ACCT407 Management Assertions Flashcards

Questions and Answers

What does the Occurrence assertion concern?

Whether recorded transactions actually occurred (correct)

Whether all transactions are included

Whether transactions are recorded in the appropriate accounts

Whether transactions are recorded at correct amounts

What is the focus of the Completeness assertion?

Whether transactions are recorded in the correct period

Whether transactions occurred as recorded

Whether all assets are valued appropriately

Whether all transactions are recorded (correct)

What does the Accuracy assertion address?

The correct amounts of recorded transactions (correct)

The appropriate classification of transactions

The existence of recorded transactions

The timing of recorded transactions

What does the Classification assertion verify?

That transactions are in the appropriate accounts Signup and view all the answers

What does the Cutoff assertion relate to?

The timing of transactions Signup and view all the answers

What does the Existence assertion deal with?

Whether assets, liabilities, and equity existed Signup and view all the answers

Study Notes

Management Assertions - Classes of Transactions and Events

Occurrence: Ensures that recorded transactions in financial statements happened during the accounting period, confirming management's assertion of actual sales transactions.
Completeness: Refers to the inclusion of all necessary transactions in financial statements, ensuring management records all sales of goods and services accurately.
Accuracy: Involves recording transactions at correct amounts, highlighting potential issues with pricing or quantity calculations that violate this assertion.
Classification: Ensures transactions are recorded in the right accounts, with incorrect categorization examples, such as misclassifying administrative salaries under cost of sales.
Cutoff: Focuses on the proper accounting period for recording transactions, emphasizing the importance of timing, like recording sales in December for goods shipped in January.
Existence: Concerns whether assets, liabilities, and equity interests are legitimate as of the balance sheet date, asserting that items like merchandise inventory are present and available for sale.

Description

Explore key concepts of management assertions with these flashcards for ACCT407. Learn about the classes of transactions and events, focusing on aspects like occurrence and completeness. Ideal for mastering the foundational elements of accounting.