Mercado Electronics Company (Merelco) sells electronic gadgets and small appliances to selected retailers throughout the Philippines. Terms are 2/10, n/30. In addition to customer accounts, Merelco's accounts receivable includes employee receivables, customer credit balances, and other non-trade receivables, such as returnable container deposits, utility deposits, and amounts receivable from sale of assets other than inventory. These other amounts are considered material, but no effort is made to identify them separately for either interim or annual financial statement purposes. 1. Identify any internal control weakness present in the company. 2. Which audit assertions are affected in the situation presented? 3. List down possible substantive tests to verify the accounts receivable of Merelco.
Mercado Electronics Company (Merelco) sells electronic gadgets and small appliances to selected retailers throughout the Philippines. Terms are 2/10, n/30. In addition to customer accounts, Merelco's
1. Identify any internal control weakness present in the company.
2. Which audit assertions are affected in the situation presented?
3. List down possible substantive tests to verify the accounts receivable of Merelco.
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