Flashcards in Accounting Cycle Deck (3)
The information system relevant to financial reporting objectives, which includes the accounting system, consists of the procedures and records designed and established to:
initiate, authorize, record, process, and report entity transactions (as well as events and conditions) and maintain accountability for the related assets, liabilities, and equity;
resolve incorrect processing of transactions…;
process and account for system overrides or bypasses to controls;
transfer information from transaction processing systems to the general ledger;
capture information relevant to financial reporting for events and conditions other than transactions, such as the depreciation and amortization of assets and changes in the recoverability of accounts receivables; and
ensure information required to be disclosed by the applicable financial reporting framework is accumulated, recorded, processed, summarized, and appropriately reported in the financial statements.
What FS Assertion does obtaining credit approval support?
Obtaining credit approval before shipping goods to customers supports management's financial statement assertion of valuation. Specifically, the collectibility of accounts receivable is more likely, thus the valuation of accounts receivable is proper.