Chapter 5 Comprehensive Question 5-30;(Assertions) In planning the audit of a client's financial statements, an auditor identified;the following issues that need audit attention.;1. The allowance for doubtful accounts is fairly presented in amount.;2. All accounts payable owed as of the balance sheet date are included in the financial;statements.;3. All purchase returns recorded in the general ledger are valid.;4. There is a risk that purchases made in the last week of the month might be recorded in;the following period.;5. The client may have factored accounts receivable.;6. The client has used special-purpose entities to finance a building. Neither the building;nor the debt is included in the financial statements.;7. A retail client values its inventory using the retail method of accounting.;8. A construction client uses the percentage of completion method for recognizing revenues.;9. A client has a defined benefit pension plan and does not have competent employees to;write footnote disclosures.;10. A client acquired a subsidiary company and paid a high amount of goodwill when the;stock market, and resulting values, were at all-time highs.;11. A client financed the acquisition of assets using preferred stock that pays a 3 percent;dividend and must be redeemed from the shareholders next year.;Required;Identify the assertion for items 1 through 11 above.
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