Questions: Q1: Discuss how the SEC has influence (if any) over the audit of Smackey Dog Foods‚ Inc. Solution: The SEC’s influence in Smackey Dog Foods‚ Inc. can be observed in the audit standards that are being upheld. More specifically‚ the SEC developed auditor standards that must be followed. In the case of Smackey‚ we can see that the implementation of SOX has mandated that auditors be independent entities for publically held companies. Privately held companies are subject to these
Premium Accounts receivable Audit Internal control
Module III: Control Testing-Sales Processing 1. This plan doesn’t test sales revenue and accounts receivable for completeness. The most important control to assure completeness is prenumbered shipping and billing document. Unfortunately‚ the sales processing system does not provide for pre-numbered bills of lading‚ and bills of lading are not accounted for. Because of this deficiency‚ goods may have been shipped to customers but never billed to the customer. Thus‚ they don’t constitute an effective
Premium Accounts receivable Revenue Shipping
probably also requires an investment in current assets less current liabilities (working capital). There may be an increase in raw material‚ work-in-process‚ and finished goods inventories. Also‚ if there are sales on credit rather than cash‚ accounts receivable will increase; that is‚ sales per the income statement will be collected with a
Premium Investment Net present value Balance sheet
Background Horniman Horticulture is a wholesale nursery company‚ which was purchased by the browns couples from Maggie’s father at $999‚000. The nursery’s operations filled 52 greenhouses and 40 acres of productive fields and employed 12 full-time and 15 seasonal employees. Sales were primarily to retail nurseries throughout the mid-Atlantic region. The company specialized in such woody shrubs as azaleas‚ camellias‚ hydrangeas‚ and rhododen-drons‚ but also grew and sold a wide variety of annuals
Premium Generally Accepted Accounting Principles Balance sheet Accounts receivable
SOLUTIONS FOR MULTIPLE‑CHOICE QUESTIONS 6.24 a. Correct Risk is high when the company always estimates the inventory but never takes a complete physical count. b. Incorrect Risk is low when the petty cash box is always locked in the desk of the custodian. c. Incorrect Risk is low when management has published a company code of ethics and sends frequent communication newsletters about it. d. Incorrect Risk is low when the board of directors reviews and approves all investment transactions. 6.25
Premium Accounts receivable Fraud Expense
Installation of the machine and the resulting increase in manufacturing capacity will require an increase in various net working capital accounts. It is estimated that the Sisyphean Corporation needs to hold 2% of its annual sales in cash‚ 4% of its annual sales in accounts receivable‚ 9% of its annual sales in inventory‚ and 5% of its annual sales in accounts payable. The firm is in the 35% tax bracket‚ and has a cost of capital of 10%. Calculate the total Free Cash Flows for each of the three
Premium Generally Accepted Accounting Principles Accounts receivable
Part A 1) a)Although a client/company is engaged to perform audits for the 2nd year‚ it does not allow sufficient time for auditor to detect material misstatement. This is due to lack of experience in understanding of the company? Repeat engagement over the years to come would reduce inherent risk Thus‚ the 2nd year of audit would increase inherent risk. b)The bank requires that a/ the company’s interest coverage ratio should be above 9‚ in order to provide loans to the client. From the extract
Premium Debt Generally Accepted Accounting Principles Finance
Accounting 3.2 – Partnership Agreement Clauses Goodwill * What goodwill represents in Lucy and Gemma’s new partnership agreement for ‘Awesome Catering’. As Lucy and Gemma start there new partnership agreement from Lucy’s old business called ‘Lucy’s Catering and combine their assets and liabilities to form a new partnership called ‘Awesome Catering’‚ Lucy’s old business‚ ‘Lucy’s Catering’ will have Goodwill as an asset. Goodwill is the monetary value given to the reputation or customer loyalty
Premium Accounts receivable Balance sheet
Objective To prepare a comprehensive balance sheet and Single-Step Income Statement presented in good form and derived from a list of various accounts. The amounts relative to each account will be given and the student will learn to determine whether an account is a balance sheet account or a temporary account that belongs to the income statement. The accounts will be comprised of all the various subgroupings in the balance sheet (Current Assets‚ Investment‚ Fixed Assets‚ Intangibles and Other Assets
Premium Balance sheet Generally Accepted Accounting Principles Accounts receivable
inventory theft problems and pilferage from the cash drawer. Third‚ Warren managed the company by leveraging resources and partnering with a community leader to avoid selling shares of the company. What else he might to adopt is managing account receivable and payment of the company. 3. What types of cash flow management issues would you expect cakehole to encounter if it grows at a rate of three bakeries per year or more? Growth is good‚ but rapid growth can sometimes overwhelm the ill-prepared
Premium Finance Accounts receivable Balance sheet