3C - Audit Evidence and Procedures Simulation

AUDIT TASK Make sure that the cash balance per bank shown on the bank reconciliation is verified by the bank Analyze the gross profit percentage with respect to previous period(s) and industry data Verify that the client has deeds or other proof of ownership for land and other plant assets Compare checks written in the weeks following the end of the fiscal period to amounts in accounts payable at period-end Consider payroll cost and expenses (in total and as a percentage of sales) for this period compared to prior period(s) Test the sales journal to establish that sales transactions actually took place and are reported in the proper period Compare the number of days' sales in accounts receivable (average collection period) from this period to prior period(s) Obtain an aged schedule of accounts receivable from period-end and verify the aging of the balances RELEVANT ASSERTION(S) Existence / Occurrence Completeness Cutoff Valuation & Allocation Rights & Obligation AUDIT EVIDENCE Physical…

Match each description to the appropriate term. Clear All Measures how frequently during the year accounts Net realizable value receivable are being turned into cash Amounts owed by customers Receivables documented by a formal written instrument of credit All money claims against Notes receivable other entities The difference between Accounts receivable accounts receivable and turnover allowance for doubtful accounts

6) Examine the cash receipts journal in the accounting system and compare the amounts received to the corresponding amounts invoiced in the revenue accounting system and to the bank statement evidencing the deposit. This is an example of which of the following?                     A) audit objective                    B) audit assertion         C) audit procedure                 D) audit program

The Cash account in the general ledger of Hendry Corporation shows a balance of $96,990 at December 31, year 1 (prior to performing a bank reconciliation). The company's bank statement shows a balance of $100,560 at the same date. An examination of the bank statement reveals the following. 1. Deposits in transit amount to $24,600. 2. Bank service charges total $200. 3. Outstanding checks total $31,700. 4. A $3,600 check marked NSF from Kent Company (one of Hendry Corporation's customers) was returned to Hendry Corporation by the bank. This was the only NSF check that Hendry Corporation received during year 1. 5. A canceled check (no. 244) written by Hendry Corporation in the amount of $1,250 for office equipment was incorrectly recorded in the general ledger as a debit to Office Equipment of $1,520, and a credit to Cash of $1,520. In addition to the above information, Hendry Corporation owns the following assets at December 31, year 1: (1) money market accounts totaling $75,000, (2)…

List of Auditing Procedures A. Trace to cash receipts journal. B. Trace to cash disbursements journal. C. Compare to 9/30/X5 general ledger. D. Confirm directly with bank. E. Inspect bank credit memo. F. Inspect bank debit memo. G. Ascertain reason for unusual delay. H. Inspect supporting documents for reconciling item not appearing on cutoff statement. I. Trace items on the bank reconciliation to cutoff statement. J. Trace items on the cutoff statement to bank reconciliation. GENERAL COMPANY Bank Reconciliation 1st National Bank of US Bank Account a. Select 2 procedures b. Select 5 procedures September 30, 20X5 Balance per bank Deposits in transit 9/29/X5 9/30/X5 S 30,300 $ 925 1,175 2,100 32,400 c. Select 5 procedures Outstanding checks #988 8/31/X5 900 #1281 9/26/X5 600 #1285 9/27/X5 350 #1289 9/29/X5 900 #1292 9/30/X5 325 (3,075) 29,325 d. Select 1 procedure e. Select 2 procedures f. Select 1 procedure Customer note collected by bank Error: Check #1282; written on 9/26/X5 for $350…

Complete parts d,e, and f

show how the accounts related to the preceding sale and collection activities shoukd be reported on the current year income statement PLEASE DO NOT ANSWER IMAGE FORMET

4. Which of the following audit procedures is most appropriate to address the occurrence assertion for sales? a. Confirm receivables balances. b. Perform analytical procedures. c. Review collectability. d. Confirm cash deposits in banks.

To minimize errors in the accounts payable function, which of the following procedures should be performed? approving the purchase requisition following up on open purchase orders double checking the math on the bank reconciliation matching the supplier’s invoice to the receiving report

6. Record structures for receipt of cash on account Refer to figure 2-30 and the discussion about updating master files from transaction files. The discussion presents the record structures for a sales transaction. Prepare a diagram (similar to 2-30) that presents the record structures for the receipt of cash from customers who are paying their outstanding accounts receivable. Assume a cash receipts file exists, which contains the transaction records to be processed. Show the subsidiary and general ledger files. Explain each step in the update process.

Which of the following balance sheet items are commonly associated with the purchases and cash disbursements cycle? A Inventory and accounts payable B Purchases and accounts receivable C Cash paid to vendors D Cash received from the sale of inventory

Which of the following must be deducted from the bank statement balance in preparing a bank reconciliation which ends with an adjusted cash balance? a. Reduction of the loan charged to the account of depositor b. Outstanding checks c. Deposit in transit d. Certified checks