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The Professional Standards Identify Five Categories of Assertions Made by Management

Question 25

Matching

The professional standards identify five categories of assertions made by management that are contained in the financial statements. The categories of assertions identified by the profession are:

Premises:

Responses:

All sales transactions that have been recorded actually occurred during the period.

Existence or occurrence

The details of sales transactions support their presentation in the financial statements.

Completeness

All sales are correctly valued at their historical cost and correctly journalized,summarized, and posted.

Rights and obligations

Accounts receivable at the balance sheet date represents legal claims of the entity on customers for payment.

Valuation or allocation

All sales transactions that occurred during the period have been recorded.

Presentation and disclosure

Premises:

All sales transactions that have been recorded actually occurred during the period.

The details of sales transactions support their presentation in the financial statements.

All sales are correctly valued at their historical cost and correctly journalized,summarized, and posted.

Accounts receivable at the balance sheet date represents legal claims of the entity on customers for payment.

All sales transactions that occurred during the period have been recorded.

Responses:

Existence or occurrence

Completeness

Rights and obligations

Valuation or allocation

Presentation and disclosure

Correct Answer:

Premises:

Responses:

All sales transactions that have been recorded actually occurred during the period.

The details of sales transactions support their presentation in the financial statements.

All sales are correctly valued at their historical cost and correctly journalized,summarized, and posted.

Accounts receivable at the balance sheet date represents legal claims of the entity on customers for payment.

All sales transactions that occurred during the period have been recorded.