Which of the Following Is an Exception Report That the Auditor

question 7

Multiple Choice

Which of the following is an exception report that the auditor would generate using generalised audit software in order to test the valuation and allocation assertion for accounts receivable?

• A)Adding the accounts receivable ledger, and checking the total to the accounts receivable balance in the general ledger.
• B)A sequence check looking for missing sales invoice numbers.
• C)A report outlining those balances that are greater than three months overdue.
• D)A sample of debtors to be confirmed by positive debtors' confirmation procedures.

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Definitions:

Asset

Resources owned or controlled by a business that are expected to generate future economic benefits.

Fair Value Principle

Assets and liabilities should be reported at fair value (the price received to sell an asset or settle a liability).

Investment Securities

Investment securities are financial instruments that individuals or institutions buy and intend to hold for profit, such as stocks, bonds, or mutual funds.

Current Assets

Current assets refer to all assets that a company expects to convert into cash or use up within one year or one operating cycle, whichever is longer, including cash, inventory, and accounts receivables.