Exam 11: Substantive Testing and Income Statement Accounts

Testing the balance sheet substantively will provide reasonable assurance on the income statement accounts.

The key audit assertions when auditing cost of sales and expenses include:

The occurrence assertion for sales relates to which of the following audit objectives?

An example of a substantive test always performed for costs and expenses is obtaining detailed analysis of selected accounts and tracing the details to the source data.

Which type of substantive procedure do auditors ordinarily use when testing income statement accounts?

Control risk is:

A simple way of testing which period a sale should be recorded in is to:

Which assertion is generally not significant for sales revenue?

Testing the pricing and mathematical accuracy of sales invoices is an example of a substantive test of transactions in the sales process.

When the inherent risk and control risk assessment is high:

Explain the principal objectives in auditing costs and expenses.

Purchases testing is performed most efficiently by the use of controls testing.

When inherent risk and control risk are assessed to be low, the level of substantive procedures required to address any remaining detection risk is limited.

The auditor uses their professional judgment, knowledge of the client and risk assessment for each significant account to determine the timing and extent of testing.

Bad debts expense is ordinarily tested as part of the testing of the valuation of:

Analytical procedures involve:

Substantive tests of costs and expenses that are always performed include:

Substantive procedures are designed to detect material misstatements at the assertion level.

The audit objective that costs and expenses are stated in the income statement at the appropriate amounts relates to which assertion?

The classification assertion relates to ensuring that all costs and expenses in the income statement are properly supported as charges against the entity.