James noticed that the sales budget for June indicated sales of $1,000,000, however, the cash budget for June indicated collections from customers totaled $890,000, James was concerned about this difference and brought it to the attention of the CFO. The CFO's likely response was Multiple Choice This is an indication that there may be fraudulent activity, with sales being understated on the budget One of the departments revised the budget for cash received by $110 000 because they expected sales to be down for the month Cash collected would be less than sales because the company has estimated that a percentage of the sales recorded were on credit This is an error by the budget manager and the CFO will have it corrected

James noticed that the sales budget for June indicated sales of $1,000,000, however, the cash budget for June indicated collections from customers totaled $890,000, James was concerned about this difference and brought it to the attention of the CFO. The CFO's likely response was Multiple Choice This is an indication that there may be fraudulent activity, with sales being understated on the budget One of the departments revised the budget for cash received by $110 000 because they expected sales to be down for the month Cash collected would be less than sales because the company has estimated that a percentage of the sales recorded were on credit This is an error by the budget manager and the CFO will have it corrected

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume Marcella and the board adopted the spreadsheet prepared to forecast operations at 890,000 units (see the spreadsheet provided with this case) as the budget for 2016. At the close of the first six months of 2016, Marcella and the board asked the accountant to prepare an income statement for the first six months of 2016 to show how well the actual data compare to the budgeted data. The board asked to see a concise presentation showing only totals for variable and fixed costs. The analysis presented in Exhibit 2 below was provided for the board. Hanson expects sales and fixed costs to occur uniformly throughout the year. Exhibit 2: Budget Analysis as of June 30, 2016 Budget Actual Variance Sales units 445,000 470,000 Sales $ 1,824,500 $ 1,880,000 $55,500 Variable costs $694,200 $ 742,600 ($48,400)…
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You recently began a job as an accounting intern at Raymond Adventures. Your first task was to help prepare the cash budget for February and March. Unfortunately, the computer with the budget file crashed, and you did not have a backup or even a hard copy. You ran a program to salvage bits of data from the budget file. After entering the following data in the budget, you may have just enough information to reconstruct the budget. Raymond Adventures eliminates any cash deficiency by borrowing the exact amount needed from State Street Bank, where the current interest rate is 8%. Raymond Adventures pays interest on its outstanding debt at the end of each month. The company also repays all borrowed amounts at the end of the month as cash becomes available. Complete the following cash budget: Raymond Adventures Cash Budget February and March…
Discuss the internal control weaknesses in the expenditure cycle flowchart Structure your answer in terms of the control activities within the SAS 78/COSO control model.
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Below are several scenarios related to control activities of a company.1. A manufacturing company compares total sales in the current year to those in the previous year but does not compare the cost of production.2. So that employees can have easy access to office supplies, a company keeps supplies in unlocked cabinets in multiple locations.3. At the end of each day, a single employee collects all cash received from customers, records the total, and makes the deposit at the bank.4. At the end of the year only, the company compares its cash records to the bank’s records of cash deposited and withdrawn during the year.5. A company encourages employees to call an anonymous hotline if they believe other employees are circumventing internal control features.6. All employees have the authority to refund a customer’s money.Required:For each scenario, determine which control activity is violated. Control activities include separation of duties, physical controls, proper authorization, employee…
Pls explain first how you solve it. Thank you. F COMPANY, organized on March 1, 2021, has a very poor internal control system. Thecompany's cashier is also its accountant. After 9 months of operations, the company's managersuspects that the cashier-accountant has been misappropriating company collections. You havebeen engaged to audit the company's accounts to determine the extent of fraud, if any. You started the audit on November 15. On that date, the cash on hand per your surprise countwas P5,140. Also on that date, the bank confirmed that the balance of the company's currentaccount was P26,328. Your examination of the records reveals that a check for P1,852 wasoutstanding on November 15. The company's markup is 40% of sales. Further examination of the company's records reveals the following balances at November 15,2021:
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AMI International is a large office products company. Headquartersmanagement imposed pressure on operating division managers to meet profit forecasts. The division managers met these profit goals using several accounting manipulations involving the record-keeping system that maintained all transactions and account balances on computer files. Employees who operated the computer accounting system were aware of the modifications of policy the managers ordered to accomplish the financial statement manipulations. The management and employees carried out these activities:1. Deferred inventory write-downs for obsolete and damaged goods.2. Kept open the sales entry system after the quarterly and annual cutoff dates, recording sales of goods shipped after the cutoff dates.3. Recorded as sales transactions that had been coded as leases of office equipment.4. Recorded shipments to branch offices as sales.5. Postponed recording vendors’ invoices for parts and services until later, but the actual…
A large retail enterprise has established a policy that requires the paymaster to deliver all unclaimed payroll checks to the internal audit department at the end of each payroll distribution day. This policy was most likely adopted toa. Ensure that employees who were absent on a payroll distribution day are not paid for that day.b. Prevent the paymaster from cashing checks that are unclaimed for several weeks.c. Prevent a bona fide employee’s check from being claimed by another employee.d. Detect any fictitious employee who may have been placed on the payroll
In Blossom Corporation's first year of operations, inadequate budgeting led to significant cost overruns in multiple production areas. Direct materials needed to be express-delivered, and laborers needed to be paid overtime because reasonable budgets weren't in place, nor were managers properly trained on how to use them. If adequate budgeting had been done, the company might have achieved its objectives that year. As year one comes to a close, all managers are now committed to creating and using accurate budgets for next year so they can properly plan for the resources to support production. The following information is in place to assist the management team in budgeting for year 2. Budgeted sales volume Additional information: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. (a1) Sales Volume Selling Price Sales Revenue Q1 Q2 $ $ Year 2 Q3 Budgeted selling price is $82/unit. Desired ending FG Inventory is 25% of the following quarter's sales volume. Beginning FG Inventory on January 1 of Year 2 is…