Auditing problems (Accounts Payable and other liabilities)

In the course of your initial audit of the financial statements of Sylvan Company, you determine that of the substantial amount of accounts payable outstanding at the close of the period, approximately 75% is owed to six creditors. You have requested that you be permitted to confirm the balances owing to these six creditors by c ...continues

Auditing Questions (1-5)

Please answer only if you are sure you are correct...thank you! 1. Immediately upon receipt of cash, a responsible employee should a. Record the amount in the cash receipts journal. b. Prepare a remittance listing. c. Update the subsidiary accounts receivable records. d. Prepare a deposit slip in triplicate. 2. Upo ...continues

Auditing Questions (6-10)

6. Which of the following would not overstate current period net income? a. Capitalizing an expenditure that should be expensed. b. Failing to record a liability for an expenditure. c. Failing to record a check paying an item in Vouchers Payable. d. All of the above would overstate net income. 7. A client’s purchasing ...continues

Auditing Questions (11-15)

11. When auditing inventories, an auditor would least likely verify that a. All inventory owned by the client is on hand at the time of the count. b. The client has used proper inventory pricing. c. The financial statement presentation of inventories is appropriate. d. Damaged goods and obsolete items have been properly ac ...continues

Auditing Questions (16-21)

16. Which of the following is ordinarily performed last in the audit examination? a. Securing a signed engagement letter from the client. b. Performing tests of controls. c. Performing a review for subsequent events. d. Obtaining a signed management representation letter. 17. Hall accepted an engagement to audit the y ...continues

Auditing: revenue recognition procedures and policies

You have been recently hired as a new auditor for CM Fancy, a major manufacture of gift boxes. The company has been in operation for the past 5 years and has had a good degree of success. The company’s primarily sales channel has been through distributors using a dedicated sales force. Now the company has decided to go public t ...continues

Auditing: Memo about recording a loss contingency

Your audit firm is auditing your client Jo-Jo Jolly Products. The company is a small regional manufacturing firm located in Rye, New York. The company manufactures and sells crayons and pencils directly to retail stores. Your firm is auditing the financial statements of this company as of the year ended December 31, 2006. Du ...continues

Related Party Transactions: What disclosures are required in the financial statements

Most business transactions result from “arm’s length’ dealing. When parties to a transaction are related, the objectivity expected in unrelated bargaining may be lost. Any loss of objectivity may require reporting in the financial statements for users to be able to properly evaluate the company’s financial condition and result ...continues

Related Party Transactions: An Audit Program

Most business transactions result from “arm’s length’ dealing. When parties to a transaction are related, the objectivity expected in unrelated bargaining may be lost. Any loss of objectivity may require reporting in the financial statements for users to be able to properly evaluate the company’s financial condition and result ...continues

Internal Control Components: definition and application

What internal controls components are common among long-term assets and liabilities, and equity accounts? What components are unique to each? How can an auditor assess these controls? What are the key management assertions related to long-term assets and liabilities? What are the most important assertions related to long-ter ...continues