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Unformatted text preview: 5-19Class of Transactionsa. Financial Statement Balanceb. Title of Journalc. Transaction CyclePurchase ReturnsPurchase returns & allowancesAcquisition or purchasesAcquisition & paymentRental RevenueRent revenueRevenue or sales historySales & collectionCharge-Off of Uncollectible AccountsBad debts or allowance for doubtful accountsAdjustmentsSales & collectionAcquisitions of Goods and ServicesRepair and maintenanceAcquisition or purchasesAcquisition & paymentCollection of GSTGST payableRevenue or sales historySales & collectionAdjusting EntriesAccrued payrollAdjustmentsPayroll & personnelPayroll Service & PaymentsSales salariesPayrollPayroll & personnelCash DisbursementsAccounts payableDisbursementsAcquisition & paymentCash ReceiptsAccounts receivableCash receiptsSales & collectiond.Rental revenue is likely to be recorded in the revenue journal (or revenue transaction file) using the sales at the time revenue is earned, perhaps the beginning of the month. It is likely to be recorded as a debit to accounts receivable (as well as debits to individual customer accounts in the accounts receivable transaction file and accounts receivable master file) and a credit to rental revenue. The journal (sales transactions) will be summarized periodically and posted to the general ledger. How frequently this occurs depends upon the nature of the business – some businesses have immediate (online) sales posting, while others may have daily, weekly or monthly postings. 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. Reversing entries may be used to eliminate the adjusting entries.5-22 Specific Balance-related Audit ObjectiveManagement Assertiona. There are no unrecorded receivables.2. Completenessb. Receivables have not been sold or discounted.1. Existence or occurrencec. Uncollectible accounts have been provided for.3. Measurementd. Receivables that have become uncollectible have been written off.1. Existence or occurrencee. All accounts on the list are expected to be collected within one year.3. Measurementf. All accounts on the list arose from the normal course of business and are not due from related parties.3. Measurementg.. Sales cutoff at year end is proper.4. Allocation5-23a.Assertions are implied or expressed representations by management about the components of financial statements. These assertions are the same for every account balance. General audit objectives are essentially the same as management assertions, but they are expanded somewhat to help the auditor decide which audit evidence is necessary to satisfy the management assertions. Valuation, classification, posting and summarization, and mechanical accuracy are a subset of the measurement assertion. Specific audit objectives are determined by the auditor for each general audit objective. These are done for each account balance to help the the auditor for each general audit objective....
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This note was uploaded on 02/19/2012 for the course ACCT Audit taught by Professor Niki during the Spring '12 term at Saint Mary's University Texas.
- Spring '12