Substantive Tests Must Be Designed to Tests Specific Audit Objectives

question 7

Multiple Choice

Substantive tests must be designed to tests specific audit objectives.
REQUIRED: For the following specific audit procedures, indicate the assertion that is being tested. Use the following letters, placing your response in the space provideD.
-Test the aging of accounts receivable, discussing long-overdue accounts with the
credit manager.

• A)Existence or occurrence
• B)Completeness
• C)Valuation or allocation
• D)Rights and obligations
• E)Presentation and disclosure

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate revenue and expenses to the appropriate periods.

December Rent

A specific expense related to the leasing of property or space that is due in the month of December.

Adjusting Entries

Ledger entries prepared at an accounting cycle's end to correctly allocate income and expenses to the period they occurred.

Potential Manipulation

The possibility of altering financial data or operational practices to present a misleading view of a company's financial health or performance.