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You have performed preliminary analytical procedures on one of your audit engagements and observed the following independent situations:1. The allowance for obsolete inventory increased from the prior year, but the allowance as a percentage of inventories decreased from the prior year.2. Long term debt increased from the prior year, but total interest expense decreased as a percentage of long term debt.3. The dollar amount of operating income is consistent with the prior year although the entity was more profitable on a net income basis.4. The quick ratio decreased from the prior year, although the amount of cash and net accounts receivable is almost the same as the prior year.Required:Below are possible explanations for each of the observed changes in the financial statement amounts and ratios. For each observed change, select the most likely explanation(s) from the list below. Note: There may be more than one explanation for a given observed change, and an explanation can be used more than once.a. Shipments of inventory sold prior to year end were included in the client's inventory counts as of the balance sheet date.b. Selling and general administrative expenses were lower this year relative to last year.c. Sales have decreased compared to the prior year, and the client is maintaining fewer inventories as a result.d. Portions of existing long term debt were refinanced at lower interest rates.e. The effective tax rate decreased, as compared to the prior year.f. The client purchased a large block of inventory on account close to year end.g. Sales increased at a greater percentage than cost of goods sold, as compared to the prior year.h. Client inventory items are off site on consignment at retailers and are thus excluded from the year end inventory counts.i. Short term borrowings were refinanced on a long term basis at lower interest rates.
Identify six key control weaknesses and its implication that were evident in Huntington unit's operations and develop control policies or procedures to alleviate the control weaknesses you identified in responding to question above.
What governing bodies are responsible for establishing financial reporting parameters? What is their purpose? Which body is the most important? Why?
Determine whether SOX has been effective in regulating ethical behavior of for-profit health care organizations. Defend your position.
q smith manufacturings bank has just informed the companys cfo that an audit is required to get an operating line of
What does the two designations mean? How would you compare the corporate governance systems of the United States and Germany. How did both countries come to have the systems they have? and what are the consequences of each system?
You have just been appointed as the auditor of Gritty Manufacturing Ltd and you are in the process of planning your first audit. Gritty manufactures security cameras and is a part of the electronics industry.
Given time and cost constraints of an audit, explain how materiality and audit risk are assessed and applied to make an audit efficient and effective.
The Mesa Bank is offering your company the use of their lockbox services. They estimate that you can reduce your average mail time by 2 days and they can save you a combined clearing and processing time of 1.5 days by putting the checks into the c..
On July 1, 2007, Gale Sondergaard Company sold special-order merchandise on credit and received in return an interest-bearing note receivable from the customer. Sondergaard will receive interest at the prevailing rate for a note of this type. Both..
My assignment is the marketing audit for The Toowoomba chamber of commerce. I've been having a hard time to analysis the internal and external envrionment: SWOT, pest.
What are the different types of audits that retailers use. Why is auditing necessary? What benefits can be gained to offset the costs associated with them?
The following audit procedures were performed to address presentation and disclosure related audit objectives related to notes payable.
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