Differentiate between test of details of balances, tests of controls and substantive tests of transactions for the sales and collection cycle. Also, determine the effect of tests of controls and substantive test over test of details of balances.

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Answer 1

Question

Chapter 16, Problem 1RQ

To determine

Differentiate between test of details of balances, tests of controls and substantive tests of transactions for the sales and collection cycle. Also, determine the effect of tests of controls and substantive test over test of details of balances.

Expert Solution & Answer

Explanation of Solution

Difference between test of details of balances, test of control and substantive tests of transactions for sales and collection cycle are as mentioned below:

Test of details of balances: are used to identify whether the statements of transaction are valid and correct or not. It is a method of collection of facts and figures that supports the statements. For example: An auditor can use prepaid income liabilities account by examining each of the prepaid income balance.
Test of control and substantive test of transaction for the sales and collection cycle: are focused upon verifying whether the internal control of the audit process are working or not and also to test the actuality of the transaction in the financial statements. For example: Inspection of a fixed asset

The test of control and substantive test of transaction results affects the size of the sample, method, timing and units selected for the test of details of balances, as effective internal control will reduce the testing.

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Distinguish among tests of details of balances, tests of controls,and substantive tests of transactions for the sales and collection cycle. Explain how thetests of controls and substantive tests of transactions affect the tests of details of balances.

What is the purpose of analytical reviews in the audit of revenue cycle accounts? Please give an example.

Describe the steps that auditors use to test controls over sales and collections. Please provide references if any.

Answer 2

Question

Chapter 16, Problem 1RQ

To determine

Differentiate between test of details of balances, tests of controls and substantive tests of transactions for the sales and collection cycle. Also, determine the effect of tests of controls and substantive test over test of details of balances.

Expert Solution & Answer

Explanation of Solution

Difference between test of details of balances, test of control and substantive tests of transactions for sales and collection cycle are as mentioned below:

Test of details of balances: are used to identify whether the statements of transaction are valid and correct or not. It is a method of collection of facts and figures that supports the statements. For example: An auditor can use prepaid income liabilities account by examining each of the prepaid income balance.
Test of control and substantive test of transaction for the sales and collection cycle: are focused upon verifying whether the internal control of the audit process are working or not and also to test the actuality of the transaction in the financial statements. For example: Inspection of a fixed asset

The test of control and substantive test of transaction results affects the size of the sample, method, timing and units selected for the test of details of balances, as effective internal control will reduce the testing.

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Answer 3

Question

Chapter 16, Problem 1RQ

To determine

Differentiate between test of details of balances, tests of controls and substantive tests of transactions for the sales and collection cycle. Also, determine the effect of tests of controls and substantive test over test of details of balances.

Expert Solution & Answer

Explanation of Solution

Difference between test of details of balances, test of control and substantive tests of transactions for sales and collection cycle are as mentioned below:

Test of details of balances: are used to identify whether the statements of transaction are valid and correct or not. It is a method of collection of facts and figures that supports the statements. For example: An auditor can use prepaid income liabilities account by examining each of the prepaid income balance.
Test of control and substantive test of transaction for the sales and collection cycle: are focused upon verifying whether the internal control of the audit process are working or not and also to test the actuality of the transaction in the financial statements. For example: Inspection of a fixed asset

The test of control and substantive test of transaction results affects the size of the sample, method, timing and units selected for the test of details of balances, as effective internal control will reduce the testing.

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Answer 4

Question

Chapter 16, Problem 1RQ

To determine

Differentiate between test of details of balances, tests of controls and substantive tests of transactions for the sales and collection cycle. Also, determine the effect of tests of controls and substantive test over test of details of balances.

Expert Solution & Answer

Explanation of Solution

Difference between test of details of balances, test of control and substantive tests of transactions for sales and collection cycle are as mentioned below:

Test of details of balances: are used to identify whether the statements of transaction are valid and correct or not. It is a method of collection of facts and figures that supports the statements. For example: An auditor can use prepaid income liabilities account by examining each of the prepaid income balance.
Test of control and substantive test of transaction for the sales and collection cycle: are focused upon verifying whether the internal control of the audit process are working or not and also to test the actuality of the transaction in the financial statements. For example: Inspection of a fixed asset

The test of control and substantive test of transaction results affects the size of the sample, method, timing and units selected for the test of details of balances, as effective internal control will reduce the testing.

