Explain why the accountant suspected that the accounts had not been adjusted prior to the preparation of the trial balance. Explain to the bookkeeper the importance of adjusting entries and the potential misstatements that can result from their exclusion.

An auditor is likely to perform each of the below procedures to obtain evidence regarding the potential understatement of accounts payable at year-end (i.e., the Completeness assertion) except…   Question options:   Inspect purchase orders and receiving reports for accounts payable recorded at year-end.   Inspect the open invoice file for invoices to be paid after year-end.   All options describe procedures that can be used to identify a potential understatement of accounts payable.   Analyze cash disbursements made during the first few weeks of the subsequent year and inspect supporting documentation for each disbursement.

The auditor is MOST likely to learn of retirements of equipment through which of the following? a. Review of the purchase and allowance account. b. Review of the sales discount account. c. Analysis of the credits to the accumulated depreciation account. d. Review of insurance policy riders. e. Confirmation of recorded credits to the accounts payable account.

A client uses percentages of aging categories to calculate the allowance for doubtful accounts.  When auditing the allowance for doubtful accounts, the auditor must…   Question 4 options:   Ensure that the client’s aging categories are consistent with industry averages.   Ensure that the client has calculated the allowance for the current and all prior years using the same percentages for uncollectible accounts.   Perform tests to ensure that the aging categories are accurate.   Perform tests to ensure that management has not exercised judgment when calculating the allowance for doubtful accounts.