Reference no: EM131810017
The following misstatements are sometimes found in the sales and collection cycle's account balances:
1. Several cash receipts were posted to the incorrect customer accounts.
2. A shipment made in the subsequent period is recorded as a current period sale.
3. The allowance for uncollectible accounts is inadequate because of the client's failure to reflect depressed economic conditions in the allowance.
4. Several accounts receievable are in dispute as a result of claims of defective merchandise.
5. The pledging of accounts receivable to the bank for a loan is not disclosed in the financial statements.
6. Goods were returned for credit on the last day of the fiscal year but the sales return was not recorded until the following fiscal year.
7. Several accounts receivable in the accounts receivable master file are not included in the aged trial balance.
8. One account receivable in the accounts receivable master file is included on the aged trial balance.
9. Long-term interest-bearing notes receivable from affiliated companies are included in accounts receivable.
Required:
a. For each misstatement, identify the balance-related audit objective to which it pertains.
b. For each misstatement, list an internal control that should prevent it.
c. For each misstatement, list one test of details of balances audit procedure that the auditor can use to detect it.
|
Find probability that the sample contains defective items
: Consider two machines, A and B, each producing the same items. Each machine produces large number of these items every day.
|
|
What depreciation is claimed in year 3
: Metal Stampings, Inc., can purchase a new forging machine for $400,000. After 20 years of use, the forge should have a salvage value of $25,000.
|
|
Identify the six source documents that need to be processed
: The manager Identifies the following six source documents that need to be processed to bring the accounting records up to date.
|
|
Muddy fields earthmoving can purchase a bulldozer
: Muddy Fields Earthmoving can purchase a bulldozer for $30,000. After 7 years of use, the bulldozer should have a salvage value of $5000.
|
|
List an internal control that should prevent it
: For each misstatement, list one test of details of balances audit procedure that the auditor can use to detect it.
|
|
Declining balance method
: What is the depreciation charge for the fifth year, and what is the book value at the end of the fifth year?
|
|
What is the value of the probability in given cases
: I keep dealing independent poker hands. Write an expression for the probability that I get my 150th one pair' on or after the 400th deal.
|
|
Evaluate the feasibility of applying strategic management
: Evaluate the feasibility of applying strategic management accounting techniques
|
|
Compute the depreciation schedule
: The Afar Jewel Mining Company has just purchased a new crystal extraction machine that cost $5000 and has an estimated salvage value of $1000 at the end of its
|