Question

For the following statement/questions match the assertion that best matches: When auditing the following accounts identify what auditors are primarily concerned with:

a. Revune
b. Assests
c. Liabilities
d. Expenses


1. Overstatments
2. Understatments

Answer 1

When auditing the following accounts, auditors are primarily concerned with:

Accounts Assertions

a. Revenue Overstatements

b. Assets Overstatements

c. Liabilities Understatements

d. Expenses Understatements

Step-by-step explanation:

Auditors are generally concerned about these assertions when auditing financial statements and their related disclosures: accurate recording, completeness, cut-off, existence, rights and obligations, and valuation. For revenue and assets, they want to ensure that these are not overstated. Their overstatement will increase the reported profits of the entity, which is a kind of cooking the books to please analysts. They are also interested in ensuring that liabilities and expenses are not understated for the same purpose.