Lucy, an audit senior, has obtained a list of items which make up the cash and cash equivalents balance (£3,556) in the financial statements of Alex Manufacturing Ltd.
Materiality has been set at £4,000.
For the item below, select whether Lucy should test or should NOT test the item, or whether they should consult a senior colleague or a junior colleague.
- Current account balance (overdrawn) £5,600
Select ONE answer:
- Test
- Not Test
- Consult a senior colleague
- Consult a junior colleague
Show your workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 1
- Correct – The current account balance should be tested as it is over the materiality threshold.
- Not correct
- Not correct
- Not correct
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