The audit of income and expense accounts to ensure an accurate income is highly-inter-related with the audit of a number of balance sheet accounts. For example, several balance sheet accounts that are directly tied to income or expense accounts include:

- Inventory

- Accounts receivable

- Property, plan and equipment

- Long term investments

Notes and bonds payable

a). List the income statement items likely associated with each of the balance sheet accounts listed above.

b). When auditing the income and expense accounts, what are some of the substantive analytical procedures used?

c). For the substantive analytical procedures listed in your answer to part (b), explain what possible misstatement each procedure is designed to discover.