chap 6 balance related and presentation and disclosure related audit objectives

Question 1

balance related audit objectives are almost always applied to what ?

Answer 1

the ending balance in the B/S accounts

Question 2

what does the general balance related audit objective of “Detail Tie In” deal with?

Answer 2

concerned that the details on lists (which are details in master files and schedules prepared by clients which support the account blances on FSs) are accurately preparred, correctly added, and agree with the general ledger

Question 3

when using blance related audit objectives to audit account balances, the auditor doesn’t verify the account balance itself but rather does what?

Answer 3

accumulates evidence to verify detail that supports the account balance

Question 4

what does the general balance related audit objective of “Completeness” deal with?

Answer 4

whether all amounts that should be included have actually been included

Question 5

what are the examples of soemm balance related audit objectives that are appled to certain I/S accounts

Answer 5

1. usually involve nonroutine transactions and unpredictable expenses like legal expense or repairs and maintenance 2. I/S accounts closely related to B/S accounts which are tested simultaneously like depreciation expense with accumulated depreciation and interest expnse with notes payable

Question 6

what does the general balance related audit objective of “Classification” deal with?

Answer 6

involves determining whether items included on a clients listing are included in the correcct geneeral ledger accounts

Question 7

there are 4 presentation and disclsorue audit objectives that focues mostly on what?

Answer 7

info included inthe footnotes to the FSs inluding its accuracy and understandability

Question 8

what are the 2 differences between balance related and transaction related audit objectives?

Answer 8

1. balance related objectives are applied to account balances like A/R and Inventory rather than classes of transactions such as sales transatiions and purchases of inventory 2. there are 8 balance related objectives while there are only 6 transaction related audit objectives

Question 9

what does the general balance related audit objective of “Realizable Value” deal with?

Answer 9

whether an account balance has been reduced for declines from histocial cost to net realizable value or when accounting standards require fair market value accounting treatment ex. allowance for uncollectibel A/R and write down of inventroy for obsolescence

Question 10

the realizable value objective jenerally applies only to what kind of accounts

Answer 10

asset

Question 11

what is the general blance related audit objective for the managment assertion regarding account balances of “completeness”

Answer 11

completeness

Question 12

what does the general balance related audit objective of “Cutoff” deal with?

Answer 12

determine wiether transactions are recorded and included in account balances in the proper period. relates only to transactions near year end

Question 13

what does the general balance related audit objective of “Existence” deal with?

Answer 13

whether the amounts included in theFSs should actually be included

Question 14

what are teh 4 general presentation and disclosure related audit objectives?

Answer 14

1. occurrence and rights and obligations 2. completeness 3. accuracy and valuation 4. classification and understandability

Question 15

what does the general balance related audit objective of “Accuracy” deal with?

Answer 15

refers to amounts being included at the correct amount

Question 16

what are the 5 general blance related audit objective for the managment assertion regarding account balances of “Valuation and allocation”

Answer 16

1. Accuracy 2. Classification 3. Cutoff 4. Detail Tie In 5. Realizable Value

Question 17

once the gneral blance related audit objectives are determned, specific ones for what can be developed?

Answer 17

each account balance on the FSs

Question 18

what are the 8 blance related audit objectives?

Answer 18

1. Existence—Amounts included exist. 2. Completeness—Existing amounts are included. 3. Accuracy—Amounts included are stated at the correct amounts. 4. Classification—Amounts included in the client’s listing are properly classified. 5. Cutoff—Transactions near the balance sheet date are recorded in the proper period. 6. Detail Tie-In—Details in the account balance agree with related master file amounts, foot to the total in the account balance, and agree with the total. 7. Realizable Value—Assets are included at the amounts estimated to be realized. 8.Rights and Obligations—Assets are owned or controlled by the entity, and liabilities are obligations of the entity.

Question 19

what is the general blance related audit objective for the managment assertion regarding account balances of “Existence”

Answer 19

existence

Question 20

what does the general balance related audit objective of “Rights and obligations” deal with?

Answer 20

assets must be owned before it is acceptable to put them in the FSs and liabilities must belong to the entitiy

Question 21

what is the general blance related audit objective for the managment assertion regarding account balances of “Rights and obligations”

Answer 21

rights and obligations