Task 1: The senior accountant has identified three misstatements that have been carried forward onto the summary of proposed audit adjustments. Determine the impact of the identified misstatements on the financial statement ratios noted below. For each of the identified misstatements below, indicate the impact on the financial ratio identified. In columns D and E, select the impact, if any, that the misstatement has on the financial ratio from the option list. Selections used once, more than once, or are not at all. Consider each misstatement independently. Choices for Columns D and E: decrease increase no impact A B C D E 1 Account Debit Credit Impact on current ratio Impact on profit margin 2 Payroll expense 72,000 3 Accrued payroll 72,000 4 5 Depreciation expense 125,000 6 Accumulated depreciation 125,000 7 8 Prepaid insurance 15,000 9 Insurance expense 15,000
Task 1:
The senior accountant has identified three misstatements that have been carried forward onto the summary of proposed audit adjustments. Determine the impact of the identified misstatements on the financial statement ratios noted below.
For each of the identified misstatements below, indicate the impact on the financial ratio identified. In columns D and E, select the impact, if any, that the misstatement has on the financial ratio from the option list. Selections used once, more than once, or are not at all. Consider each misstatement independently.
Choices for Columns D and E:
- decrease
- increase
- no impact
|
A |
B |
C |
D |
E |
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|
1 |
Account |
Debit |
Credit |
Impact on |
Impact on profit margin |
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|
2 |
Payroll expense |
72,000 |
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|
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|
3 |
Accrued payroll |
72,000 |
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4 |
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5 |
|
125,000 |
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|
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6 |
|
125,000 |
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7 |
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|
8 |
Prepaid insurance |
15,000 |
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|
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|
9 |
Insurance expense |
15,000 |
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