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September 22, 2020

IMPORTANT NOTE: Answer in your own words, DO NOT COPY from s

IMPORTANT NOTE: Answer in your own words, DO NOT COPY from slides, fellow student, or internet. Q1. What is the difference between the substantive analytical procedures and the substantive test of details? Explain in detail and provide an example of each one. Q2. For each of the following, state whether it is a test of details of account balances or a test of details of disclosures. Then note for which assertion the test provides evidence. 1. Inspect loan agreements under which an entity’s inventories are pledged. 2. Review inventory compilation for proper classification among raw materials, work in process, and finished goods. 3. Observe the count of physical inventory. 4. Trace test counts and tag control information to the inventory compilation. 5. Inquire of management about issues related to LIFO liquidations. 6. Review book-to-physical adjustments for possible misstatements. Below is the answer of the first one to explain how to answer the question: 1. Disclosures – Occurrence, Rights and obligations Q3. Explain the importance of observing physical inventory during an audit.

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