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Hi sir,
Yesterday I had my first revision class and in our class, when I answered the question of Dec. 2010 part (c), my teacher said that these procedures are wrong:
1) Obtain a listing of payables from the purchase ledger and agree to the general ledger and the financial statements.
2) Ensure that the payables included in the financial statements as current liabilities.
3) Select a sample of GRNs before the year-end and follow through to inclusion in the year-end payables balance, to ensure cut-off.
These are exactly what the examiner has written in her Dec. 2010 part(c) answer!!
And when, in the break time, I showed him the Examiner’s answer, he said that even examiner has written it wrong and if I write these in the exam, I would be marks wrong 🙁
IS THIS TRUE?
Thanks for reading and replying 🙂 I am now confused that if examiner would publish answers with mistakes then who would I rely upon 🙁I think that the examiner’s answers are correct in principle, though she does say that each procedure explained should state what assertion it addresses.
So 1 addresses completeness and existence
2 addresses pesentation
3 addresses cut-off.Thanks for the reply sir.
Therefore, you mean these all are acceptable?
But can I use the cut-off procedure for Payables, Receivables? I mean for the Account Balance level? Because the examiner uses them but my lecturer says if I write it in the exam, I would be marked wrong :/Cut-off is complicated. It means that expenses for a period are porpoerly included in the FS, but it also has implications for receivables and payables, and cut-off tests are used there to ensure competeness and existence. Also with inventory. Although cut-off is not entioned as an assertion relating to year-end balances, I would mention it myself.
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