Audit Assertions: Identify the Assertion for the Issues Listed
Not what you're looking for?
(Assertions) In planning the audit of a client's financial statements, an auditor identified
the following issues that need audit attention.
1. The allowance for doubtful accounts is fairly presented in amount.
2. All accounts payable owed as of the balance sheet date are included in the financial
statements.
3. All purchase returns recorded in the general ledger are valid.
4. There is a risk that purchases made in the last week of the month might be recorded in
the following period.
5. The client may have factored accounts receivable.
6. The client has used special-purpose entities to finance a building. Neither the building
nor the debt is included in the financial statements.
7. A retail client values its inventory using the retail method of accounting.
8. A construction client uses the percentage of completion method for recognizing revenues.
9. A client has a defined benefit pension plan and does not have competent employees to
write footnote disclosures.
10. A client acquired a subsidiary company and paid a high amount of goodwill when the
stock market, and resulting values, were at all-time highs.
11. A client financed the acquisition of assets using preferred stock that pays a 3 percent
dividend and must be redeemed from the shareholders next year.
Required
Identify the assertion for items 1 through 11 above.
Purchase this Solution
Solution Summary
The solution identifies the audit assertion for the issues listed.
Solution Preview
1. The allowance for doubtful accounts is fairly presented in amount.
**Presentation & Disclosure
2. All accounts payable owed as of the balance sheet date are included in the financial
statements.
** Completeness
3. All purchase returns recorded in the general ledger are valid.
** Rights & Obligations
4. There is a risk that ...
Purchase this Solution
Free BrainMass Quizzes
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Operations Management
This quiz tests a student's knowledge about Operations Management