Standards, a financial statement assertion is relevant if it has a reasonable possibility of containing a...

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Standards, a financial statement assertion is relevant if it has a "reasonable possibility of containing a misstatement that would cause the financial statements to be materially misstated." For each audit procedure listed below, please select the appropriate financial statement assertion that would be tested by the procedure (i.e., existence or occurrence, completeness, valuation, rights and obligations, presentation and disclosure) and signifi- cant financial statement account: Audit Procedures a. The auditor sends a letter to the bank confirming the amount of cash in the bank account. b. The auditor takes a shipping document and traces it to the sales invoice and sales journal. c. The auditor selects items from the company's inventory list and observes those items in the warehouse. d. The auditor compares prices on a vendor invoice to an approved price list from the vendor. e. The auditor reviews recorded expenses with vendor invoices. f. The auditor determines whether inventory has been pledged as collateral for a loan. g. The auditor reads the minutes from the board of directors meeting to make sure that recorded stock options were approved. h. The auditor reviews new lease agreements to evaluate whether leases have been recorded properly on the balance sheet. t One The Contemporary Auditing Environment 1.70 i. The auditor selects inventory items at a retail store to determine whether any are held on consignment. j. The auditor sends letters to customers to confirm amounts owed to the company. Internet Exercise: Profeccion Standards, a financial statement assertion is relevant if it has a "reasonable possibility of containing a misstatement that would cause the financial statements to be materially misstated." For each audit procedure listed below, please select the appropriate financial statement assertion that would be tested by the procedure (i.e., existence or occurrence, completeness, valuation, rights and obligations, presentation and disclosure) and signifi- cant financial statement account: Audit Procedures a. The auditor sends a letter to the bank confirming the amount of cash in the bank account. b. The auditor takes a shipping document and traces it to the sales invoice and sales journal. c. The auditor selects items from the company's inventory list and observes those items in the warehouse. d. The auditor compares prices on a vendor invoice to an approved price list from the vendor. e. The auditor reviews recorded expenses with vendor invoices. f. The auditor determines whether inventory has been pledged as collateral for a loan. g. The auditor reads the minutes from the board of directors meeting to make sure that recorded stock options were approved. h. The auditor reviews new lease agreements to evaluate whether leases have been recorded properly on the balance sheet. t One The Contemporary Auditing Environment 1.70 i. The auditor selects inventory items at a retail store to determine whether any are held on consignment. j. The auditor sends letters to customers to confirm amounts owed to the company. Internet Exercise: Profeccion