. An excerpt from an internal audit observation indicates that travel advances exceeded prescribed maximum amounts. Company policy provides travel funds to authorized employees for travel. Advances are not to exceed 45 days of anticipated expenses. Company procedures do not require justification for large travel advances. In this audit observation, the element of an audit finding known as “effect” is: Group of answer choices Advances are not to exceed estimated expenses for 45 days Unauthorized employees are given travel advances Employees accumulate large, unneeded advances Travel advances exceed prescribed maximum amounts

. An excerpt from an internal audit observation indicates that travel advances exceeded prescribed maximum amounts. Company policy provides travel funds to authorized employees for travel. Advances are not to exceed 45 days of anticipated expenses. Company procedures do not require justification for large travel advances. In this audit observation, the element of an audit finding known as “effect” is: Group of answer choices Advances are not to exceed estimated expenses for 45 days Unauthorized employees are given travel advances Employees accumulate large, unneeded advances Travel advances exceed prescribed maximum amounts

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter5: Accounting Systems

Section: Chapter Questions

Problem 19E: After Bunker Hill Assay Services Inc. had completed all postings for March in the current year...

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IDENTIFY THE EFFECT OF THE FOLLOWING TRANSACTION TO THE RISK OF MATERIAL MISSTATEMENT TO FINANCIAL STATEMENTS. The employees of the company are being paid on a weekly basis. Does it have a: A. INCREASE effect B. DECREASE effect C. NO EFFECT effect
Statements 1. Revenue and expense accounts are audited in conjunction with related 2. 3. The 4. 5. 6. 7. Material fluctuations revealed by analytical procedures should be investigated to determine whether they are indicative of material in the financial statements. When paper paychecks are issued, the company's of the company. A 11 accounts. department of the company should authorize changes in employee pay rates. should distribute them to the employees is a list of all specific disclosures required by financial accounting standards. The primary purpose of the primarily responsible for the fairness of the financial statements. The auditors should obtain a letter from the client's attorneys describing is to have the client's principal officers acknowledge that they are 8. In estimating the total likely misstatement in the financial statements, the auditors should combine misstatements, projected misstatements, and judgmental misstatements. 9. If the auditors conclude that the total…
c. Assuming you have checked this account and have detected that client did not record an expense transaction of $60,000 for the accrued salary incurred in June 2020. The client also did not calculate and record the accrued annual leave expenses for the 2020 financial year at the amount of $30,000 - What management assertions are violated (i.e. at risk) - What would you do in relation to the personnel expenses account if you have determined that the issues detected all are errors (an unintentional mistake).
Which of the following is correct regarding the result of a cash disbursement cut-off rendered by an auditor to gather evidence regarding the completeness assertion of a financial statements audit client's liability accounts? A. A January cash disbursement entry debiting accrued expense supported by documents dated December shall understate prior year's liability and profit. B. A January cash disbursement entry debiting accrued expense supported by documents dated January shall overstate prior year's liability and profit. C. A January cash disbursement entry debiting expense supported by documents dated January shall understate prior year's liability and overstate prior year's profit. D. A January cash disbursement entry debiting expense supported by documents dated January shall have no effect on the prior year's liability and profit.
As a result of analytical procedures an auditor determines that gross profit has declined from 30% to 15% in the current year. The auditor should.. A. Document manamgent intentions with respect to reversing the trend. B. Evaluate managment's performance in causing the deline C. Require a footnote disclosure D. Consider the possibility of an error in the financial statements.
For each issue write a note for the audit file (3-5 sentences) identify the type of accounting change or error, the appropriate accounting treatment, include amounts where applicable and how net income would be impacted if the issue needs correcting. a) In early 2019, Honey Crunch changed its estimate from 5% to 4% of receivables on the amount of bad debt expense to be charged to operations. Bad debt expense for 2018, if a 4% rate had been used, would have been $8,000. The company adjusted Net Income in 2018 to reflect the change.
audit is scheduled to begin in one weck. With respcct to past duc audit fccs, Alma 1. Alma, CPA, had not been paid yet her prior year's audit fee. The current year', audit is scheduled to begin in one weck. With respect to past duc audit fccs, Alm should a. Perform the scheduled audit and allow the company to pay when cash flow difficulties are alleviated. b. Perform the scheduled audit only after arranging a definite payment schedule and securing notes signed by the company. C. Inform management that the past due audit fees may be considered a loan on which interest must be computed for financial statement purposes. d. Inform management that the past-due audit fees are considered an impairment of auditor's independence. 2. Without the consent of the client. a CPA should not disclose confidential information contained in working papers to a a, Court that has issued a valid subpoena. b. Disciplinary body created under state statute. c. Voluntary quality control review board. d. CPA firm…
An IT auditor is conducting data analysis procedures on an employee expense report file and notices several expenses for $24.99 from the same individual. The company’s policy requires that any expenses that are under $25.00 do not require a receipt. The IT auditor should: [SELECT ALL THAT APPLY a) Maintain professional skepticism and investigate these transactions further b) Pass on investigating these items further, focusing on higher dollar amounts c) Evaluate the business process approval controls, and related procedures d) Discuss fraud awareness and detection programs with management to gain an understanding of management’s commitment to fraud prevention and related entity-level anti-fraud controls.
Problem 1. You were engaged for the first time to audit the FS of Bebeko Corporation for the period ended December 31, 2020. The company started its operation in 2018. In reviewing the books, the auditor discovered that certain adjustments had either been overlook or improperly recorded at the end of years to 2020. Omissions and other failures for each year are summarized below: December 31 2018 2019 2020 1. Omissions of the following year-end accruals/deferrals: a. Accrued utilities expense b. Accrued interest income c. Prepaid rent expense d. Unearned royalty income |2. Delivery of merchandise at year-end to customers, recorded as sales upon collection the following year. 3. Receipt of merchandise at year-end from suppliers, recorded as purchases upon payment the following year. 4. Cash received from customers at year-end, recorded as sales deliveries yet to be made the following year. In the year of collection, corresponding 5000 7000 6000 2000 4000 3000 2000 1000 8000 3000 5000…
Identify the applicable qualitative characteristics referred to in the Conceptual Framework for Financial Reporting that is not adhered in the scenario below and indicate the respective group to which each characteristic belongs to. You are also required to indicate the sub-category (if applicable) to which the qualitative characteristic belong to. A company discovered at the end of the fiscal year that credit sales transactions from the last 2 months of the period were not recorded as the accountant was waiting for a transfer of cash or equivalent to settle the outstanding amounts. a. Faithful Representation; completeness; Enhancing b. Faithful Representation; completeness; Fundamental c. Faithful Representation; neutral; Fundamental d. Faithful Representation; free from error; Fundamental
Listen Time: 8 minutes For the following statements identify the assertion related to the risk of material misstatement. Explain your choice. Statement 1: "I am concerned that several of the significant accounts receivable balances on the Balance Sheet are uncollectible" Statement 2: "I am concerned that several of the revenue transactions that were recorded during the year didn't actually happen" Statement 3: "I am concerned that there is a significant unrecorded liability that should be recorded on the Balance Sheet" Statement 4: "I am concerned that assets that don't actually exist were recored on the Balance Sheet!" BIU Format tv
How much is the Doubtful accounts expense for 2019? A. 47,000 B. 62,000 C. 63,500 D. 65,000 What is the net amount of Accounts Receivables to be presented in the audited financial statements? A. 873,000 B. 886,500 C. 900,000 D. 1,000,000