Escolar Documentos
Profissional Documentos
Cultura Documentos
6-18
a.
(2)
b.
(2)
6-19
a.
(1)
b.
(2)
6-20
a.
(3)
b.
(4)
c.
(1)
c.
(4)
6-24
b.
c.
CLASS OF
TRANSACTIONS
a.
FINANCIAL
STATEMENT
BALANCE
TITLE OF
JOURNAL
TRANSACTION
CYCLE
PURCHASE
RETURNS
Purchase returns
& allowances
Acquisitions
Journal
Acquisition &
Payment
RENTAL
REVENUE
Rent revenue
Revenue Journal
Sales &
Collection
CHARGE-OFF OF
UNCOLLECTIBLE
ACCOUNTS
Bad debts
Adjustments
Journal
Sales &
Collection
ACQUISITION OF
GOODS AND
SERVICES
Repair and
maintenance
Acquisitions
Journal
Acquisition
& Payment
RENTAL
ALLOWANCES
Rental allowances
Adjustments
Journal
Sales &
Collection
ADJUSTING
ENTRIES (FOR
PAYROLL)
Accrued payroll
Adjustments
Journal
Payroll &
Personnel
PAYROLL
SERVICE &
PAYMENTS
Sales salaries
Payroll Journal
Payroll &
Personnel
CASH
DISBURSEMENTS
Accounts
payable
Acquisition
& Payment
CASH RECEIPTS
Accounts
receivable
Cash Receipts
Journal
Sales &
Collection
d. Rental revenue is likely to be recorded in the cash receipts journal at the time the
cash is received from renters. It is therefore likely to be recorded as a debit to cash
receipts and a credit to rental revenue. The journal will be summarized monthly and
posted to the general ledger. There will be required adjusting entries for unearned
rent and for rent receivable. A record will be kept of each renter and a determination
made whether rent is unpaid or unearned at the end of each accounting period. The
entries that are likely to be made in the adjustments journal are posted to the general
ledger. Then the financial statements are prepared from the adjusted general ledger.
Reversing entries may be used to eliminate the adjusting entries.
6-25
a.
INCOME STATEMENT
ACCOUNTS
CYCLE
SALES AND
COLLECTION
Accounts receivable
Cash
Notes receivable--trade
Allowance for doubtful accounts
Interest receivable
Sales
Bad debt expense
Interest income
ACQUISITION
AND PAYMENT
PAYROLL AND
PERSONNEL
Cash
Accrued sales salaries
INVENTORY
AND
WAREHOUSING
Inventory
Purchases
CAPITAL
ACQUISITION
AND
REPAYMENT
Bonds payable
Common stock
Cash
Notes payable
Retained earnings
Prepaid interest expense
Interest expense
b. The general ledger accounts are not likely to differ much between a retail and a
wholesale company unless there are departments for which there are various
categories. There would be large differences for a hospital or governmental unit. A
governmental unit would use the fund accounting system and would have entirely
different titles. Hospitals are likely to have several different kinds of revenue
accounts, rather than sales. They are also likely to have such things as drug
expense, laboratory supplies, etc. At the same time, even a governmental unit or a
hospital will have certain accounts such as cash, insurance expense, interest
income, rent expense, and so forth.
6-26
SPECIFIC BALANCERELATED AUDIT
OBJECTIVE
MANAGEMENT
ASSERTION
a.
There are no
unrecorded
receivables.
2.
Completeness
Unrecorded transactions or
amounts deal with the
completeness objective.
b.
Receivables have
not been sold or
discounted.
4.
Rights and
obligations
c.
Uncollectible
accounts have been
provided for.
3.
Valuation or
allocation
d.
Receivables that
have become
uncollectible have
been written off.
3.
Valuation or
allocation
e.
3.
Valuation or
allocation
f.
Any agreement or
condition that
restricts the nature
of trade receivables
is known and
disclosed.
5.
Presentation and
disclosure
COMMENTS
6-26
(continued)
MANAGEMENT
ASSERTION
g.
3.
Valuation or
allocation
h.
3.
Valuation or
allocation
6-27
a.
COMMENTS
b.
and
c. The easiest way to do this problem is to first identify the general transaction-related
audit objectives for each specific transaction-related audit objective. It is then easy to
determine the management assertion using Table 6-2 (p. 147 in text) as a guide.
6-27
(continued)
b.
c.
GENERAL
TRANSACTIONRELATED AUDIT
OBJECTIVE
MANAGEMENT
ASSERTION
a.
3.
Valuation
allocation
or
8.
b.
3.
Valuation
allocation
or
c.
1.
Existence or
occurrence
6.
Existence
d.
3.
Valuation
allocation
or
9.
Classification
e.
Existing
cash
disbursement
transactions are recorded.
2.
Completeness
7.
Completeness
f.
3.
Valuation
allocation
10. Timing
6-29
or
Accuracy
6-29
b.
SPECIFIC BALANCE-RELATED
1.
EXISTENCE
d.
2.
COMPLETENESS
a.
3.
ACCURACY
e.
j.
AUDIT OBJECTIVE
Fixed assets physically exist and are being used for the
purpose intended.
There are no unrecorded fixed assets in use.
4.
CLASSIFICATION
i.
5.
CUTOFF
h.
6.
DETAIL TIE-IN
c.
7.
REALIZABLE VALUE
k.
8.
RIGHTS AND
OBLIGATIONS
b.
f.
g.
9.
PRESENTATION
AND DISCLOSURE