Question

Below are five audit procedures, all of which are tests of balances associated with the audit of accounts receivable. Also below are the nine general transaction-related audit objectives . For each audit procedure, indicate its audit objective. Please fill in all five answers in the text box. Number each answer! Objectives: A. Existence B. Completeness C. Accuracy D. Cutoff E. Detail tie-in F. Realizable Value G. Classification H. Rights and Obligations I. Presentation __________1. Obtain an aged listing of accounts receivable. For a sample of individual customers on the listing, agree the customer's name, amount, and other information with the corresponding information in the accounts receivable master file. __________2. Examine details of sales for five days before and five days after year-end to determine whether sales have been recorded in the proper period. __________3. Assess the reasonableness of the balance in the allowance for doubtful accounts. __________4. Send a letter to a sample of customers to verify whether they have an outstanding balance at the audit date. __________5. Inquire as to whether there are any receivables from related parties.

Answer 1

Solution

1. Detail tie in -Obtain an aged listing of accounts receivable. For a sample of individual customers on the listing, agree the customer's name, amount, and other information with the corresponding information in the accounts receivable master file

2. Cut off - Examine details of sales for five days before and five days after year-end to determine whether sales have been recorded in the proper period.

3. Accuracy - Assess the reasonableness of the balance in the allowance for doubtful accounts.

4. Existence - Send a letter to a sample of customers to verify whether they have an outstanding balance at the audit date.

5. Presentation - Inquire as to whether there are any receivables from related parties.