Auditing and Assurance Services 9th Edition by Alvin Arens,Mark Beasley,Randy Elder

Exercise 24

Assertions are expressed or implied representations by management that are reflected in the financial statement components. The auditor performs audit procedures to gather evidence to test those assertions.
Required:
Your client is All's Fair Appliance Company, an appliance wholesaler. Select the most appropriate audit procedure from the following list and enter the number in the appropriate place on the grid. (An audit procedure may be selected once, more than once, or not at all.)
Audit Procedure:
1. Review of bank confirmations and loan agreements.
2. Review of drafts of the financial statements.
3. Select a sample of shipping documents, match them with related sales invoices, and determine that they have been included in the sales journal and accounts receivable subsidiary ledger.
4. Select a sample of shipping documents for a few days before and after year-end.
5. Confirmation of accounts receivable.
6. Review of aging of accounts receivable with the credit manager.