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Business

Accounting

least likely to be your starting point in computing materiality

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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Carinal Ltd. specializes in the development of electronic components within quite acompetitive environment causing concerns for marketing and pricing. Its non-current assetsprimarily include IT software, property, and investments, and there have been additions tothese during the year.As audit manager, you are conducting a preliminary analytical review and associated riskanalysis for this client for the year ended June 30 2022. You have been presented with thefollowing draft financial information about Carinal with incomplete ratios and percentagescalculation. INCOME STATEMENT Year ended June 30 2022 2021 $'000 $'000Revenue…
Problem You are the lead partner overseeing the audit for Camo Ltd, a privately owned company.The completion of the audit report is pending for the income year 2020 and you have noted severalsituations with possible actions.The situations are as follows: 1. Camo Corporation carries its property, plant, and equipment accounts at currentmarket values. Current market values exceed historical cost by a highly materialamount, and the effects are pervasive throughout the financial statements. 2. Management of Camo Corporation refuses to allow you to observe, or make,any counts of inventory. The recorded book value of inventory is highlymaterial. 3. You were unable to confirm accounts receivable with Camo’s customers.However, because of detailed sales and cash receipts records, you were able toperform reliable alternative audit procedures. 4. One week before the end of fieldwork, you discover that the audit manager onthe Camo engagement owns a material amount of Camo’s common stock. 5. You…
Question 3: (35 Marks) As the in-charge senior auditor on the audit engagement for JA Tire Manufacturing for the year ended December 31, 2019, you are responsible for auditing the revenue cycle. The manager has instructed you to read JA Tire Manufacturing system provided on the first tab of the Excel file "Appendix 1_JATireSales_Data" before attempting this audit to familiarize yourself with the sales process and the relevant worksheets and terminology. This file contains sales transaction information for the year ended December 31, 2019. JA Tire has four sales divisions within Canada and sells primarily to large tire companies with regional warehouses that subsequently distribute to local retailers. Based on some of the risk assessment procedures already performed, you identified risks related to the fact that salespersons receive a commission on sales to distributors and the commission is calculated on a monthly basis. Your manager has asked you to perform analytical procedures as a…
Use 2018 Form 990 and the 2019 audited financial statements for Feeding America. Although Form 990 indicates it is for 2018, it is actually for the period July 1, 2018, to June 30, 2019, the same time period as the 2019 audited financial statements. Required Compute the following performance measures using the Form 990. Using the annual financial statements, calculate the following performance measures. Compute the following performance measures using the Form 990. (Round your answers to two decimal places and the Going Concern ratio to three decimal places.) This is what I had come up with but they are all incorrect amounts. Let me know how I can sent the Form 990 to give you the figures. Liquidity Choose Numerator ÷ Choose Denominator = Ratio Current Assets Current Liabilities $106,955,173 ÷ $15,171,035 = 7.05 Going Concern Choose Numerator ÷ Choose Denominator = Ratio Revenue over expenses Total Expenses…
Uncorrected Misstatements and Performance Materiality. Pat Colt is auditing the financial statements of Manning Company. The following is a summary of the uncorrected misstatements that Colt has identified during the past three years. These misstatements are immaterial and have related to isolated matters. In this summary, parentheses imply that the misstatements would have reduced balances if they had been corrected (e.g., in 2014, the misstatements would have reduced net income by $82,500, assets by $100,000, liabilities by $17,500, and equity by $82,500 if corrected). Check the below image for misstatements- During the most recent audit, Colt concluded that expenses totaling $130,000 were recognized in January 2018 (when Manning paid them) but should have been recognized in 2017.Required:a. How does the misstatement identified in 2017 affect net income, assets, liabilities, and equity? (Assume a 35 percent tax rate for Manning.)b. Describe the rollover method of evaluating…
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Carinal Ltd. specializes in the development of electronic components within quite acompetitive environment causing concerns for marketing and pricing. Its non-current assetsprimarily include IT software, property, and investments, and there have been additions tothese during the year.As audit manager, you are conducting a preliminary analytical review and associated riskanalysis for this client for the year ended June 30 2022. You have been presented with thefollowing draft financial information about Carinal with incomplete ratios and percentagescalculation. INCOME STATEMENT Year ended June 30 2022 2021 $'000 $'000Revenue 22450 18675Cost of sales 8475 8055Gross Profit 13975 10620Distribution costs 4245 3120Administrative expenses 1276 2134Selling expenses 5555 512Profit from operations 2899 4854Net interest receivable 1245 495Profit before tax 4144 5349Income tax expense 2145 2345Net profit 1999 3004Retained profits 1325 2105Dividends paid $1250 $1049Accounting ratios and…