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You have been assigned to the audit of Processing Solutions, Inc., a privately held corporation that develops and sells computer systems. The systems are sold under one- to five-year contracts that provide for a fixed price for licensing. delivery, and setup of the systems and maintenance and technical support for the life of the contract. Your review of the working papers reveals that premature revenue recognition is a risk that must be addressed in the audit.
a. Describe the criteria from SEC Staff Accounting Bulletin No. 104 that must be met to recognize revenue under generally accepted accounting principles.
b. Describe two techniques that management of Processing Solutions might use to overstate revenue.
c. For the two techniques identified in (b), describe an auditing procedure that might be employed by the auditors to detect the overstatement of revenue.
Cramer Company projects the following sales for the first 3 months of the year:$12,500. in Jan. 13,240. in Feb, 14,600.in March. Prepare a revised schedule of cash receipts if receipts from sales on account are 60% in the month of the sale, 30% the m..
Danny Inc. issued a 100% stock dividend of its common stock which had a par value of $.01, and a market value of $123 on declaration date and $62 on payment date. At what amount should retained earnings be capitalized for the additional shares issued
Carry's Company bonds have a 12% coupon rate. Interest is paid semi-annually. The bonds have a par value of $1,000 and will mature 8 years from now. Compute the value of the bonds if investors' required rate of return is 8%.
Tangelo had $50,000 in accumulated E&P at the beginning of the year, during the year it incurred a $75,000 operating loss, it distributed $65,000 to its sole shareholder, how should the distribution be treated for tax purposes?
Calculate the following. The unit cost of ending inventory on the balance sheet prepared for stockholders. The unit cost of ending inventory on a variable cost balance sheet.
How can the company expand the equity capital and avoid high-risk debt in order to make up for the cash flow inadequacy using ESOP?
Prepare a two page newsletter that identifies and summarises developments and changes in the financial reporting environment for the quarter from 1 May to 31 July 2016.
What percentage of total revenues is the short-term unearned revenue as of June 30, 2008? Round to one decimal place.
Consolidations must be performed based on the level of control; many companies, however, use different methods for their internal record keeping. In general, what do these entry notations mean? Provide at least one example of a journal entry for one ..
Fit & Slim is a health club that offers members various gym services. F&S accounts reports.
For this assignment, you must write 4-5 paragraphs that you will deliver to the ICBI board (discussed in the IP 3 assignment) on the need for a budget contingency plan.
What are the decisions at the Planning stage of management Sales?
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