Question

A CPA is auditing a client's financial statements and is performing procedures to audit accounts receivable....

A CPA is auditing a client's financial statements and is performing procedures to audit accounts receivable. While reviewing the financial statements, the auditor verifies that accounts receivable is shown as a current asset. Which financial statement assertion is the auditor testing? (Select only one.)

Select one:

a. Rights/Obligations

b. Existence/Occurence

c. Presentation/Disclosure

d. Valuation/Allocation

e. Completeness

Business   Accounting   
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Homework Answers

Answer #1

Explanation

Substantive procedures include assertions

They are divided into 3 items BS ,P& L and notes

IN BS sheet item the following assertions are used 1. Existence 2.Rights and obligations 3.completeness4.valuation and allocation.

IN valuation and allocation deals about whether all the figures are presented accurately and proper valuation of assets,liabilities and equity.

So in the given question accounts recievable is a balance sheet item and using valuation assertion it is shown as current asset.

So option d is correct.

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