Arshg7Arshg7 asked 5 months ago
  1. The draft financial statements of Tex Co for the year ended 31 March 2018 show the following information:

Rs.

Revenue

52,00,000

Cost of sales

37,00,000

Gross profit

15,00,000

Trade receivables

18,00,000

Trade payables

10,00,000

 
The auditor has confirmed the trade payables payment period with the Tex Co staff as  98 days during the current year. This was compared with the payment period with the last year records and found out there has been a decrease of 20 days in average. Which of the following audit procedures will provide the auditor with the assertion of valuation of trade payables at the year end?
 

  1. Review the trade accounts payables listing to identify any large debits which should be recorded as trade receivables or deposits
  2. For a sample of vouchers, inspect supporting documentation, such as authorised purchase
  3. Test transactions around the year end to determine whether amounts have been recognised in the correct financial
  4. Compare the amounts owed to a sample of individual suppliers in the trade accounts payables listing with amounts owed to these suppliers in the previous

why not 1 why 4?

1 Answers
RaviRavi Staff answered 5 months ago

a — focuses on presentation & disclosure in notes to accounts
b– focuses on occurrence of transactions and existence of balance
c– focuses on cut-off
d– focuses on valuation 
d is answer

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