Question 2 (18 marks) The following are examples of audit procedures: 1. Watch employees count inventory to determine whether company procedures are being followed 2. Count a sample of inventory items and record the amount in the audit files 3. Calculate the ratio of sales commission expense to sales as a test of sales commissions 4. Review the accounts receivable with the credit manager to evaluate their collectibility 5. Compare a sales invoice with the sales journal for customer name and amount 6. Obtain a written statement from a bank stating that the client has $15,671 on deposit and liabilities of $500,000 on a demand note. 7. Add the sales journal entries to determine whether they were correctly totaled. 8. Obtain a letter from the client's attorney addressed to the CPA firm stating that the attorney is not aware of any existing lawsuits. 9. Extend the cost of inventory times the quantity on an inventory listing to test whether it is accurate, 10. Obtain a letter from an insurance company to the CPA firm stating the amount of the fire insurance coverage on buildings and equipment. 11. Examine an insurance policy stating the amount of the fire insurance coverage on buildings and equipment. 12. Calculate the ratio of cost of goods sold to sales as a test of overall reasonableness of gross margin relative to the preceding year. 13. Obtain information about internal control by requesting the client to fill out a questionnaire. 14. Trace goods dispatch notes/sales invoices to entries in sales ledger and trade receivable subledger 15. Examine a piece of equipment to make sure that a major acquisition was actually received and is in operation corporate minutes to determine the authorization of the issue of bonds 17. Discuss and confirm with management that there are no unrecorded 18. Review the total of repairs and maintenance for each month to determine whether any month's total was unusually large. Required Classify each of the preceding items according to the types of audit evidence: (1) inspection of asset, (2) confirmation, (3) inspection of documents (4) analytical procedures, (5) inquiries, (6) recalculation () reperformance, and (8) observation (18 marks) Audit Procedures (list out the item numbers)