Part 2 Management Assertions (24 points) I. Conceptually. management makes assertions about the financial statements. (1) Define, or explain, what meant by management assertions. (2) auditor in auditing an entity's financial statements? Discuss. How does the concept of management assertions help the II. Indicate the most applicable Assertion for each of the Items shown below [in the form of an assertion). Use only ONE letter for each item. Assertions about Classes of Transactions and Events and Related Disclosures, for the period under audit: A. Occurrence D. Cutoff B. Completeness E. Classification OR Presentation C. Accuracy Assertions about Account balances and Related Disclosures, at the period end. G. Existence J. Accuracy, Valuation and Allocation H. Rights and Obligations K. Classification OR Presentation I. Completeness Assertions: 1. Items in the company's warehouse can be found on the inventory listing. 2. The company actually owns inventory found in its warehouse. 3. Purchases in transit at year-end shipped FOB shipping point are properly included in the company's accounts. 4. The auditor notes that the company determines properly the "lower of cost or net realizable value" when determining the amount for inventory. 5. Liabilities duo in six months follow the accounting rules and are shown on the company's balance sheet as long-term liabilities. 6. The auditor counts 99 ORCS of inventory, the inventory listing shows 100. [Do not select Completeness] 7. Land owned by the company is shown on the Balance Sheet at Historie (original] Cost. 8. Sales that were recorded, took place. Part 2 II. Answers (USE ONLY ONE LETTER) 1. 2. 3. Part 2 Management Assertions (24 points) I. Conceptually. management makes assertions about the financial statements. (1) Define, or explain, what meant by management assertions. (2) auditor in auditing an entity's financial statements? Discuss. How does the concept of management assertions help the II. Indicate the most applicable Assertion for each of the Items shown below [in the form of an assertion). Use only ONE letter for each item. Assertions about Classes of Transactions and Events and Related Disclosures, for the period under audit: A. Occurrence D. Cutoff B. Completeness E. Classification OR Presentation C. Accuracy Assertions about Account balances and Related Disclosures, at the period end. G. Existence J. Accuracy, Valuation and Allocation H. Rights and Obligations K. Classification OR Presentation I. Completeness Assertions: 1. Items in the company's warehouse can be found on the inventory listing. 2. The company actually owns inventory found in its warehouse. 3. Purchases in transit at year-end shipped FOB shipping point are properly included in the company's accounts. 4. The auditor notes that the company determines properly the "lower of cost or net realizable value" when determining the amount for inventory. 5. Liabilities duo in six months follow the accounting rules and are shown on the company's balance sheet as long-term liabilities. 6. The auditor counts 99 ORCS of inventory, the inventory listing shows 100. [Do not select Completeness] 7. Land owned by the company is shown on the Balance Sheet at Historie (original] Cost. 8. Sales that were recorded, took place. Part 2 II. Answers (USE ONLY ONE LETTER) 1. 2. 3