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

question 104

Essay

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:

Opportunity Cost

The financial loss associated with rejecting the subsequent preferable choice when deciding or selecting amongst various options.

Specialization

The process of focusing on and becoming expert in a particular subject or skill, or of businesses, regions, or nations concentrating on producing certain goods or services.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, essentially what is given up when choosing one option over another.

Specialization

The practice of focusing effort on a particular field or discipline, leading to increased efficiency and expertise in that area.