a. Explanation Estimation transaction: Estimation transaction results in the creation of the estimates. This kind of transaction has the highest level of inherent risk. When an accountant estimates a figure related to the future for the future reference then it is known as estimation transaction. Explain three approaches to auditing accounting estimates with examples: Following are the three approaches to auditing accounting estimates with examples. Examine the process of developing accounting estimates: Example: The auditor could examine the client’s method of calculating the accounting estimates related to obsolete inventory. He could examine whether the client has estimated the correct amount of obsolete inventory by examining the process of developing the estimate for obsolete inventory... b. To determine Explain the relationship between the allowance for doubtful accounts and allocation assertion. c. To determine Explain the factors which state that the allowance for doubtful accounts is likely to be an account with high inherent risk.

Principles Of Auditing & Other Assurance Services

21st Edition

ISBN: 9781259916984

Author: WHITTINGTON, Ray, Pany, Kurt

Publisher: Mcgraw-hill Education,

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Question

Chapter 5, Problem 54P

To determine

Explain three approaches to auditing accounting estimates with examples.

To determine

Explain the relationship between the allowance for doubtful accounts and allocation assertion.

To determine

Explain the factors which state that the allowance for doubtful accounts is likely to be an account with high inherent risk.

Expert Solution & Answer

Chapter 5 Solutions

Principles Of Auditing & Other Assurance Services

Ch. 5 - Prob. 1RQ Ch. 5 - Prob. 2RQ Ch. 5 - Prob. 3RQ Ch. 5 - Distinguish among routine, nonroutine, and...Ch. 5 - Prob. 5RQ Ch. 5 - Prob. 6RQ Ch. 5 - Prob. 7RQ Ch. 5 - As part of the verification of accounts receivable...Ch. 5 - Prob. 9RQ Ch. 5 - When in the course of an audit might the auditors...

Ch. 5 - Prob. 11RQ Ch. 5 - Prob. 12RQ Ch. 5 - Prob. 13RQ Ch. 5 - Prob. 14RQ Ch. 5 - Prob. 15RQ Ch. 5 - Prob. 16RQ Ch. 5 - Prob. 17RQ Ch. 5 - Prob. 18RQ Ch. 5 - Prob. 19RQ Ch. 5 - What disclosures should be made in the financial...Ch. 5 - Prob. 21RQ Ch. 5 - Prob. 22RQ Ch. 5 - Prob. 23RQ Ch. 5 - Prob. 24RQ Ch. 5 - Prob. 25RQ Ch. 5 - Prob. 26RQ Ch. 5 - Prob. 27RQ Ch. 5 - Prob. 28RQ Ch. 5 - Prob. 29RQ Ch. 5 - Prob. 30RQ Ch. 5 - Prob. 31RQ Ch. 5 - I have finished my testing of footings of the cash...Ch. 5 - Prob. 33RQ Ch. 5 - Prob. 34RQ Ch. 5 - Financial statements contain a number of...Ch. 5 - Prob. 36QRA Ch. 5 - In an audit of financial statements, the auditors...Ch. 5 - Prob. 38QRA Ch. 5 - Prob. 39QRA Ch. 5 - Prob. 40QRA Ch. 5 - Prob. 41QRA Ch. 5 - Prob. 42QRA Ch. 5 - Prob. 43QRA Ch. 5 - Prob. 44QRA Ch. 5 - Prob. 45AOQ Ch. 5 - Prob. 45BOQ Ch. 5 - Prob. 45COQ Ch. 5 - Prob. 45DOQ Ch. 5 - Prob. 45EOQ Ch. 5 - Prob. 45FOQ Ch. 5 - Prob. 45GOQ Ch. 5 - Prob. 45HOQ Ch. 5 - Prob. 45IOQ Ch. 5 - Prob. 45JOQ Ch. 5 - Prob. 45KOQ Ch. 5 - A difference of opinion concerning accounting and...Ch. 5 - Prob. 46OQ Ch. 5 - Prob. 47OQ Ch. 5 - Prob. 48AOQ Ch. 5 - Prob. 48BOQ Ch. 5 - Prob. 48COQ Ch. 5 - The cost of analytical procedures in terms of time...Ch. 5 - Prob. 48EOQ Ch. 5 - Prob. 49OQ Ch. 5 - Prob. 50P Ch. 5 - Prob. 51P Ch. 5 - Prob. 52P Ch. 5 - Prob. 53P Ch. 5 - Prob. 54P Ch. 5 - Prob. 55P Ch. 5 - Prob. 56P

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Similar questions

Professional guidance indicates that the auditor should consider revenue recognition to be high risk in planning an audit of a company’s financial statements. a. Identify the activities that affect the revenue cycle. b. Identify the financial statement accounts typically associated with the revenue cycle.

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