SURVEY OF ACCOUNT.(LL)-W/ACCESS>CUSTOM<
5th Edition
ISBN: 9781260222326
Author: Edmonds
Publisher: MCG CUSTOM
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Chapter 10, Problem 18E
a.
To determine
Indicate whether the amount has been understated or overstated for each element.
b.
To determine
Identify the actions that should be taken by employee.
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The CFO of the Benson Microscope Corporation intentionally misclassified a downstream
transportation expense in the amount of $675,000 as a product cost in an accounting
period when the company made 9,000 microscopes and sold 6,500 microscopes. Benson
rewards its officers with bonuses that are based on net earnings.
Required
a. Indicate whether the elements on the financial statements (i.e., assets, liabilities, equity,
revenue, expense, and net income) would be overstated or understated as a result of
the misclassification of the downstream transportation expense. Determine the amount
of the overstatement or understatement for each element.
Note: If there is no effect, select "Not affected" from the dropdown provided. Enter all
answers as positive values.
Assets
Liabilities
Retained earnings
Revenue
Expense
Net income
4
uestion:1
A privately held company recently outsourced its information processing system to a CPA who also has been asked to conduct the year-end financial statement audit.
Management accepts responsibility for the information processed by the CPA and the CPA will not assume the role of an employee in any way. The statement pertains to AICPA code of conduct rule:
A. Commissions and Referral Fees C. Independence
B. Confidential Client Information D. Integrity and Objectivity
Ethics Case
Suppose an auditor has been paid $1,000,000 each year for the past several years to perform the audit of a company's annual financial statements. This company is the auditor's largest client. In the current year, the auditor notices that the preliminary income statement excludes certain expenses that typically are shown. When asked, management tells the auditor that these expenses do not reflect the company's true performance, so they will not be shown in this year's income statement. Plus, management informs the auditor it will be paying $1,200,000 for this year's audit, and management commits to using the auditor for at least five more years.
Required:
1. Understand the reporting effect: Does the audit arrangement described above have the potential to jeopardize the auditor's opinion of management's decision not to report certain expenses?
2. Specify the options: Are auditors employees of the company who must accept requests of management?
3. Identify the impact: Do…
Chapter 10 Solutions
SURVEY OF ACCOUNT.(LL)-W/ACCESS>CUSTOM<
Ch. 10 - 1. What are some differences between financial and...Ch. 10 - 2. What does the value-added principle mean as it...Ch. 10 - 4. How does product costing used in financial...Ch. 10 - 5. What does the statement costs can be assets or...Ch. 10 - 6. Why are the salaries of production workers...Ch. 10 - 7. How do product costs affect the financial...Ch. 10 - 8. What is an indirect cost? Provide examples of...Ch. 10 - 9. How does a product cost differ from a selling,...Ch. 10 - 10. Why is cost classification important to...Ch. 10 - 11. What is cost allocation? Give an example of a...
Ch. 10 - 13. What are some of the common ethical conflicts...Ch. 10 - 14. What costs should be considered in determining...Ch. 10 - 15. What is a just-in-time (JIT) inventory system?...Ch. 10 - Prob. 14QCh. 10 - Prob. 15QCh. 10 - Prob. 16QCh. 10 - Prob. 17QCh. 10 - Prob. 18QCh. 10 - Prob. 19QCh. 10 - Prob. 1ECh. 10 - Exercise 1-2A Identifying product versus selling,...Ch. 10 - Prob. 3ECh. 10 - Prob. 4ECh. 10 - Prob. 5ECh. 10 - Exercise 1-6A Identifying product versus SGA costs...Ch. 10 - LO 1-3 Exercise 1-7A Recording product versus SGA...Ch. 10 - Prob. 8ECh. 10 - LO 1-4 Exercise 1-9A Upstream, midstream, and...Ch. 10 - Prob. 10ECh. 10 - Prob. 11ECh. 10 - Prob. 12ECh. 10 - Prob. 13ECh. 10 - Cost of goods manufactured and sold The following...Ch. 10 - Prob. 15ECh. 10 - Exercise 1-14A Using JIT to minimize waste and...Ch. 10 - Prob. 17ECh. 10 - Prob. 18ECh. 10 - Prob. 19ECh. 10 - Prob. 20ECh. 10 - Problem 1-19A Characteristics of financial versus...Ch. 10 - Prob. 22PCh. 10 - Problem 1-21A Effect of product versus period...Ch. 10 - Problem 1-22A Product versus SGA costs The...Ch. 10 - Prob. 25PCh. 10 - Prob. 26PCh. 10 - Prob. 27PCh. 10 - Prob. 28PCh. 10 - Prob. 29PCh. 10 - Prob. 30PCh. 10 - Prob. 31PCh. 10 - Prob. 32PCh. 10 - Prob. 1ATCCh. 10 - Prob. 2ATCCh. 10 - Prob. 3ATCCh. 10 - Prob. 4ATCCh. 10 - Ethical Dilemma Product cost versus selling and...
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