Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 7, Problem 30DQP
a.
To determine
Categorize the type of audit evidence for
b.
To determine
Categorize the general transaction-related audit objectives using audit procedure.
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For a sample of sales transactions selected from the sales journal, verify that the amount of the transaction has
been recorded in the correct customer account in the accounts receivable subledger.
Choose the Audit Objective:
Choose the specific audit objective
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Which of the following audit procedures is aimed most directly at testing the completeness assertion for accounts payable?
Footing the list of accounts payable.
Tracing shipping reports after year-end to related customer purchase orders and invoices.
Examining underlying documentation for cash disbursements in the period after year-end.
Tracing shipping reports issued on or before year-end to related customer purchase orders and invoices.
1. For each of the following audit procedures, identify A- the type of audit evidence and B- the related audit objective.
a. Ask the accounts payable clerk about procedures for verifying prices, quantities, and extensions on vendors’ invoices –
b. Vouch entries in sales journal to sales invoices and related shipping documents. –
c. Examine the footnotes about the company’s policies for recording revenue transactions to determine whether the disclosures are reasonable
d. Examine expense voucher packages and related vendors’ invoices for approval of expense account classification.
e. Add the sales journal for the month of July and trace amounts to the general ledger
f. Compare the quantities on hand and unit prices on this year’s inventory count sheets with those in the preceding year as a test for large differences.
g. Test the extension of unit prices times quantity on the inventory list for a sample of items, test foot the list, and compare the total to the general ledger.
h. Trace…
Chapter 7 Solutions
Auditing And Assurance Services
Ch. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 6RQCh. 7 - Prob. 7RQCh. 7 - Prob. 8RQCh. 7 - Prob. 9RQCh. 7 - Prob. 10RQ
Ch. 7 - Prob. 11RQCh. 7 - Prob. 12RQCh. 7 - Prob. 13RQCh. 7 - Prob. 14RQCh. 7 - Prob. 15RQCh. 7 - Prob. 16RQCh. 7 - Prob. 17RQCh. 7 - Prob. 18RQCh. 7 - Prob. 19RQCh. 7 - Prob. 20RQCh. 7 - Define what is meant by a tick mark. What is its...Ch. 7 - Prob. 22RQCh. 7 - Prob. 23.1MCQCh. 7 - Prob. 23.2MCQCh. 7 - Prob. 23.3MCQCh. 7 - Prob. 24.1MCQCh. 7 - Prob. 24.2MCQCh. 7 - Prob. 24.3MCQCh. 7 - Prob. 25.1MCQCh. 7 - Prob. 25.2MCQCh. 7 - Prob. 25.3MCQCh. 7 - Prob. 26.1MCQCh. 7 - Prob. 26.2MCQCh. 7 - Prob. 26.3MCQCh. 7 - Prob. 27DQPCh. 7 - Prob. 28DQPCh. 7 - Prob. 29DQPCh. 7 - Prob. 30DQPCh. 7 - Prob. 31DQPCh. 7 - Prob. 32DQPCh. 7 - Prob. 33DQPCh. 7 - Prob. 34DQPCh. 7 - Prob. 36DQPCh. 7 - Prob. 37DQPCh. 7 - Prob. 40DQP
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- Which of the following audit procedures represent a substantive test of transaction that would validate managements assertion on occurrence of a purchase transaction a. Comparing the classification of the transaction based on the supplier's invoice with the company’s chart of accounts. b. Recalculation of the supplier's invoice to check its mathematical accuracy. c. Reviewing and scanning of the purchases journal for large or unusual amounts. d. Tracing from the file of receiving reports to the purchases journalarrow_forwardIndicate whether each of the following audit procedures is a testof controls, a substantive test, or a dual-purpose test. Next, indicate the financial statement assertion most closely related to each audit procedure. Required:a. Vouch recorded sales invoices to supporting shipping documents.b. Inspect recorded sales invoices for credit approval.c. Vouch recorded sales invoices prices to the approved price list.d. Send confirmations to all customers regarding accounts receivable.e. Recalculate the arithmetic accuracy of the recorded sales invoices.f. Compare the shipment date of recorded sales invoices with the invoice record date.g. Trace recorded sales invoices to posting in the general ledger control account and in the correct customer’s account.h. Select a sample of shipping documents from the shipping department file and trace shipments to recorded sales invoices.i. Scan recorded sales invoices and shipping documents for missing numbers in sequence.j. Vouch sales invoices and…arrow_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_forward
