EBK PRINCIPLES OF AUDITING & OTHER ASSU
21st Edition
ISBN: 9781260299434
Author: WHITTINGTON
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 11B, Problem 1P
To determine
Review the audit plan and identify the substantive
Expert Solution & Answer
Explanation of Solution
Substantive audit procedure: The particular accounts balances from the financial statements are again investigated to substantiate those balances to address the risk of material misstatement of the financial statements identified during the audit procedure.
The risk of material misstatement: Risk of material misstatement arises when the financial statement carries the misstatement before the audit. This could result in two cases, inherent risk and control risk.
Material misstatement: Risk assessment procedures performed by the auditors is aimed at identifying any misstated information in the financial statements that will lead to any fraud if not audited then it is called the material misstatement of financial records. Some matters are indispensable for the fair representation of the financial statements and to keep the financial statements free from any such material misstatement audit is performed.
Identify the substantive audit procedure to address the risk of material misstatement:
- 1. Review the aging of accounts receivables
trial balances with the respective third parties. - 2. The customer’s account sample should be confirmed.
- 3. Determine the sales transactions in the last week of the current year with the delivery receipts inspection from the sales records.
- 4. Sales returns should be reviewed through the credit receipts and credit allowances.
- 5. Review the sales return in order to decide whether any adjustments are required to record as the year-end items.
- 6. Inspecting and reviewing the delivery receipts of sales records occurred during the year-end.
- 7. Salesman’s modifications should be inquired and reviewed to discover if they are allowed by the management like providing an extra period for returning goods.
- 8. Reviewing and confirming the contract terms for consulting with the customers as well as how the existing contracts are progressing.
- 9. Comparing actual billing and basis for that billing for the consulting contracts by examining time records and the duration of the job performed.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
subject = general accounting
Please explain the solution to this general accounting problem with accurate explanations.
Can you explain the correct methodology to solve this financial accounting problem?
Chapter 11B Solutions
EBK PRINCIPLES OF AUDITING & OTHER ASSU
Knowledge Booster
Similar questions
- Q1. S-Sports Ltd specialises in selling premium sports equipment. Over the month, it recorded the following transactions. - Incurred $10,000 on credit for a one-time promotional event organised for its customers and local sports team. This amount will be paid in the coming month. - Made sales of $50,000 to customers, of which $5,000 is credit sales and will be collected in the following month. The goods sold were purchased from a local supplier at $20,000. -Purchased $15,000 of goods from a supplier on credit, with payment due in 30 days. - Paid rents of $12,000 for three months, with this month being the first month. -Repaired a window broken by a typhoon in summer. The repair cost is $3,000 in cash. -Paid supplier $25,000 for goods purchased last month. -Collected $8,000 in advance and promised to deliver goods the following month. -Incurred $1,800 depreciation expense and $9,000 other operating expenses. The operating expenses will be paid early next month. Q. For each item…arrow_forwardI am searching for a clear explanation of this financial accounting problem with valid methods.arrow_forwardHii, Tutor Give answerarrow_forward
- Please provide the answer to this general accounting question using the right approach.arrow_forwardI need guidance with this general accounting problem using the right accounting principles.arrow_forwardPlease provide the correct answer to this financial accounting problem using valid calculations.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education