ASSIGNMENT
6-31 (OBJECTIVE 6-8) The following are various management assertions (a. through m.) related to sales and accounts receivable.
Management Assertion
a. Recorded accounts receivable exist.
b. Disclosures related to sales are relevant and understandable.
c. Recorded sales transactions have occurred.
d. There are no liens or other restrictions on accounts receivable.
e. All sales transactions have been recorded.
f. Receivables are appropriately classified as to trade and other receivables in the
financial statements and are clearly described.
g. Sales transactions have been recorded in the proper period.
h. Accounts receivable are recorded at the correct amounts.
i. Sales transactions have been recorded in the appropriate accounts.
j. All required disclosures about accounts receivables have been made.
k. All accounts receivable have been recorded.
l. Disclosures related to receivables are at the correct amounts.
m. Sales transactions have been recorded at the correct amounts.
a. Explain the differences between management assertions about classes of transactions
and events and management assertions about account balances.
b. For each assertion, indicate whether it is an assertion about classes of transactions
and events or an assertion about account balances.
c. Indicate the name of the assertion made by management. (Hint: See Table 6-3 on p. 166.)
6-32 (OBJECTIVES 6-8, 6-10) The following are specific balance-related audit objectives applied
to the audit of accounts receivable (a. through i.) and management assertions about account
balances (1 through 6). The list referred to in the specific balance-related audit objectives is
the list of the accounts receivable from each customer at the balance sheet date.
Specific Balance-Related Audit Objective
a. There are no unrecorded receivables.
b. Uncollectible accounts have been provided for.
c. Receivables that have become uncollectible have been written off.
d. All accounts on the list are expected to be collected within 1 year.
e. The total of the amounts on the accounts receivable listing agrees with the general
ledger balance for accounts receivable.
f. Accounts receivable are appropriately aggregated and clearly described in the financial statements.
g. All accounts on the list arose from the normal course of business and are not due from related parties.
h. Sales cutoff at year end is proper.
i. Receivables have not been sold or discounted.
Management Assertion About Account Balances
1. Existence
2. Completeness
3. Accuracy, valuation, and allocation
4. Classification
5. Rights and obligations
6. Presentation
