What is the completeness assertion for the income statement?
Completeness for the income statement addresses whether management has recorded all of the activity in the financial statements that should have been recorded. The primary concern of the audit team is that management is understating certain aspects of the financial statements like expenses.
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How to test the completeness assertion for expenses?
The primary concern for expenses is that the company has not recorded all expenses in the financial statements. By not recording certain expenses, the company can inflate profit. The audit team can trace invoices or cash disbursements to the general ledger (i.e. the search for unrecorded liabilities).
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What are the assertions for the transaction & events level?
The transaction & events assertions relate to the income statement and the activity throughout the year. The five key assertions include occurrence, completeness, accuracy, cutoff, and classification.
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What assertions are included in the account balance category?
The account balance category addresses the balance sheet. The four assertions included in this category are occurrence, rights & obligations, completeness, and valuation & allocation.