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Accounting Information Systems

11th Edition
Ulric J. Gelinas + 3 others
ISBN: 9781337552127

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BuyFindarrow_forward

Accounting Information Systems

11th Edition
Ulric J. Gelinas + 3 others
ISBN: 9781337552127
Textbook Problem

The following is a brief description of the financial statement assertions from PCAOB Auditing Standards Section AU 326, Evidential Matter:

  1. A. Existence or occurrence: Assets or liabilities of the entity exist at a given date (existence) or recorded transactions have occurred during a given period (occurrence). For example, management asserts that finished goods inventories in the balance sheet are available for sale. Similarly, management asserts that sales in the income statement represent the exchange of goods or services with customers for cash or other consideration.
  2. B. Completeness: Transactions and accounts that should be presented in the financial statements are so included. For example, management asserts that all purchases of goods and services are recorded and are included in the financial statements. Similarly, management asserts that notes payable in the balance sheet include all such obligations of the entity.
  3. C. Rights and obligations: Assets are the rights of the entity and liabilities are the obligations of the entity at a given date. For example, management asserts that amounts capitalized for leases in the balance sheet represent the cost of the entity’s rights to leased property and that the corresponding lease liability represents an obligation of the entity.
  4. D. Valuation or allocation: Asset, liability, equity, revenue, and expense components have been included in the financial statements at appropriate amounts. For example, management asserts that property is recorded at historical cost and that such cost is systematically allocated to appropriate accounting periods. Similarly, management asserts that trade accounts receivable included in the balance sheet are stated at net realizable value.
  5. E. Presentation and disclosure: Particular components of the financial statements are properly classified, described, and disclosed. For example, management asserts that obligations classified as long-term liabilities in the balance sheet will not mature within one year. Similarly, management asserts that amounts presented as extraordinary items in the income statement are properly classified and described.

Match each of these five assertions with all of the input control goals that apply. Write a one or two-sentence explanation of each matching entry.

Assertions

  1. A. Existence or occurrence
  2. B. Completeness
  3. C. Rights and obligations
  4. D. Valuation and allocation
  5. E. Presentation and disclosure

Control Goals

  1. 1. Input validity (IV)
  2. 2. Input completeness (IC)
  3. 3. Input accuracy (IA)

A)

Summary Introduction

To match: The assertion “Existence or occurrence” with the control goals.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

Explanation

Match the assertion with the control goals:

The financial data would contain only actual objects and acetal events when the input data is res...

B)

Summary Introduction

To match: The assertion “Completeness” with the control goals.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

C)

Summary Introduction

To match: The assertion “Rights and obligations” with the control goals.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

D)

Summary Introduction

To match: The assertion “Valuation and allocation” with the control goals.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

E)

Summary Introduction

To match: The assertion “Presentation and disclosure” with the control goals.

Introduction:

Accounting Information System (AIS) is said to be the specialized subsystem of the Information System (IS). AIS can be used in the business events for the purpose of collecting, processing, and reporting the financial information.

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