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Tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent year provide assurance about management's assertion regarding:
Suggested Answer: D
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Choice 'd' is correct. When obtaining an understanding of an entity's internal control in a financial statement audit, an auditor is not obligated to search for significant deficiencies in the operation of internal control.
Choice 'a' is incorrect. In order to determine the nature, timing and extent of tests to be performed, an auditor must determine whether the control activities have been implemented.
Choice 'b' is incorrect. An auditor is required to perform procedures to confirm his/her understanding of the internal control systems' design, and to determine whether relevant controls have been implemented.
Choice 'c' is incorrect. An auditor is required to document his or her understanding of the entity's internal control components, even if he or she intends to use a substantive approach.
35 comments · newest first
GA
Gaynell
11 months ago
Surprised this is even a question, it seems obvious!
BA
Barbra
11 months ago
100% agree with B, cutoff is key here!
YO
Yong
11 months ago
Wait, are we sure it’s not C? Sounds off.
RE
Rebbecca
11 months ago
I thought it was A for classification.
BE
Bernadine
11 months ago
Definitely B, it's all about cutoff!
VA
Valentin
12 months ago
I agree with the others, it has to be about cutoff. We discussed how important it is for financial statements to reflect the right period during our review sessions.
AN
Anthony
12 months ago
I’m not entirely sure, but I feel like it could also relate to classification. But cutoff seems more relevant to me.
VE
Veronica
12 months ago
I remember practicing a similar question, and I think cutoff is definitely the key here. It’s about timing, not just accuracy.
CR
Cristal
1 year ago
I think this question is about cutoff, right? It’s all about making sure sales are recorded in the correct period.
NI
Nina
1 year ago
This question is tripping me up a bit. I know cutoff is important, but I'm not sure if that's the only assertion it relates to. I'll need to think this through step-by-step to make sure I don't miss anything.
DE
Deeanna
1 year ago
Okay, I think I've got this. Cutoff testing is all about making sure transactions are recorded in the right accounting period, so the correct answer must be B. Cutoff.
RE
Reita
1 year ago
Hmm, I'm a bit unsure about this one. I know cutoff testing is important, but I'm not totally clear on how it relates to the different management assertions. I'll need to review my notes carefully.
GE
Georgene
1 year ago
This seems like a straightforward question about cutoff testing. I'll focus on reviewing the definitions of the different management assertions to make sure I select the right one.
LO
Loise
1 year ago
I think this is a close-ended question, so I'll need to be concise and focused in my response.
JA
Jacinta
1 year ago
I think I saw a question about this where it suggested that longer credit periods generally increase accounts receivable. Is that what we're looking for here?
SH
Sherita
1 year ago
I think the key here is understanding how Solr4 indexes are affected by a backup while the system is running. I'll need to carefully consider the potential impacts on the index status.
VE
Vesta
1 year ago
I'm leaning towards the wiki option as well. The ability to track changes and have a centralized place for all the documents seems really useful for a committee managing all these materials.
HE
Herminia
1 year ago
B) Cutoff, no doubt. I bet the auditor is really cutting it close on this one, ha!
DE
Delmy
1 year ago
Cutoff is definitely the key assertion being tested. B) Cutoff for sure.
TA
Tayna
1 year ago
Ah, classic cutoff question. I'm pretty confident B) Cutoff is the right answer here.
FR
Francine
1 year ago
Management's assertion regarding cutoff is key to accurate financial reporting.
CO
Corinne
1 year ago
Cutoff testing is essential to ensure transactions are recorded in the correct accounting period.
VA
Val
1 year ago
Yes, B) Cutoff is crucial for detecting credit sales recorded in the wrong period.
KI
Kirk
1 year ago
I agree, B) Cutoff is the correct answer for this question.
TA
Tawna
1 year ago
I'm not sure, but I think it could also be D) Existence, as we are verifying the actual occurrence of the sales transactions.
SU
Susana
2 years ago
I agree with Lonny, because testing for credit sales made before the end of the year ensures that transactions are recorded in the correct period.
LO
Lonny
2 years ago
I think the answer is B) Cutoff.
ED
Edmond
2 years ago
Hmm, this one's tricky. I think I'll go with B) Cutoff. Sounds like it's testing whether the company has properly recorded sales at the right time.
KA
Kandis
1 year ago
I think so too, it's all about making sure the sales are recorded in the correct period.
RE
Regenia
1 year ago
I agree, B) Cutoff seems like the right choice here.
AZ
Azalee
1 year ago
Yeah, it makes sense to test if sales are recorded in the correct period.
KA
Katina
1 year ago
I agree, B) Cutoff seems like the best choice here.
KE
Keshia
2 years ago
I'm not sure, but I think it could also be D) Existence, as the tests would confirm the actual existence of the sales transactions.
AL
Alease
2 years ago
I agree with Celestina, because testing for credit sales made before the end of the year ensures that they are recorded in the correct period.
CE
Celestina
2 years ago
I think the answer is B) Cutoff.