ACCA Audit and Assurance (F8) Practice Exam

Which audit test is NOT typically conducted for long-term liabilities?

1. Verify lenders to register

2. Trace additions/repayments to cash book

3. Review sales revenue for the period

4. Obtain direct confirmation from lenders

The correct answer is: Review sales revenue for the period

The chosen response is particularly relevant because reviewing sales revenue for the period does not directly relate to the audit of long-term liabilities. Long-term liabilities are associated primarily with obligations such as loans, bonds, and similar debt instruments that are expected to be settled over a longer timeframe, usually beyond one year. When auditing long-term liabilities, the focus is typically on verifying the existence and accuracy of the obligations, understanding the terms and conditions under which they were incurred, and ensuring that they are properly classified in the financial statements. In contrast, verifying lenders to check their registration relates directly to confirming the existence of the liability and its terms. Tracing additions and repayments to the cash book helps ensure that all transactions affecting the long-term liabilities have been recorded correctly. Obtaining direct confirmation from lenders is an essential audit procedure for verifying that the reported liabilities exist and are accurate in the financial statements. Reviewing sales revenue does not contribute to the understanding or verification of long-term liabilities since it is more concerned with income generation rather than the obligations the company has to external parties. Therefore, this option is not a typical audit test conducted for long-term liabilities.