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Continuation of practice audit exercises.

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ACCOUNTS RECIEVABLE VS. ACCOUNTS PAYABLE
As part of your first audit of the financial statements of Sugarland Company you have decided to confirm
some of the accounts payable. You are now in the process of selecting the individual companies to whom
you will send the accounts payable confirmation requests. Among the accounts payable you are
considering are the following:
COMPANY
AMOUNT PAYABLE AT YEAR-
TOTAL PURCHASES FROM
END
VENDOR DURING THE YEAR
Shelton, Inc
$0
$ 1,980,000
Underwood
$ 22,650
$ 46, 100
Chesney Supply
$ 65,000
$ 75,000
Zac Brown
$ 190,000
$ 2.123,000
a.) Which of the above four accounts payable would you select as the most important to confirm?
Explain your choice in terms of the audit assertion being tested and why it is important in the audit
of accounts payable. Include the key audit assertion being tested in your answer.
b.) Assume that you are selecting accounts receivable to be confirmed. Assume also that the four
companies listed above are customers of your client rather than suppliers and that the dollar
amounts are accounts receivables balances and total sales for the year. Which two companies
would you select as the most important to confirm? Explain your choice in terms of the audit
assertion being tested and why it is important in the audit of accounts recievable.

Top Answer

a) As there are only 4 accounts payable given and in requirement, 4 accounts payable are required to select so i would like... View the full answer

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