Question

Understanding the management assertions related to a specific control is an important factor in preparing the tests of controls. Using the assertions provided below, select the management assertion(s) that relates to the purpose of the controls in the table. (A management assertion may be selected once, more than once, or not at all.)

Management Assertions

(a) Existence or occurrence

(b) Completeness

(c) Rights and obligations

(d) Valuation or allocation

(e) Presentation and disclosure

(f) Authorization

(g) Cutoff

Purpose of Control	Management Assertion
To ensure that credit is approved before a sale is executed and service is provided or goods are shipped
To ensure that transactions shown as sales are properly classified
To ensure that when cash receipts are recorded they show cash that was actually received by the company and deposited
To ensure that cash receipts transactions are properly posted to the accounts receivable subsidiary ledger and general ledger
To ensure that all cash received by the company is deposited and recorded in the cash receipts journal and that amounts and details, including the date, are shown correctly
To ensure that sales transactions are recorded based on the correct dates

Answer 1

1)Valuation or Occurance- ensure that only paying customers are granted credit.

2)Completeness-Wheather all transaction and eents that should have been recorded have been recorded.

3)Occurance- Whether transaction that have been recorded actually took place.

4)Allocation- transaction have been recorded in proper account.

6) Cutt-off- to ensure ransactions and events are recorded in correct accounting period.