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GAAP Exercises

Hi, I need your assistance with these study guide questions.

1.Which one of the following assertions is not made by management in placing an item in the financial statements?
a. existence or occurrence
b. direct controls
c. rights and obligations
d. presentation and disclosure
e .completeness

2. If reported sales for 20X0 erroneously include sales that occurred in 20X1, the assertion violated on the 20X0 statements would be:
a.existence or occurrence
b. completeness.
c. valuation or allocation.
d. presentation and disclosure.
e. rights and obligations.

3. The completeness assertion would be violated if:
a. fictitious sales transactions were included in accounts receivable.
b. the allowance for doubtful accounts was understated.
c. unbilled shipments had occurred during the period.
d. disclosure in the statements of pledged receivables was inadequate.
e. the balance of accounts payable was overstated.

4. The rights and obligations assertion applies to:
a.current liability items only.
b.revenue and expense items only.
c. both income statement and balance sheet items.
d.assets that are not owned by the company.
e. balance sheet items only.

5. Determining whether amounts are in conformity with Generally Applied Accounting Principles (GAAP) addresses the proper measurement of assets, liabilities, revenues, and expenses, which includes all of the following except:

a. the reasonableness of management's accounting estimates.
b. proper application of valuation principles such as cost, net reliable value, market value, and present value.
c. consistency in the application of accounting principles.
D the reasonableness of management's accounting policies.
E proper application of the matching principle.

(6) Specific audit objectives are normally:

a. the same as the categories of management's financial statement assertions.
b. developed for each item in the financial statements and derived from the categories of management's financial statement assertions.
c. derived from the categories of management's financial statement assertions.
d. developed for each item in the financial statements.
e. developed for material items in the financial statements.

Solution Preview

-- This is to be used along to aid in your audit study purposes:

1.Which one of the following assertions is not made by management in placing an item in the financial statements?
b. direct controls <-- There is no such thing as a direct control assertion.

2. If reported sales for 20X0 erroneously include sales that occurred in 20X1, the assertion violated on the 20X0 statements would be:
c. valuation or allocation. ...

Solution Summary

This solution provides the correct answers with explanations to the accounting questions listed.

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