Substantive Tests Must Be Designed to Tests Specific Audit Objectives

question 36

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.
-Trace beginning balance for accounts payable to prior year's working papers.

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

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Definitions:

Indirect Method

A cash flow statement preparation method that adjusts net income for changes in non-cash accounts to calculate operating cash flow.

Operating Activities

Operating activities include the primary, day-to-day tasks and transactions related to running a business, which contribute to generating revenue.

Direct Method

A cash flow statement reporting approach that lists major operating cash receipts and payments during a period.

Statement of Cash Flows

A financial report that provides aggregate data regarding all cash inflow and outflow a company receives from its ongoing operations and external investment sources.