Concept explainers
a.
Concept introduction:
To indicate: The category and the primary assertion being tested insending a written request to the client's customers requesting that they report the amount owed to the client.
a.
Answer to Problem 5.33P
Account balances, Existence.
Explanation of Solution
The category and the primary assertion being tested in Sending a written request to the client's customers requesting that they report the amount owed to the client is account balances and existence respectively.
b.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: The category and the primary assertion being tested in examining large sales invoices for a period of two days before and after year-end to determine if sales are recorded in the proper period.
b.
Answer to Problem 5.33P
Transactions and events, Cutoff.
Explanation of Solution
The category and the primary assertion being tested in examining large sales invoices for a period of two days before and after year-end to determine if sales are recorded in the proper period are Transactions and events and cutoff respectively.
c.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: The category and the primary assertion being tested in Agreeing the total of the accounts receivable subsidiary ledger to the accounts receivable general ledger account.
c.
Answer to Problem 5.33P
Account balances, Completeness.
Explanation of Solution
The category and the primary assertion being tested in Agreeing the total of the accounts receivable subsidiary ledger to the accounts receivable general ledger account are account balances and completeness respectively.
d.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: The category and the primary assertion being tested in discussing the adequacy of the allowance for doubtful accounts with the credit manager.
d.
Answer to Problem 5.33P
Account balances, valuation and allocation.
Explanation of Solution
The category and the primary assertion being tested in discussing the adequacy of the allowance for doubtful accounts with the credit
e.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: The category and the primary assertion being tested in comparing the current-year gross profit percentage with the gross profit percentage for the last four years.
e.
Answer to Problem 5.33P
Account balances, valuation and allocation.
Explanation of Solution
The category and the primary assertion being tested in comparing the current-year gross profit percentage with the gross profit percentage for the last four years are account balances, and valuation and allocation respectively.
f.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: The category and the primary assertion being testedin examining a new plastic extrusion machine to ensure that this major acquisition was received.
f.
Answer to Problem 5.33P
Account balances, Existence.
Explanation of Solution
The category and the primary assertion being testedin examining a new plastic extrusion machine to ensure that this major acquisition was received are account balance and existence respectively.
g.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: The category and the primary assertion being tested in watching the client's warehouse personnel count the raw materials inventory.
g.
Answer to Problem 5.33P
Account balances, completeness or existence.
Explanation of Solution
The category and the primary assertion being tested in watching the client's warehouse personnel count the raw materials inventory are account balances and completeness or existence respectively.
h.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: The category and the primary assertion being tested in performing test counts of the warehouse personnel's count of the raw material.
h.
Answer to Problem 5.33P
Account balances, completeness or existence.
Explanation of Solution
The category and the primary assertion being tested in performing test counts of the warehouse personnel's count of the raw material are account balances and completeness or existence respectively.
i.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: The category and the primary assertion being tested in obtaining a letter from the client's attorney indicating that there were no lawsuits in progress against the client.
i.
Answer to Problem 5.33P
Account balances, Valuation and allocation and Completeness.
Explanation of Solution
The category and the primary assertion being tested in obtaining a letter from the client's attorney indicating that there were no lawsuits in progress against the client are Account balances, Valuation and allocation and Completeness respectively.
j.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: The category and the primary assertion being tested in tracing the prices used by the client's billing program for pricing sales invoices to the client's approved price list.
j.
Answer to Problem 5.33P
Transaction and events, Accuracy.
Explanation of Solution
The category and the primary assertion being tested in tracing the prices used by the client's billing program for pricing sales invoices to the client's approved price list are Transaction and events, Accuracy respectively.
k.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: The category and the primary assertion being tested in reviewing the general ledger for unusual
k.
Answer to Problem 5.33P
Account balances, Valuation and allocation.
Explanation of Solution
The category and the primary assertion being tested in reviewing the general ledger for unusual adjusting entries are Account balances, and Valuation and allocation respectively.
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Chapter 5 Solutions
AUDITING RMU
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- Listed in the table below are some common audit procedures. For each procedure below: Identify whether it is a test of control (TOC), substantive test of transaction (STOT), analytical procedure (AP) or a test of details of balances (TODOB). Write your answer in the 2nd column of the table below. State one audit objective that is being satisfied. Write your answer in the 3rd column of the table below.arrow_forwardOnce risks are identified, auditors assess the risk of material misstatement at the _______ level for these significant classes of transactions and account balances. A. disclosure B. financial statement C. relevant assertion level D. accountarrow_forwardWhich of the following is the major purpose of performing analytical procedures in internal audits? a. To perform additional audit procedures. b. To plan the audit engagement. c. To obtain audit evidence. d. To study relationships among elements of information.arrow_forward
- In determining whether transactions were really exist, the direction of the audit testing should be from the A. Financial Statements B. Original Source Documents C.General Ledger Balances. D.General Journal Entriesarrow_forwardIndicate 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 balancesarrow_forwardThe following are procedures to obtain audit evidence except: a. Physical examination. b. Organization. c. Confirmation. d. Analytical procedures.arrow_forward
- Auditors identify and assess the risk of material misstatement at these two levels Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Financial Statement level and Information Process Goals level b Financial statement level and Operations Process Goals level c Information Process Goals level and Operations process goals level d Financial Statement Level and Relevant Assertion Levelarrow_forwardessentially describe what materiality means in the context of the audit.arrow_forwardState the relationship between the confirmation of accountsreceivable and the results of the tests of controls and substantive tests of transactions.arrow_forward
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