ExpertHard1 markMultiple Choice
CPA · Question 52 · Area III: Procedures
An auditor is testing the 'Presentation and Disclosure' assertion for a client's debt. The auditor is most concerned with:
An auditor is testing the 'Presentation and Disclosure' assertion for a client's debt. The auditor is most concerned with:
Answer options:
A.
Whether the debt actually exists.
B.
Whether the debt is correctly classified as current or non-current.
C.
Whether the interest expense is calculated correctly.
D.
Whether all debt is recorded.
How to approach this question
Link Assertion to Issue. Presentation = Classification (Current vs Long Term) and Footnotes.
Full Answer
B.Whether the debt is correctly classified as current or non-current.✓ Correct
Presentation and Disclosure assertions include Classification. Ensuring debt is properly split between Current (due within 1 year) and Non-current is a key presentation objective.
Common mistakes
Focusing on the amount (Valuation) rather than the display (Presentation).
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