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Present your answers in the following structure: Type of procedure No. (i) (ii) Assertion tested

Present your answers in the following structure: Type of procedure No. (i) (ii) Assertion tested

FINANCIAL ACCOUNTING
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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Present your answers in the following structure: Type of procedure No. (i) (ii) Assertion tested
Transcribed Image Text:Present your answers in the following structure: Type of procedure No. (i) (ii) Assertion tested
Question 2 Auditors performed the following audit procedures in the substantive testing of the accounts. For each of the procedures listed below, identify the type of audit procedure used and identify the assertion tested. (i) Tour client's plant to look for a newly acquired machine at the production floor and testing the functionality of the machine. (ii) Select some samples of sales invoice and check them against the corresponding shipping documents. (iii) Review the receivable aging with credit manager to audit the provision for doubtful debt accounts. (iv) Select some samples of sales invoice and check the information against the price listing and multiply the quantity with the unit price. (v) Calculate the ratio of depreciation expense to total non-current assets as a test of overall reasonableness. (vi) Select some inventory samples and check them against the records. (vii) Request for a copy of client's business loan agreement and review the terms and condition in the agreement. (viii) Review sales transactions recorded in the last few days of the financial year and check the corresponding shipping documents of the sales. (ix) Request acknowledgement from a major customer as to receivable balance shown to be due to the audit client. (x) Watch inventory count by client personnel during stock take.
Transcribed Image Text:Question 2 Auditors performed the following audit procedures in the substantive testing of the accounts. For each of the procedures listed below, identify the type of audit procedure used and identify the assertion tested. (i) Tour client's plant to look for a newly acquired machine at the production floor and testing the functionality of the machine. (ii) Select some samples of sales invoice and check them against the corresponding shipping documents. (iii) Review the receivable aging with credit manager to audit the provision for doubtful debt accounts. (iv) Select some samples of sales invoice and check the information against the price listing and multiply the quantity with the unit price. (v) Calculate the ratio of depreciation expense to total non-current assets as a test of overall reasonableness. (vi) Select some inventory samples and check them against the records. (vii) Request for a copy of client's business loan agreement and review the terms and condition in the agreement. (viii) Review sales transactions recorded in the last few days of the financial year and check the corresponding shipping documents of the sales. (ix) Request acknowledgement from a major customer as to receivable balance shown to be due to the audit client. (x) Watch inventory count by client personnel during stock take.
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