State four specific balance-related audit objectives for accounts payable and, for each objective, describe one common test of details of balances. (Auditing problem)
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- Identify the eight accounts receivable balance-related audit objectives. For each objective, list one audit procedureThe following are two specific audit objectives in the audit of accounts payable. The list referred to is the list of accounts payable taken from the accounts payable subsidiary record. The total amount in the list agrees with the accounts payable balance in the general ledger. For the audit of accounts payable, which of these two specific audit objectives is usually more important? Group of answer choices a. Audit of existence. b. Audit of completeness.The following are two specific balance-related audit objectives inthe audit of accounts payable. The list referred to is the list of accounts payable takenfrom the accounts payable master file. The total of the list equals the accounts payablebalance on the general ledger.1. All accounts payable included on the list represent amounts due to valid vendors.2. There are no unrecorded accounts payable.a. Explain the difference between these two specific balance-related audit objectives.b. Which of these two specific balance-related audit objectives applies to the generalbalance-related audit objective of existence, and which one applies to completeness?c. For the audit of accounts payable, which of these two specific balance-related auditobjectives is usually more important? Explain
- The following are two specific audit objectives in the audit of accounts payable. The list referred to is the list of accounts payable taken from the accounts payable subsidiary record. The total amount in the list agrees with the accounts payable balance in the general ledger. Which of these two audit objectives validates the management assertion of existence, and which one applies to completeness? Group of answer choices 1. All accounts payable included in the list represent amounts due to valid vendors. a. existence b. occurrence 2. There are no unrecorded accounts payable. a. existence b. occurrenceDistinguish between the existence and completeness balance-relatedaudit objectives. State the effect on the financial statements (overstatement or understatement) of a violation of each in the audit of accounts receivable.In the audit of accounts payable, an auditor’s procedures will most likely focusprimarily on management’s assertion about account balances of(1) existence. (3) valuation and allocation.(2) completeness. (4) classification and understandability.
- Explain how management assertions, general balance-relatedaudit objectives, and specific balance-related audit objectives are developed for anaccount balance such as accounts receivable.When auditing the accounts receivable account on the balance sheet, an auditor’s procedures most likely would focus primarily on management’s assertion ofa. Existence.b. Completeness.c. Presentation and disclosure.d. Rights and obligations.When auditing the accounts payable balance on the balance sheet, an auditor’s procedures most likely would focus primarily on management’s assertion of Select one: a. Rights and obligations b. Completeness. c. Existence d. Presentation and disclosure
- State three types of differences that might be observed in theconfirmation of accounts receivable that do not constitute misstatements. For each, statean audit procedure that will verify the difference.If the auditor verifies a debtor’s account balance, which is comprised of a number of transactions, at the end of the financial period by sending a debtor’s confirmation request, this is an example of a Select one: A. substantive test of transactions B. test of controls C. substantive analytical procedure D. substantive test of balancesIndicate a specific audit procedure under each of the following categories, as applied particularly in the sales and collection cycle.a. test of controlb. substantive test of transactionsc. substantive test of account balances