Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 22, Problem 4RQ
To determine
Determine the importance of searching for an unrecorded notes payable than for a recorded notes receivable and the
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Confirmations of bank accounts may help the auditor to determine if material amounts of
accounts receivable have been sold to the bank on a recourse basis. True False
Why is it more important to search for unrecorded notes payablethan for unrecorded notes receivable? Suggest audit procedures that the auditor can useto uncover unrecorded notes payable.
What are the risks associated with auditing accounts payable? Can you explain the process of auditing accounts payable using confirmations.
Chapter 22 Solutions
Auditing And Assurance Services
Ch. 22 - List four examples of interest-bearing liability...Ch. 22 - Prob. 2RQCh. 22 - Prob. 3RQCh. 22 - Prob. 4RQCh. 22 - Prob. 5RQCh. 22 - Distinguish between (a) tests of controls and...Ch. 22 - Prob. 7RQCh. 22 - Prob. 8RQCh. 22 - Prob. 9RQCh. 22 - Prob. 10RQ
Ch. 22 - Prob. 11RQCh. 22 - Prob. 12RQCh. 22 - Prob. 13RQCh. 22 - Prob. 14RQCh. 22 - Prob. 15RQCh. 22 - Explain the relationship between the audit of...Ch. 22 - Prob. 17.1MCQCh. 22 - Prob. 17.2MCQCh. 22 - Prob. 17.3MCQCh. 22 - Prob. 18.1MCQCh. 22 - Prob. 18.2MCQCh. 22 - Prob. 18.3MCQCh. 22 - Prob. 19.1MCQCh. 22 - Prob. 19.2MCQCh. 22 - Prob. 19.3MCQCh. 22 - Prob. 20DQPCh. 22 - Prob. 21DQPCh. 22 - Prob. 22DQPCh. 22 - Prob. 23DQPCh. 22 - Prob. 24DQPCh. 22 - Prob. 25DQPCh. 22 - Prob. 26DQPCh. 22 - Prob. 27DQPCh. 22 - Prob. 28DQPCh. 22 - Prob. 29DQPCh. 22 - Prob. 30DQP
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- It is common practice to audit the balance in notes payable inconjunction with the audit of interest expense and interest payable. Explain theadvantages of this approach.arrow_forwardWhy is it important to emphasize the existence assertion when auditing accounts receivable?arrow_forwardTo gather audit evidence related to accounts receivable, the client should mail the confirmation requests. TRUE OR FALSE? WHY?arrow_forward
- How can fraud be detected in the financial statements?arrow_forwardWhat is the process of confirming accounts receivable balances. Why is it important for auditors to understand revenue recognition rules?arrow_forwardWhich of the following tests of details most likely would help an auditor determine whether accounts payable have been misstated?a. Examining reported purchase returns that appear too low. b. Examining vendor statements for amounts not reported as purchases. c. Searching for customer-returned goods that were not reported as returns. d. Reviewing bank transfers recorded as cash received from customers.arrow_forward
- Summarize common internal controls over cash receipts and cash disbursements. Assess the purpose of a bank confirmation and why bank confirmations are an important piece of audit evidence. What are some errors and frauds that can occur in the revenue cycle? Review the process of confirming accounts receivable balances. Why is it important for auditors to understand revenue recognition rules?arrow_forwardWhich type of evidence is considered more reliable and relevant by the auditor? accounts receivable confirmation O minutes from management meetings O internally generated evidence O copy of cash receiptarrow_forwarddiscuss the process of auditing the following:• Revenue• Receivables• Expected Credit Loss (ECL)arrow_forward
- Explain why auditors usually emphasize the detection of fraud inthe audit of cash receipts. Is this consistent or inconsistent with the auditor’s responsibilityin the audit? Explain.arrow_forwardWhat is the purpose of a bank confirmation and why are bank confirmations an important piece of audit evidence? What are some errors and frauds that can occur in the revenue cycle?arrow_forward1. Which of the following may be considered to be primary objective of the auditor in the examination of accounts receivables? a. Determine the approximate time of collectability of receivables b. Determine the relationship of receivables to sales c. Determine the reasonableness of the sales figure d. Establish validity and collectability of receivables 2. In determining the validity of accounts receivable, which of the following would the auditor consider most reliable? a. Direct telephone communication between the auditor and debtor b. Confirmation replies received directly from customers c. Credits to accounts receivable from the cash receipts book after the close of business at year end d. Documentary evidence that supports the accounts receivable balance 3. An auditor should perform alternative procedures to substantiate the existence of accounts receivable when a. Pledging of the receivables is probable b. No reply to a negative confirmation request is received c. No reply to a…arrow_forward
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