & Discussion. Accounts Receivable and another account.

4. Sales for Understatement. The type of evidence is _____. Discuss.

help 3A & 4