Tests of Controls and Management Assertions For each of these tests of controls
ID: 2576865 • Letter: T
Question
Tests of Controls and Management Assertions For each of these tests of controls for sales and accounts receivable, indicate the management as: nt assertion number in the blank below. An assertion may be used more than once, or not used. Management Assertions 1. Occurrence or Existence 2. Rights and Obligations 3. Completeness 4. Cutoff 5. Accuracy or Valuation and Allocation 6. Classification A. Scan sales invoices for missing numbers in sequence. B. Perform arithmetic recalculation of a sample of recorded sales invoices. C. For a sample of recorded sales, determine whether credit was approved. D. Trace a sample of credit memos to postings in customers' accounts. E. Select a sample of customer accounts and vouch debits to sales invoices.Explanation / Answer
-Management assertion for the above are:
A. Scan sales invoices for missing numbers in sequence is Completeness.
B. Perform arithmetic recalculation of a sample of recorded sales invoices is Accuracy or Valuation and Allocation.
C. For a sample of recorded sales, determine whether credit was approved - Rights and Obligations.
D. Trace a sample of credit memos to postings in customers' accounts- Occurrence or Existence.
E. Select a sample of customer accounts and vouch debits to sales invoices- Occurrence or Existence.
-Explanation:
A. Saccing sales invoice for missing numbers in sequence is test of controls for the completeness of sales invoives and ensuring that none are missing.
B. Performing arithmetic recalculations is test of control for the Accuracy , Valuation and Allocation for recording sales invoics.
C. For a sample recorded sales its Rights and Obligations to check whether credit is approved or not.
D. Tracing a sample of credit memos for posting in customer's accounts is a test of control for its Existence or Occurrence by which management can know about the correct posting in accounts.
E. Selection of sample of customer accounts and vouching debits to sales invoices is test to assertain whether there is proper Existence or occurrence of it or not according to the management assertion.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.