[happygal]

I am trying to relate the Financial Statement Assertions to the types of revenue, expenses, etc that they correlate with, and I am having a lot of trouble with them.

So far my understanding is:

when we have assets such as cash and accounts receivable we want to know if the exist so the assertion they would relate with is existence and occurrence

when we have expenses or liabilities such as Accounts Payable we want to know that all the liabilities have been recorded therefore the assertion would be completeness

when we have a credit sales made before the end of the year that have been recorded in the subsequent year, the assertion would be cutoff because we want to make sure everything is recorded in the right period

1. Can someone please let me know if I am on the right track and

2. give some examples on the assertions of rights and obligations, valuation and allocation, occurance, presentation and disclosure, because when it comes to these I keep getting the mcq’s wrong.

3. also anything else that can help with the understanding of this topic

thanks a lot!

[Biff-1955-Tannen]

1. Yes you are good so far
2. Rights and obligations – An example of this would be inspecting an invoice or a title to make sure that the company has a right to whatever they are claiming on the books.
Valuation and allocation – Finding obsolete inventory would affect the valuation assertion since obsolete inventory does not hold the same value as normal goods.
Occurence – This one and “cutoff” are kind of similar. This is just looking to make sure that the transaction or event actually happened (and in this period). So tracing to an invoice could be an example of this.
Presentation and disclosure – I didn't come across to many questions about this assertion. But this would be concerned with something like depreciation. If depreciation is incorrect, then the presentation and disclosure would be an issue.
3. Lots of MCQ?

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[Author]

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