Exercises Exercise 1 1. No collection was ever made for a sale to Sister Company because the invoice was never billed. The following matters were noted in the audit of Pat Express. 2. A cash collection for the account of Rain Company was misappropriated by the cashier. 3. The accounts receivable clerk posted to the Kiko's account a sale made to Josie. 4. A shipment included four pairs of JC-1 clamps rather than four individual clamps. 5. A properly executed invoice for a valid sale was not recorded. 6. An order was never billed because the shipping document was misplaced. 7. In an attempt to meet profit goals, more goods were shipped than customers had ordered. 8. A sale that occurred on December 31, the last day of the accounting period, was recorded in the next accounting period. Required: Answer the following questions about each of the eight situations. a. What control would have prevented or detected the misstatement? b. What test should an auditor perform to test the control? To which financial statement assertion does the misstatement relate? Exercise 2

Exercises Exercise 1 1. No collection was ever made for a sale to Sister Company because the invoice was never billed. The following matters were noted in the audit of Pat Express. 2. A cash collection for the account of Rain Company was misappropriated by the cashier. 3. The accounts receivable clerk posted to the Kiko's account a sale made to Josie. 4. A shipment included four pairs of JC-1 clamps rather than four individual clamps. 5. A properly executed invoice for a valid sale was not recorded. 6. An order was never billed because the shipping document was misplaced. 7. In an attempt to meet profit goals, more goods were shipped than customers had ordered. 8. A sale that occurred on December 31, the last day of the accounting period, was recorded in the next accounting period. Required: Answer the following questions about each of the eight situations. a. What control would have prevented or detected the misstatement? b. What test should an auditor perform to test the control? To which financial statement assertion does the misstatement relate? Exercise 2

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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