Question

1.The search for unrecorded liabilities consists of procedures designed specifically to detect _______.

		A. significant unrecorded obligations at the balance sheet date (or as of an interim date)
		B. insignificant unrecorded obligations at the balance sheet date (or as of an interim date)
		C. significant unrecorded obligations at the income statement date (or as of an interim date)
		D. significant recorded obligations at the balance sheet date (or as of an interim date)

Question 2

If factory workers are paid based on time and/or productivity, there is likely high inherent risk for which of the following key assertions?

		M. Accuracy
		N. Cutoff
		O. Completeness
		P. None of the answer choices is correct.

Answer 1

Question 1 :

A. Significant unrecorded obligations at the balance sheet date (or as of an interim date )

Reason : These unrecorded liabilities may effect the audit report issued by an auditor a search for significant unrecorded liabilities is conducted in an audit procedure.

Question 2 :

O. Completeness

Reason : Inherent Risk is a risk posed by an error or omission in a financial due to a factor other than a failure of internal control. Therefore, in case of workers payment ,there is a chance of high inherent risk for completeness.