TEST OF CONTROLS – REVENUE TRANSACTIONS |Audit Objective |Audit procedure |Findings | |General | | | |Validity |Observe
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occurrence Audit Objectives: Substantiate the existence of receivables and the occurrence of revenue transactions. Prove none of the account receivables are fictitious. Completeness Audit objectives: Establish the completeness of receivables and revenue transactions. Rights and obligations Audit objectives: Determine the client has rights to the recorded receivables. Prove the accounts receivable are collectible in the normal course of business and
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take an accounting course. | d. | Only to financial analysts and brokers. | __D__ 5. Which set of items below are current assets? a. | Accounts receivable‚ net income‚ inventory‚ and dividends | b. | Cash‚ accounts receivable‚ capital stock‚ and sales | c. | Net income‚ cash‚ office supplies‚ and inventory | d. | Cash‚ accounts receivable‚ inventory‚ and office supplies | __B__ 6. For several years‚ Malcom Corporation has had a current ratio that was consistent with other companies
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explanations. (Note‚ enter all accounts in one box. The dates have been included to help with formatting). Date Account Titles and Explanation Debit Credit 1 Accounts Receivable Sales Revenue $3‚600‚000 $3‚600‚000 (To record sales on account) 2 Sales Returns and Allowances Accounts Receivable $150‚000 $150‚000 (To record merchandise returned) 3 Cash Accounts Receivable $3‚100‚000 $3‚100‚000
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DQ 1 Week4 You notice that your accounts receivable days outstanding have doubled in the first 6 months. Do you give someone a bonus or put him or her on probation? Why? Just because the accounts receivable days outstanding have doubled in the first 6 months does not mean that someone gets a bonus or is put on probation. There is not enough information given in this question to warrant such action. This type of action is jumping to conclusions and assuming without the evidence to substantiate
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36‚000 Total 2014 gross profit $71‚000 Requirement 2 2013 deferred gross profit balance: 2013 initial gross profit ($360‚000 – 234‚000) $126‚000 Less: Gross profit recognized in 2013 (52‚500) Balance in deferred gross profit account $73‚500 2014 deferred gross profit balance: 2013 initial gross profit ($360‚000 – 234‚000) $ 126‚000 Less: Gross profit recognized in 2013 (52‚500) Gross profit recognized in
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principle of short-term debt • Calculate the cash conversion cycle • Understand the risk/return trade-off in managing working capital I. Background The business manager must continually be alert to changes in working capital accounts‚ the cause of these changes and the implications of these changes for the financial health of the company. One convenient and effective method to highlight the key managerial requirements in this area is to view working capital in terms of its major
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Problem 4-3. Luft Corporation’s accounts had the following beginning balances: Account | | Dr. | | Cr. | Accounts Payable | | | | $ | 3‚070 | Accounts Receivable | | $ | 2‚160 | | | Accumulated Depreciation | | | | 2‚800 | Allowance for doubtful accounts | | | | 70 | Cash | | | | 1‚440 | | | Fixed Assets (at cost) | | | 6‚200 | | | Inventories | | | | 1‚730 | | | Note Payable (current) | | | | | 600 | Owner’s Equity | |
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Chapter 7 Inventories 6. Ending inventory is made up of the oldest purchases when a company uses a. first-in‚ first-out b. last-in‚ first-out c. average cost d. retail method 11. The inventory method that assigns the most recent costs to cost of goods sold is a. FIFO b. LIFO c. Average d. specific identification 12. Inventory costing methods place primary emphasis on assumptions about a. flow of goods b. flow of costs c. flow of goods or flow of costs depending on the method d. neither flow
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P9-4A Wall Inc. uses the allowance method to estimate uncollectible accounts receivable. The company produced the following aging of the accounts receivable at year end. Number of Days Outstanding Total 0-30 31-60 61-90 91-120 Over 120 Accounts receivable $375‚000 $220‚000 $90‚000 $40‚000 $10‚000 $15‚000 % uncollectible 1% 4% 5% 8% 10% Calculate the total estimated bad debts based on the above information. Total Accounts receivable % uncollectible Estimated bad debts $375‚000 0-30 $220‚000 1% 31-60
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