Listed below are ten substantive procedures: 1. Ensure that interest paid on the bank loan is...

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Accounting

Listed below are ten substantive procedures:
1. Ensure that interest paid on the bank loan is correct bymultiplying the interest rate by the outstanding principal for eachmonth of the year.
2. Send a letter to the bank to confirm a loan taken out by thecompany during the year.
3. Attend the year-end stocktake and perform test counts on asample of stock items.
4. Review all invoices received for one month after the year-endto ensure that they do not relate to the current year.
5. Calculate the accounts receivable turnover and compare withprevious year’s turnover.
6. Select a sample of non-current assets and sight them.
7. Review the income statement for unusual differences in thebalances recorded for this year and last year.
8. Select a sample of invoices and ensure that they have beenproperly recorded in the sales ledger.
9. Trace the last inventory received before the year-end to theinventory listing.
10. Review the adequacy of the company’s allowance for doubtfuldebts.
REQUIRED:
(a) For each test, indicate what type of substantive procedureto which it relates (analytical review, tests of details ofbalances or tests of details of transactions).
(b) Give an assertion (ONLY ONE) to which each test relates.

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Substantive Procedure Type of Substantive Procedure Assertion 1 Ensure that interest paid on the bank loan is correct by multiplying the interest rate by the outstanding principal for each month of the year Analytical Review Accuracy 2 Send a letter to the bank to See Answer

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Listed below are ten substantive procedures:1. Ensure that interest paid on the bank loan is correct bymultiplying the interest rate by the outstanding principal for eachmonth of the year.2. Send a letter to the bank to confirm a loan taken out by thecompany during the year.3. Attend the year-end stocktake and perform test counts on asample of stock items.4. Review all invoices received for one month after the year-endto ensure that they do not relate to the current year.5. Calculate the accounts receivable turnover and compare withprevious year’s turnover.6. Select a sample of non-current assets and sight them.7. Review the income statement for unusual differences in thebalances recorded for this year and last year.8. Select a sample of invoices and ensure that they have beenproperly recorded in the sales ledger.9. Trace the last inventory received before the year-end to theinventory listing.10. Review the adequacy of the company’s allowance for doubtfuldebts.REQUIRED:(a) For each test, indicate what type of substantive procedureto which it relates (analytical review, tests of details ofbalances or tests of details of transactions).(b) Give an assertion (ONLY ONE) to which each test relates.