Principles of Auditing & Other Assurance Services (Irwin Accounting)
20th Edition
ISBN: 9780077729141
Author: Ray Whittington, Kurt Pany
Publisher: McGraw-Hill Education
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Chapter 5, Problem 7RQ
To determine
Evaluate the statement related to the verification of the physical assets.
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When auditing the cash account, the auditor traces the cash receipts, which are recorded on the cash receipt journal but not on the current period bank statement, to subsequent bank statements. Which of the following audit objectives are tested?
A.
Classification and cut-off
B.
Completeness and occurrence
C.
Occurrence and cut-off
D.
Completeness and cut-off
E.
Classification and occurrence
Which among the following types of audit evidence can be considered the most reliable?
a.Verbal reply from management that the accounts receivable are fairly presented.
b.Sales invoice with alteration submitted to the audit team by the company that has weak internal control.
c.Photocopy of the building insurance document.
d.Confirmation of cash balance directly obtained by the audit team leader from the bank.
Q1) The best means of verification of cash, inventories, office equipment, and nearly all other assets is a physical count of the items , only a physical count gives the auditors complete assurance as to accuracy of the amounts listed on the balance sheet.”.Evaluate this statement .
Chapter 5 Solutions
Principles of Auditing & Other Assurance Services (Irwin Accounting)
Ch. 5 - Prob. 1RQCh. 5 - Prob. 2RQCh. 5 - Prob. 3RQCh. 5 - Distinguish among routine, nonroutine, and...Ch. 5 - Prob. 5RQCh. 5 - Prob. 6RQCh. 5 - Prob. 7RQCh. 5 - As part of the verification of accounts receivable...Ch. 5 - Prob. 9RQCh. 5 - When in the course of an audit might the auditors...
Ch. 5 - Prob. 11RQCh. 5 - Prob. 12RQCh. 5 - Prob. 13RQCh. 5 - Prob. 14RQCh. 5 - Prob. 15RQCh. 5 - Prob. 16RQCh. 5 - Prob. 17RQCh. 5 - What disclosures should be made in the financial...Ch. 5 - Prob. 19RQCh. 5 - Prob. 20RQCh. 5 - Prob. 21RQCh. 5 - Prob. 22RQCh. 5 - Prob. 23RQCh. 5 - Prob. 24RQCh. 5 - Prob. 25RQCh. 5 - Prob. 26RQCh. 5 - Prob. 27RQCh. 5 - Prob. 28RQCh. 5 - Prob. 29RQCh. 5 - I have finished my testing of footings of the cash...Ch. 5 - Prob. 31RQCh. 5 - Prob. 32RQCh. 5 - Financial statements contain a number of...Ch. 5 - Prob. 34QRACh. 5 - In an audit of financial statements, the auditors...Ch. 5 - Prob. 36QRACh. 5 - Prob. 37QRACh. 5 - Prob. 38QRACh. 5 - Prob. 39QRACh. 5 - Prob. 40QRACh. 5 - Prob. 41QRACh. 5 - Prob. 42QRACh. 5 - Prob. 43AOQCh. 5 - Prob. 43BOQCh. 5 - Prob. 43COQCh. 5 - Prob. 43DOQCh. 5 - Prob. 43EOQCh. 5 - Prob. 43FOQCh. 5 - Prob. 43GOQCh. 5 - Prob. 43HOQCh. 5 - Prob. 43IOQCh. 5 - Prob. 43JOQCh. 5 - Prob. 43KOQCh. 5 - A difference of opinion concerning accounting and...Ch. 5 - Prob. 44OQCh. 5 - Prob. 45OQCh. 5 - Prob. 46AOQCh. 5 - Prob. 46BOQCh. 5 - Prob. 46COQCh. 5 - The cost of analytical procedures in terms of time...Ch. 5 - Prob. 46EOQCh. 5 - Prob. 47OQCh. 5 - Prob. 48PCh. 5 - Prob. 49PCh. 5 - Prob. 50PCh. 5 - Prob. 51PCh. 5 - Prob. 52PCh. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Prob. 56RDC
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- Which of the following is the best audit procedure for the detection of lapping? a. Comparison of postings of cash receipts to accounts with the details of cash deposits. b. Confirmation of the cash balance. c. Reconciliation of the cash account balances. d. Preparing a proof of cash.arrow_forwardList the transaction-related audit objectives for the verificationof cash receipts. For each objective, state one internal control that the client can use toreduce the likelihood of misstatements.arrow_forward22) Use audit software to foot and crossfoot the cash disbursements journal and trace the balance to the general ledger. This is which of the following tests A) test of balances B) analytical procedure C) test of transactions D) test of controlarrow_forward
- Which 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_forwardIn an audit of cash receipts, fraud detection is often a primary focus. It's up to the auditor to decide whether this is consistent or not with their responsibilities. Explain.arrow_forward22) Use audit software to foot and cross foot the cash disbursements journal and trace the balance to the general ledger. This is which of the following tests A) test of balances B) analytical procedure C) test of transactions D) test of controlarrow_forward
- For each procedure, indicate the primary audit objective being satisfied: Trace entries from cash receipts journal to entry in accounts receivable master file. O Occurrence O Completeness - transactions O Timing O Posting and summarization O Existence O Completeness - balances O Cutoff O Detail tie-in Realizable valuearrow_forwardEvidence comes in various types and has different degrees of reliability. Below are some pairs of various types of evidence: A bank confirmation versus observation of the segregation of duties between cash receipts and recording payment in the accounts receivable subsidiary ledger. An auditor’s recalculation of depreciation versus examination of raw material requisitions. A bank statement included in the client’s records versus the client’s shipping documents. Required: For each pair, indicate which type of evidence is more reliable. Justify your choicesarrow_forward6) Examine the cash receipts journal in the accounting system and compare the amounts received to the corresponding amounts invoiced in the revenue accounting system and to the bank statement evidencing the deposit. This is an example of which of the following? A) audit objective B) audit assertion C) audit procedure D) audit programarrow_forward
- Match each example audit procedure with its correct general audit objective related to accounts receivable. Select a sample of sales invoices in the subsequent period, and examine the related shipping documents for date of shipment to ascertain whether some of those shipments at the end of the period were inadvertently not recorded Provide a list of related parties to all members of the audit team to assist in identification of the transacations Existence of assets Rights to assets Review confirmations of liabilities to determine if receivables have been sold Completeness of assets Compare the amount of credits given to customers in the subsequent period to the amount estimated by management Cutoff of transactions Confirm a sample of receivables by direct communication with the debtors Valuation of assets Vouch sales and cash receipt transactions occurring near period end Financial statement presentation and disclosure ofarrow_forwardAudit tests include tests of controls and substantive procedures. Substantive procedures can be divided into substantive analytical procedures, tests of balances, tests of transactions and tests of disclosures.Required:For each test in the table below, select the type of audit test it represents. 1.Examine the financial report to determine whether all related party loans are properly presented2.Recalculate depreciation figure3.Trace sales recorded in the sales journal to shipping documents4.Examine sales invoices for initials to indicate that prices and extensions have been checked5.Check the cost of closing inventory to subsequent sales prices6.Confirm loan balances with financial institutionsarrow_forwardDescribe TWO (2) substantive testing procedures an auditor could employ to verify each of the following: i. Revenue and Accounts Receivable ii. Purchases and Accounts Payable iii. Inventory iv. Cash at bankarrow_forward
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