I-75 Section 4 (Evidence gathering/Audit Assertions)

Question 1

What is being tested which each of the following balance sheet assertions?

Accumulated depreciation (Contra-asset)

Allowance for doubtful accounts (Contra-Asset)

Ficticious Credit Sales Transactions

Fixed Assets on Balance Sheet Sold/retired

Acct Receiveable in connection with loan covenant (aka Pledged rec’vables)

Credit Granting Policies

Receivable Confimations (mailed to clients)

Assertions relating to whether ALL assets, liabilities, and equity interests are in the financial stmts.

Answer 1

Accumulated depreciation (Contra-asset) - VALUATION

Allowance for doubtful accounts (Contra-Asset) - VALUATION

Ficticious Credit Sales Transactions - EXISTENCE

Fixed Assets on Balance Sheet Sold/retired - EXISTENCE

Acct Receiveable in connection with loan covenant (aka Pledged rec’vables) - RIGHTS AND OBLIGATIONS

Credit Granting Policies - VALUATION

Receivable Confimations (mailed to clients) - EXISTENCE

Assertions relating to whether ALL assets, liabilities, and equity interests are in the financial stmts. - COMPLETENESS