Podcast
Questions and Answers
What does the Occurrence assertion concern?
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?
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?
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?
What does the Classification assertion verify?
What does the Cutoff assertion relate to?
What does the Cutoff assertion relate to?
What does the Existence assertion deal with?
What does the Existence assertion deal with?
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Study Notes
Management Assertions - Classes of Transactions and Events
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Occurrence: Ensures that recorded transactions in financial statements happened during the accounting period, confirming management's assertion of actual sales transactions.
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Completeness: Refers to the inclusion of all necessary transactions in financial statements, ensuring management records all sales of goods and services accurately.
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Accuracy: Involves recording transactions at correct amounts, highlighting potential issues with pricing or quantity calculations that violate this assertion.
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Classification: Ensures transactions are recorded in the right accounts, with incorrect categorization examples, such as misclassifying administrative salaries under cost of sales.
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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.
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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.
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