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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Directional testing
I can’t understand the concept of If asset balances and expenses for the year (i.e. debits) are tested directly for overstatement and all credit balances and income for the year are tested directly for understatement, then misstatement in the opposite directions will be tested indirectly.
For eg if payables are checked for understatement that would also indirectly test purchases for what ?
overstatement.
How important is this topic for F8
Not very important.
What its saying is that if you are happy that all liabilities have been included (credits), you are also pretty happy that all the (debits) expenses and non-current assets have also been included.