CHAPTER 8
MATERIALITY DECISIONS AND PERFORMING
ANALYTICAL PROCEDURES
8-14. a. The following discussion first evaluates each potential misstatement individually.
1. Title did not pass on these two shipments until January 20×5. Hence, revenue
should not have been recognized. Because the auditor audited every transaction
during the cutoff period, sampling is not involved. The following journal entry
represents the journal entry needed to correct the potential misstatement.
Revenue $240,000
Inventory $130,000
Accounts Receivable $240,000
