assertions/evidence

Question 1

Examine sales invoices for the last five sales transactions recorded in the sales journal in 2020 and examine shipping documents to determine they are recorded in the correct period

Answer 1

CUT-OFF

Question 2

Send letters to a sample of accounts receivable customers to verify whether they have an outstanding balance at December 31, 2020

Answer 2

EXISTENCE

Question 3

Determine whether long-term receivables and related party receivables are reported separately in the financial statements

Answer 3

PRESENTATION

Question 4

Use audit software to total sales in the sales journal for the month of July and trace postings to the general ledger

Answer 4

POSTING & SUMMARIZATION

Question 5

For a sample of shipping documents selected from shipping records, trace each shipping document to a transaction recorded in the sales journal

Answer 5

COMPLETENESS

Question 6

Discuss with credit department personnel the likelihood of collection of all accounts as of December 31, 2020 with a balance greater than $100,000 and greater than 90 days old as of year-end

Answer 6

REALIZABLE VALUE

Question 7

Add all customer balances in the accounts receivable trial balance and agree the amount to the general ledger

Answer 7

DETAIL TIE-IN

Question 8

Inventory quantities on the client’s perpetual records agree with items physically on hand

Answer 8

ACCURACY

Question 9

All accounts on the list arose from the normal course of business and are not due from related parties

Answer 9

CLASSIFICATION

Question 10

The company has title to all inventory items. Inventories are not pledged as collateral

Answer 10

RIGHTS AND OBLIGATIONS

Question 11

Evaluate reasonableness of receivables by calculating and comparing ratios

Answer 11

ANALYTICAL PROCEDURES

Question 12

Recompute invoice total by multiplying item price times quantity sold

Answer 12

RECALCULATION

Question 13

Agree sales invoice price to approved price list

Answer 13

REPERFORMANCE

Question 14

Examine vendors’ invoices supporting a sample of cash disbursement transactions throughout the year

Answer 14

INSPECTION

Question 15

Watch client employees count inventory to determine whether company procedures are being followed

Answer 15

OBSERVATION

Question 16

Obtain a written statement from the client’s bank stating the client’s year-end balance on deposit

Answer 16

CONFIRMATION

Question 17

Make a surprise count of petty cash to verify that the amount of the petty cash fund is intact.

Answer 17

PHYSICAL EXAMINATION

Question 18

Trace postings from the sales journal to the general ledger accounts

Answer 18

REPERFORMANCE,

Question 19

Review the total of repairs and maintenance for each month to determine whether any month’s total was unusually large

Answer 19

ANALYTICAL PROCEDURES

Question 20

Obtain information about the client’s internal controls by asking questions of client personnel

Answer 20

INQUIRY