Read the following statements carefully: 1- Recalculate the allowance of Accounts receivables. 2- Vouch sales journal entries to sales invoices. 3- Inspect Bank statement in the client's file. 4- Trace sales invoices to account receivable ledger. 5- Ask payroll department to make report about the calculating criteria of the over time. 6- Inspect the disclosure of inventories in the financial statements. 7- Ask management about inventories the client has legal title on it. 8- Observe that Inventory quantities include all products, materials, and supplies on hand. Instructions: 1-Indicate the type of Evidence for each statement. 2-Indicate the type of Assertion for each statement. No. Type of Evidence 1 2 3 4 5 6 7 8 Type of Assertion
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Evidence: Analytical procedures Assertion: Valuation 2- Vouch sales journal entries to sales invoices. Evidence: Inspection of documents Assertion: Existence 3- Inspect Bank statement in the client's file. Evidence: Inspection of documents Assertion: Show more…
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Auditors gather several different types of evidence during the audit, including physical evidence, third-party representation, documentary evidence, computations, and client representation. Listed below are FIVE (5) audit procedures that are typically performed in an audit: i. Observe the client's inventory-taking procedures. ii. Computer printout from the client's accounts receivable subsidiary ledger. iii. Obtain a report on the valuation of inventory by a specialist. iv. Examine an invoice in support of a sales transaction. v. Inspect the client's bank statements. Required: a) Verify whether each of the above (i) to (v) documentary evidence is used, is received directly by auditors, created externally and held by the client, or created internally by the client. b) Exhibit the difference between the relative reliability of the above THREE (3) forms of documentary evidence.
Madhur L.
3. a. Identify the main concerns in the analysis of accounts receivable. b. Describe information, other than that usually available in financial statements, that we should collect to assess the risk of noncollectibility of receivables. 4. a. What is meant by the factoring or securitization of receivables? b. What does selling receivables with recourse mean? What does it mean to sell them without recourse? c. How does selling receivables (particularly with recourse) potentially distort the balance sheet? 5. Analysts must be alert to what aspects of goodwill in their analysis of financial statements? 6. Explain when an expenditure should be capitalized versus when it should be expensed. 7. Based on the Expenditure Capitalization, discuss the scandal of Worldcom Inc in the 2000s.
Adi S.
Akash M.
Recommended Textbooks
Horngren’s Cost Accounting
Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
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