Required: a) As part of your risk assessment procedures for Healthcare Bhd, identify and provide a possible explanation for the unusual changes in the income statement. b) Confirmation of the end-of-year bank and account receivables balances are important audit procedures. Discuss the audit objectives pertaining to the procedures.
Required: a) As part of your risk assessment procedures for Healthcare Bhd, identify and provide a possible explanation for the unusual changes in the income statement. b) Confirmation of the end-of-year bank and account receivables balances are important audit procedures. Discuss the audit objectives pertaining to the procedures.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 2MC: The following information is available for Cooke Company for the current year: The gross margin is...
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Sales cycle
![Healthcare Bhd is a listed pharmaceutical comnpany. Its principal sctivities are producins
edical and beauty-based products. Below is an extract from the statement of profit ot
Nast and the statement of financial position for the last two financial years of the company.
31 Dee 2614 De 7
(MYR 0) IMYR
Statement of profit or loss extract
Revenue
37,410
(17,600)
Cost of sales
31,820
Gross profit
(21,265)
19,810
10,555
Operating expenses
Administration
Selling and distribution
Interest payable
(6,175)
(6,600)
(4,905)
(3,445)
(505)
(525)
Investment income
725
Profit/(loss) before tax
8,950
(15)
Statement of financial position extract
Cash and bank
1,265
(4,750)
Account receivables
11,700
10,000
Additional information:
(i) Sales are made to companies, with income being in the form of cash and credits. Credit
sales are given to trusted customers with a term of n/60. The current year accounts
receivable includes a long overdue balance of MYR 1,700 which is outstanding more
than a year. However, the company does not record any allowance for doubtful
accounts.
(ii) All items sold are delivered to the customer using Healthcare Bhd's own delivery vans.
The directors of Healthcare Bhd indicate that the company has had a difficult year,
but are pleased to present some acceptable results to the members.
Required:
a) As part of your risk assessment procedures for Healthcare Bhd, identify and provide a
possible explanation for the unusual changes in the income statement.
b) Confirmation of the end-of-year bank and account receivables balances are important
audit procedures. Discuss the audit objectives pertaining to the procedures.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F982db544-c0fb-4e9d-8c04-e6a010906f31%2F90db1403-631a-452a-9940-3cdb991aa0cf%2Fgdnrph4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Healthcare Bhd is a listed pharmaceutical comnpany. Its principal sctivities are producins
edical and beauty-based products. Below is an extract from the statement of profit ot
Nast and the statement of financial position for the last two financial years of the company.
31 Dee 2614 De 7
(MYR 0) IMYR
Statement of profit or loss extract
Revenue
37,410
(17,600)
Cost of sales
31,820
Gross profit
(21,265)
19,810
10,555
Operating expenses
Administration
Selling and distribution
Interest payable
(6,175)
(6,600)
(4,905)
(3,445)
(505)
(525)
Investment income
725
Profit/(loss) before tax
8,950
(15)
Statement of financial position extract
Cash and bank
1,265
(4,750)
Account receivables
11,700
10,000
Additional information:
(i) Sales are made to companies, with income being in the form of cash and credits. Credit
sales are given to trusted customers with a term of n/60. The current year accounts
receivable includes a long overdue balance of MYR 1,700 which is outstanding more
than a year. However, the company does not record any allowance for doubtful
accounts.
(ii) All items sold are delivered to the customer using Healthcare Bhd's own delivery vans.
The directors of Healthcare Bhd indicate that the company has had a difficult year,
but are pleased to present some acceptable results to the members.
Required:
a) As part of your risk assessment procedures for Healthcare Bhd, identify and provide a
possible explanation for the unusual changes in the income statement.
b) Confirmation of the end-of-year bank and account receivables balances are important
audit procedures. Discuss the audit objectives pertaining to the procedures.
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