An audit trail enables a person to trace a source document to its ultimate effect on the financial statements or work back from amounts in the financial statements to source documents. Describe in detail the audit trail for the following: a. Purchases of inventory b. Sales of inventory c. Employee payroll

An audit trail enables a person to trace a source document to its ultimate effect on the financial statements or work back from amounts in the financial statements to source documents. Describe in detail the audit trail for the following: a. Purchases of inventory b. Sales of inventory c. Employee payroll

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The auditor observes the client's inventory test counts and locates the items on the client's inventory listing to test for which of the following financial statement assertions? 1. Completeness. 2. Rights and obligations. 3. Allocation and valuation. 4. Understandability and classification. O 1 O 2 O 3 O 4
Which of the following items is considered an original source document? Select one: a. accounts receivable b. company expense account c. purchase order d. general ledger
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Indicate a specific audit procedure under each of the following categories, as applied particularly in the sales and collection cycle.a. test of controlb. substantive test of transactionsc. substantive test of account balances
Describe one specific substantive audit procedure you would use to test the financial statement assertion you are most concerned with based on your analysis of inventory in the bakery
Which of the following can be used as a fundamental source of information in an audit? a. Money in the safe b. Oral testimony of the person responsible for accounting c. An e-mail from a supplier d. None e. Income statement
A company indicates the condition of goods obtained onwhich of the following documents?a. Purchase requisitionb. Purchase orderc. Receiving reportd. Supplier invoice
Discuss the meaning of the following terms and how they apply to auditing accounts receivable: a. tie-in b. completeness c. existence d. accuracy e. rights f. realizable value g. cutoff h. classification Please provide references.
Which of the following is an example of "other information" that could be used by an auditor as evidential matter supporting the financial statements? Worksheets supporting cost allocations. Accounting manuals. Special journals. Confirmation of accounts receivable.
Which of the following types of audit evidence is the least persuasive? a. Bank statements obtained from the client. O b. O c. Prenumbered purchase order forms. O d. Correspondence from the client's attorney about litigation. Test counts of inventory performed by the auditor.