1. Describe four management assertions for account balances at the end of the reporting period. 2....

1. Describe four management assertions for account balances at the end of the reporting period.

2. Describe five management assertions about transactions and transactions during the audit period.

3. Describe five management assertions for presentation and disclosure.

4. Describe the three purposes that a company establishes and maintains internal control.

Solutions

Expert Solution

1. The four management assertions for account balances at the end of the reporting period.

Existence: - The assertion is that all account balances exist for assets, liabilities, and equity.
Completeness: - All assets, liabilities and equity interests that should have been recorded have been recorded and all related disclosures that should have been included in the financial statements have been included.
Rights and Obligations: - The entity legally controls rights to its assets and its liabilities faithfully represent its obligations.
Valuation:- Assets, liabilities and equity interests have been included in the financial statements at appropriate amounts and any resulting valuation or allocation adjustments have been appropriately recorded and related disclosures have been appropriately measured and described.

2. The five management assertions about transactions and transactions during the audit period.

Cutoff: - The assertion is that all transactions were recorded within the correct reporting period.
Occurrence: - The transactions recorded have actually taken place.
Completeness: - All transactions that were supposed to be recorded have been recognized in the financial statements.
Classification: - Transactions and events have been recorded in the proper accounts.
Accuracy: - Transactions have been recorded accurately at their appropriate amounts.

3. The five management assertions for presentation and disclosure.

Accuracy: - The assertion is that all information disclosed is in the correct amounts, and which reflect their proper values.
Occurrence: - This means that all the transactions in the accounting records actually took place. No transactions are made up or are duplicates.
Rights and Obligations: - The transactions and disclosures pertain to the entity.
Understandability: - The assertion is that the information included in the financial statements has been appropriately presented and is clearly understandable.
Completeness: - All transactions needing entry into the books are recorded. The business excludes nothing.

ekkarill92 answered 1 year ago

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