1. The accounts that may be effected by the risk would be revenue, and cash or accounts receivable.
Audit Evidence would have to involve more test of details and perhaps a recalculation of the sales account.
The assertions that would be effected would be existence/occurrence, completeness, and valuation/allocation.
2. The accounts effected would be regarding their sales such as revenue, cash, and accounts receivable.
Audit evidence would again contain more test of details and analytical procedures.
The assertion the evidence should be testing is completeness and existence/occurrence.
3. The accounts in question may be sales, sales returns, discounts, and possibly allowance for doubtful accounts.
The audit evidence would include a test of details and possibly external
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The assertions in this case would be completeness, and valuation/allocation for the actual benefit accounts to ensure figures are accurate. Also, presentation/disclosure to inform stockholders that poor performance cannot be helped due to current economic conditions.
6. The accounts effected are warranty liability, sales returns, cost of goods sold, and inventory.
The audit evidence should include a test of details and an analytical procedure and inquiry to determine how management is accounting for the recall.
The assertion is valuation/allocation and completeness for the accounts, and presentation/disclosure to inform statement users of the recall and its ramifications.
7. The accounts in this scenario would be litigation liability or cash restricted- litigation.
The audit evidence should include test on controls and inquiry for how these issues are handled, and possible external confirmation of the firm’s lawyers as to the potential settlement and court costs as well as possible duration of the
1. A company’s ending accounts receivable balance and the period’s advertising expense would be found on which financial statements, respectively
1. We identified significant business processes that affect the significant accounts, disclosures and related assertions for the financial
The effect of this transaction and next year’s income statement would be the ending inventory balance will increase and added in the cost of goods sold. The current period, the high value of the inventory balance will imply lower gross margins. The income tax expenses will decrease as the income tax expenses are usually proportionately depending on the company’s net earnings. In the next year, the transaction will increase in income and tax expense. Because a lot of inventories will be processed into finished goods which increase the gross sales, increasing the level of gross profit and earnings in the company. The income tax expenses and net earnings will increase.
The company accounts for these transactions as sales in accordance with Statement of Financial Accounting Standards No. 77, ‘’Reporting
actual accounts, which can be considered as uncollectible, i.e. those that are already over 90 days. The balance
Q. Rights to receive money from customers are a. liabilities. b. prepaid expenses. c. accounts
The objectives an audit team hopes to accomplish by preparing a proper set of audit workpapers is to facilitate the planning, performance, supervision of the engagement, and provide evidence supporting significant conclusions by the auditor in accordance with the PCAOB. A record of the evidence, samples tested and the conclusions are presented to supervisors and partners for review
The account with the greatest risk of material misstatement is the inventory account. Two other accounts that have risk, but do not have as much risk as the inventory account are: accounts receivable and the property and equipment account. Finally, another account that should be monitored is the short-term investments account.
Moving onto the balance sheet, it is safe to assume that the cash position in the firm will increase the rate of the sales growth going forward. In actuality, cash has historically increased faster than the growth of revenue with 2004 being an exception. To calculate the assumption for accounts receivable, inventory, and accounts payable, we averaged the four years worth of data
The auditing firm has been in engagement with the company throughout the period when the fraud was being committed. One of the common and clear indicators of possible fraud was the company’s cash flow statement. The company experienced positive growth in its profits from the year 1996 through to the year 1998. However, a close analysis of the cash flow statement shows that the company had experienced negative figures of cash flow from both operating and investing activities and positive cash flow from financing activities which would not sufficiently offset the negative cash flows from operating and investing. It is therefore evident
Account receivables accounts for purchases which consumers have not yet aid for. This takes cares of any losses that the firm might incur due to allowing credit to certain clients. Bad debts are recorded in the income statement and they represent the des which the company doesn’t expect to be paid back. The account
The process of recording and posting the effects of business transaction is done in a double entry t-form. The total dollar amount of debits must equal the total dollar amount of credits, with debits to the left and account credit to the right. Broken down, Assets = Liabilities + Stakeholder Equity. “Since debits increase assets, expense, and dividend accounts, they normally have debit balances. Conversely, because credits increase liability, capital stock, retained earnings, and revenue accounts, they normally have credit balances.”( Edwards, J. D., Hermanson, R.H., & Maher, M. W. (2011). p.84)
In order to test his hypothesis, the author followed the Dechow and Dichev (2002), which examines the standard deviations of residuals from a regression of accounts receivable accruals on corresponding cash flow realizations. The model uses information related to accounts receivable, sales cash collected during the periods, and errors in accounts receivable accruals (sresid). The author
D) Assertions about presentation and disclosure deal with whether the accounts have been included in
It was to be specifically applied to these firms, but it should be able to apply the results in a modified way to other firms. The key question was how these firms manage their accounts receivable in the changing market conditions.