AR, Allowance for Uncollectible Accounts, and Bad-Debt Expense - Assertion Evidence Flashcards
Assertions about Classes of Transactions - Occurrence
For a sample of sales transactions recorded in the sales journal, tracing of the sales invoices back to customer orders and shipping documents.
Assertions about Classes of Transactions - Completeness
Tracing of a sample of shipping documents to the details of the sales invoices and to the sales journal and customers’ accounts receivable subsidiary ledger.
Assertions about Classes of Transactions - Authorization & Accuracy
Comparison of prices and terms on a sample of sales invoices with authorized price list and terms of trade.
Assertions about Classes of Transactions - Cutoff
Comparison of the dates on a sample of sales invoices with the dates of shipment and with the dates they were recorded in the sales journal.
Assertions about Classes of Transactions - Classification
Examine a sample of sales invoices for proper classification into revenue accounts.
Assertions about Account Balances - Existence
Confirmation of selected accounts receivable. Performance of alternative procedures for accounts receivable confirmation exceptions and non-responses.
Assertions about Account Balances - Rights and Obligations
Review of bank confirmations for any liens on receivables. Inquiry of management, review of any loan agreements, and review of board of directors’ minutes for any indication that the accounts receivable have been sold.
Assertions about Account Balances - Completeness
Obtaining of aged trial balance of accounts receivable and agreeing total to general ledger control accounts. Review results of testing the completeness assertion for assessing control risk; tracing of shipping documents into sales journal and to accounts receivable subsidiary ledger if such testing was not performed as a test of controls.
Assertions about Account Balances - Valuation and Allocation
Examination of the results of confirmations of selected accounts receivable. Examination of the adequacy of the allowance for uncollectible accounts.
Assertions about Presentation and Disclosure - Occurrence and rights and obligations
Determine whether any receivables have been pledged, assigned, or discounted. Determine if such items require disclosure.
Assertions about Presentation and Disclosure - Completeness
Complete financial reporting checklist to ensure that all financial statement disclosures related to accounts receivable and related accounts have been disclosed.
Assertions about Presentation and Disclosure - Classification and understandability
Review of aged trial balance for material credits, long-term receivables, and non trade receivables. Determine whether such items require separate disclosure on the balance sheet. Read footnotes to ensure that required disclosures are understandable.
Assertions about Presentation and Disclosure - Accuracy and valuation
Read footnotes and other information to ensure that the information is accurate and properly presented at the appropriate amounts.
