Exam 11: Substantive Testing and Income Statement Accounts

Explain the nature of the accounting fraud that was committed by the Sunbeam Corporation in the 1990s.What procedures can auditors use to detect such fraud?

Discuss the importance of the completeness assertion as it relates to auditing sales revenue.

Testing the account classification of credit memos tests the accuracy assertion for the sales returns process.

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

Control risk is:

Analytical procedures involve:

When the inherent risk and control risk assessment is high:

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

Explain the nature of and motivations for various approaches for companies to manipulate their profits through the use of expenses.

When substantive tests performed identify errors or exceptions,the auditor's first response is to:

Which of the following are examples of substantive procedures in auditing revenue that are always performed?

Identify situations where the understatement of sales can be a risk for certain clients and how auditors should react to such risk.

The level of substantive procedures will be limited when:

The risk that an auditor expresses an inappropriate audit opinion when a financial report is materially misstated is known as:

Explain the key objective of substantive testing and the responses from auditors when errors or exceptions are identified during testing.

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

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

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

Explain the principal objectives in auditing costs and expenses.

The key audit assertions for cost of sales and expenses are rights and obligations and occurrence.