Question

Rank the risk of Assertions (High,Moderate,Low) for the below accounts

Account	Existence or Occurance	Completeness	Accuracy, Valuation, Allocation (includes Cutoff)	Rights & Obligations
Legal liability and accrued expenses
Customer credits for sales returns
Lease Obligation
Notes Payable (current & noncurrent)
Preferred Stock
Common Stock
Accumulated deficit
Sales
Cost of Sales

Answer 1

Below is the allocation of ranking for 3 assertions mentioned above in that order. Please note that the ranking is more discretionary and dependent upon the auditors judgement and business specific circumstances. Hence the ranking may change from firm to firm and auditor to auditor.

Legal liability and accrued expenses	Low	Moderate	Moderate	Low
Customer credits for sales returns	Low	Moderate	Moderate	Low
Lease Obligation	High	High	High	High
Notes Payable (current & noncurrent)	High	High	High	High
Preferred Stock	High	High	High	High
Common Stock	High	High	High	High
Accumulated deficit	High	High	High	High
Sales	Low	High	Moderate	Low
Cost of sales	Low	High	Moderate	Low