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Answer 5

Chapter 16, Problem 1RQ

To determine

Differentiate between test of details of balances, tests of controls and substantive tests of transactions for the sales and collection cycle. Also, determine the effect of tests of controls and substantive test over test of details of balances.

Expert Solution & Answer

Explanation of Solution

Difference between test of details of balances, test of control and substantive tests of transactions for sales and collection cycle are as mentioned below:

Test of details of balances: are used to identify whether the statements of transaction are valid and correct or not. It is a method of collection of facts and figures that supports the statements. For example: An auditor can use prepaid income liabilities account by examining each of the prepaid income balance.
Test of control and substantive test of transaction for the sales and collection cycle: are focused upon verifying whether the internal control of the audit process are working or not and also to test the actuality of the transaction in the financial statements. For example: Inspection of a fixed asset

The test of control and substantive test of transaction results affects the size of the sample, method, timing and units selected for the test of details of balances, as effective internal control will reduce the testing.

Answer 6

Chapter 16, Problem 1RQ

To determine

Differentiate between test of details of balances, tests of controls and substantive tests of transactions for the sales and collection cycle. Also, determine the effect of tests of controls and substantive test over test of details of balances.

Expert Solution & Answer

Explanation of Solution

Difference between test of details of balances, test of control and substantive tests of transactions for sales and collection cycle are as mentioned below:

Test of details of balances: are used to identify whether the statements of transaction are valid and correct or not. It is a method of collection of facts and figures that supports the statements. For example: An auditor can use prepaid income liabilities account by examining each of the prepaid income balance.
Test of control and substantive test of transaction for the sales and collection cycle: are focused upon verifying whether the internal control of the audit process are working or not and also to test the actuality of the transaction in the financial statements. For example: Inspection of a fixed asset

The test of control and substantive test of transaction results affects the size of the sample, method, timing and units selected for the test of details of balances, as effective internal control will reduce the testing.

Answer 7

Chapter 16, Problem 1RQ

To determine

Differentiate between test of details of balances, tests of controls and substantive tests of transactions for the sales and collection cycle. Also, determine the effect of tests of controls and substantive test over test of details of balances.

Answer 8

Expert Solution & Answer

Explanation of Solution

Difference between test of details of balances, test of control and substantive tests of transactions for sales and collection cycle are as mentioned below:

Test of details of balances: are used to identify whether the statements of transaction are valid and correct or not. It is a method of collection of facts and figures that supports the statements. For example: An auditor can use prepaid income liabilities account by examining each of the prepaid income balance.
Test of control and substantive test of transaction for the sales and collection cycle: are focused upon verifying whether the internal control of the audit process are working or not and also to test the actuality of the transaction in the financial statements. For example: Inspection of a fixed asset

The test of control and substantive test of transaction results affects the size of the sample, method, timing and units selected for the test of details of balances, as effective internal control will reduce the testing.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 16 - Prob. 1RQ Ch. 16 - Prob. 2RQ Ch. 16 - Prob. 3RQ Ch. 16 - Prob. 4RQ Ch. 16 - Explain why you agree or disagree with the...Ch. 16 - Prob. 6RQ Ch. 16 - Prob. 7RQ Ch. 16 - Prob. 8RQ Ch. 16 - Prob. 9RQ Ch. 16 - Prob. 10RQ

Differentiate between test of details of balances, tests of controls and substantive tests of transactions for the sales and collection cycle. Also, determine the effect of tests of controls and substantive test over test of details of balances.

Differentiate between test of details of balances, tests of controls and substantive tests of transactions for the sales and collection cycle. Also, determine the effect of tests of controls and substantive test over test of details of balances.

Explanation of Solution

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