Below Are Five Audit Procedures,all of Which Are Tests of Balances

question 92

Short Answer

Below are five audit procedures,all of which are tests of balances associated with the audit of accounts receivable.Also below are the eight general balance-related audit objectives and the four management assertions.For each audit procedure,indicate (1)its audit objective,and (2)the management assertion being tested.

1.Obtain an aged listing of accounts receivable.For a sample of individual customers on the listing,agree the customer's name,amount,and other information with the corresponding information in the accounts receivable master file.
(1)________
(2)________
2.Examine details of sales for five days before and five days after year-end to determine whether sales have been recorded in the proper period.
(1)________
(2)________
3.Assess the reasonableness of the balance in the allowance for doubtful accounts.
(1)________
(2)________
4.Inquire as to whether any accounts receivable have been factored or sold during the period.
(1)________
(2)________
5.Inquire as to whether there are any receivables from related parties.
(1)________
(2)________

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Definitions:

Labor

The physical and mental effort used in the production of goods and services.

Capital

Resources or assets that are used in the production of goods and services, including physical assets like machinery and buildings, and intangible assets like patents.

Fixed-Proportion

A production process in which the inputs are used in fixed ratios, with no substitution possible between them.

Perfect Substitutes

Goods or services that can be used in exactly the same way, where the consumer is indifferent between the two and will choose the cheaper one.