ACC 419: Auditing Theory

Discussion Questions

Chapter 6

DQ 1 (6-27):
The following are various management assertions (a. through m.) related to sales and
accounts receivable.

Required:

i) For each assertion, indicate whether it is an assertion about classes of

transactions and events, an assertion about account balances, or an assertion
about presentation and disclosure.

m
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ii) Indicate the name of the assertion made by management.

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o.
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MANAGEMENT ASSERTION ASSERTION ASSERTION
a. Recorded sales transactions have Transactions and Occurrence
o

occurred. events
aC s

b. There are no liens or other restrictions on Account balances Rights and

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accounts receivable. obligations

c. All sales transactions have been Transactions and Completeness
recorded. events
ed d
ar stu

d. Receivables are appropriately classified Presentation and Classification and

as to trade and other receivables in the disclosure understandability
financial statements and are clearly
described.
is

e. Sales transactions have been recorded in Transactions and Cutoff

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the proper period. events

f. Accounts receivable are recorded at the Account balances Valuation and
correct amounts. allocation
sh

g. Sales transactions have been recorded in Transactions and Classification

the appropriate accounts. events
h. All required disclosures about sales and Presentation and Completeness
receivables have been made. disclosure

1
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 i. All accounts receivable have been Account balances Completeness
recorded.
j. Disclosures related to accounts Presentation and Accuracy and
receivable are at the correct amounts. disclosure valuation
k. Sales transactions have been recorded at Transactions and Accuracy
the correct amounts. events
l. Recorded accounts receivable exist. Account balances Existence
m. Disclosures related to sales and Presentation and Occurrence and
receivables relate to the entity. disclosure rights and
obligations

m
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o
aC s
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ed d
ar stu
is
Th
sh

2
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 DQ 2 (6-29):
The following are specific transaction-related audit objectives applied to the audit of cash
disbursement transactions (a. though f.).

Required:

i) For each specific transaction-related audit objective, identify the appropriate

general balance-related audit objective.

ii) For each specific transaction-related audit objective, identify the appropriate
management assertion.

GENERAL
TRANSACTION-
SPECIFIC TRANSACTION-RELATED RELATED AUDIT MANAGEMENT

m
AUDIT OBJECTIVE OBJECTIVE ASSERTION

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a. Recorded cash disbursement Accuracy Accuracy

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transactions are for the amount of
goods or services received and are

o.
correctly recorded.
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b. Cash disbursement transactions are Posting and Accuracy
properly included in the accounts summarization
payable master file and are correctly
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summarized.
aC s
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c. Recorded cash disbursements are for Occurrence Occurrence

goods and services actually received.

d. Cash disbursement transactions are Classification Classification

ed d

properly classified.
ar stu

e. Existing cash disbursement Completeness Completeness

transactions are recorded.

f. Cash disbursement transactions are Timing Cutoff

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recorded on the correct dates.

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sh

3
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