- For each of the accounts balances and associated assertions below, select the audit procedure from the list provided that gives the most appropriate audit evidence for the account assertion. Accounts Balance Assertion Procedure Inventory Completeness a. Examine invoices from suppliers. b. Examine invoices paid after year-end and trace to subsidiary ledger. c. Select items located in the inventory warehouse and trace to the inventory listing. d. Trace sales invoices and shipping documents just after year-end to customer accounts. Cash Rights and obligations a. Agree bank statement to the subsidiary ledger. b. Agree the cash balance per the bank reconciliation to the year-end bank statement. c. Review the bank confirmation for information on compensating balances. d. Trace deposits per the bank statement to the cash subsidiary ledger. Accounts Receivable Existence a. Review confirmation of accounts receivable…arrow_forwardAn audit trail enables a person to trace a source document to its ultimate effect on the financial statements or work back from amounts in the financial statements to source documents. Describe in detail the audit trail for the following: a. Purchases of inventoryb. Sales of inventoryc. Employee payrollarrow_forwardThe following are specific balance-related audit objectives applied to the audit of accounts receivable (a. through i.) and management assertions about account balances (1 through 6). The list referred to in the specific balance-related audit objectives is the list of the accounts receivable from each customer at the balance sheet date. i (Click the icon to view the audit objectives.) i (Click the icon to view the management assertions.) Requirement For each specific balance-related audit objective, identify the appropriate management assertion. (Hint: See table.) Specific balance-related audit objective There are no unrecorded receivables. b. Uncollectible accounts have been provided for. C. Receivables that have become uncollectible have been written off. d. All accounts on the list are expected to be collected within 1 year. The total of the amounts on the accounts receivable listing agrees with the general ledger balance for accounts receivable. a. e. Management assertionarrow_forward
- To gather audit evidence about the proper credit approval of sales (i.e., valuation assertion), the auditor would select a sample of documents from the population represented by the a. Subsidiary customers' accounts ledger. b. Sales invoice file. c. Bill of lading file. d. Customer order file.arrow_forwardThe auditor verifying whether all goods received by the company have been recorded appropriately. The source document that the auditor would test would mostly likely be the? A. Supplier Invoice B. Purchase Orders C. Receiving Reports D. Check Vouchersarrow_forwardThe following are two specific audit objectives in the audit of accounts payable. The list referred to is the list of accounts payable taken from the accounts payable subsidiary record. The total amount in the list agrees with the accounts payable balance in the general ledger. Which of these two audit objectives validates the management assertion of existence, and which one applies to completeness? Group of answer choices 1. All accounts payable included in the list represent amounts due to valid vendors. a. existence b. occurrence 2. There are no unrecorded accounts payable. a. existence b. occurrencearrow_forward
- An auditor will most likely review an entity’s periodic accounting for the numerical sequence of shipping documents to ensure all documents are included to support management’s assertion about classes of transactions of: Select one: a. occurrence. b. completeness c. classification. d. accuracyarrow_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. Test Type of test 1 Examine the financial report to determine whether all related party loans are properly presented 2 Recalculate depreciation figure 3 Trace sales recorded in the sales journal to shipping documents 4 Examine sales invoices for initials to indicate that prices and extensions have been checked 5 Check cost of closing inventory to subsequent sales prices 6 Confirm loan balances with financial institutions You are the audit senior on the audit of Marsa Ltd, a large manufacturing company, for the year ended 30 June 2020. It is now 16 July 2020 and you are reviewing the audit working papers…arrow_forward1. Explain the basic processes involved in documenting revenue transactions as a part of the audit on sales. 2.arrow_forward
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