Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 10, Problem 51ITC
To determine
Determine the overstatements and understatements that would result from the following situations.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The following misstatements are sometimes found in the sales and collection cycle’s account balances:a. Cash received from collections of accounts receivable in the subsequent period is recorded as current period receipts.b. The allowance for uncollectible accounts is inadequate because of the client’s failure to reflect depressed economic conditions in the allowance.c. Several accounts receivable are in dispute as a result of claims of defective merchandised. The pledging of accounts receivable to the bank for a loan is not disclosed in the financial statements.e. Goods shipped and included in the current period sales were returned in the subsequent period.f. Several accounts receivable in the accounts receivable master file are not included in the aged trial balance.g. One account receivable in the accounts receivable master file is included on the aged trial balance twice.
h. Long-term interest-bearing notes receivable from affiliated companies are included in accounts receivable.i.…
What internal control procedure(s) would provide protection against the following threats?
a. Theft of goods by the shipping dock workers, who claim that the inventory shortages reflect errors in the inventory records.b. Posting the sales amount to the wrong customer account because a customer account number was incorrectly keyed into the system
.c. Making a credit sale to a customer who is already four months behind in making payments on his account.
d. Authorizing a credit memo for a sales return when the goods were never actually returned.
e. Writing off a customer’s accounts receivable balance as uncollectible to conceal the theft of subsequent cash payments from that customer.
f. Billing customers for the quantity ordered when the quantity shipped was actually less due to back ordering of some items
.g. Lost sales because of stockouts of several products for which the computer records indicated there was adequate quantity on hand.
h. A sales clerk sold a $7,000 wide-screen TV…
A client erroneously recorded a large purchase twice. Which of the following internal accounting control measures would be most likely to detect this error in a timely and efficient manner?
A. Sending written quarterly confirmations to all vendors,
B. Reconciling vendors' monthly statements with subsidiary payable ledger accounts.
C. Footing the purchases journal
D. Tracing totals from the purchases journal to the ledger accounts
Chapter 10 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prepare an example of lapping of cash receipts,...Ch. 10 - Prob. 12RQCh. 10 - Prob. 13RQCh. 10 - Prob. 14RQCh. 10 - Prob. 15RQCh. 10 - Prob. 16RQCh. 10 - Explain two procedures by which auditors may...Ch. 10 - Prob. 18RQCh. 10 - Prob. 19RQCh. 10 - Prob. 20RQCh. 10 - Prob. 21RQCh. 10 - Prob. 22RQCh. 10 - Prob. 23RQCh. 10 - Prob. 24RQCh. 10 - Prob. 25RQCh. 10 - Prob. 26QRACh. 10 - Henry Mills is responsible for preparing checks,...Ch. 10 - During the first few months of the year, John...Ch. 10 - Prob. 29QRACh. 10 - Prob. 30QRACh. 10 - Prob. 31QRACh. 10 - Prob. 32QRACh. 10 - Prob. 33QRACh. 10 - Prob. 34QRACh. 10 - Prob. 35QRACh. 10 - Prob. 36QRACh. 10 - Prob. 37QRACh. 10 - Select the best answer for each of the following...Ch. 10 - Prob. 38BOQCh. 10 - Prob. 38COQCh. 10 - Prob. 38DOQCh. 10 - Prob. 38EOQCh. 10 - Prob. 38FOQCh. 10 - Reconciliation of the bank account should not be...Ch. 10 - The auditors suspect that a clients cashier is...Ch. 10 - Prob. 38IOQCh. 10 - Prob. 38JOQCh. 10 - Prob. 38KOQCh. 10 - Prob. 38LOQCh. 10 - Which of the following represents a correct...Ch. 10 - Which of the following correctly identifies a risk...Ch. 10 - Which of the following correctly identifies a risk...Ch. 10 - Prob. 39DOQCh. 10 - Prob. 39EOQCh. 10 - Prob. 39FOQCh. 10 - Prob. 40OQCh. 10 - Prob. 41OQCh. 10 - Prob. 42OQCh. 10 - Prob. 43OQCh. 10 - Prob. 44OQCh. 10 - Prob. 45OQCh. 10 - Prob. 46PCh. 10 - Prob. 47PCh. 10 - Prob. 48PCh. 10 - Prob. 49PCh. 10 - Prob. 50ITCCh. 10 - Prob. 51ITCCh. 10 - Prob. 52RDCCh. 10 - Prob. 53EC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- When accounts receivable are confirmed at an interim date, auditors need not be concerned witha. Obtaining a summary of receivables transactions from the interim date to the year-end date.b. Obtaining a year-end trial balance of receivables, comparing it to the interim trial balance, and obtaining evidence and explanations for large variations. c. Sending negative confirmations to all customers as of the year-end date.d. Considering the necessity for some additional confirmations as of the balance sheet date if balances have increased materiallyarrow_forwardIn a cash receipts journal, both the Accounts Receivable Credit column and the Cash Debit column were mistakenly underadded by 700. How will this error be discovered?arrow_forwardIf an adjustment for an NSF check is made in a company’s bank reconciliation, then the company must have written a bad check during the month. Please explain with full explanation. a. True b. Falsearrow_forward
- Which of the following statements is correct? Select one: a. Account receivable turnover is equal to net credit sales divided by average net accounts receivable. b. Buying aged receivables from businesses and then collects the payments directly from the customers is called Allowance for uncollectible accounts. c. Auto generated document numbers is a fraud preventive method which is more efficient than physical controls. d. If the same people are responsible for a series of related accounting activities is called Segregation of Duties.arrow_forwardWhich of the following is not an example of control procedures over accounts receivable? A.Monitoring the total amount of "credit card sales" and investigating reasons for increases in the amount B.Sending monthly statements to customers who purchased on credit C.Denying additional credit to customers with very overdue accounts D.Requiring customers complete a credit application before granting credit to the customerarrow_forwardAn auditor discovers that a client’s accounts receivable turnover is substantially lowerfor the current year than for the prior year. This trend may indicate that(1) the client recently tightened its credit-granting policies.(2) employees have stolen inventory just before year-end.(3) fictitious credit sales have been recorded during the year.(4) an employee has been lapping receivables in both years.arrow_forward
- The following misstatements are included in theaccounting records of the Joyce Manufacturing Company:1. A sales invoice was miscalculated by $1,000 as a result of a key-entry mistake.2. Cash paid on accounts receivable that had been prelisted by a secretary was stolenby the bookkeeper who records cash receipts and accounts receivable. He failed torecord the transactions.3. A material sale was recorded on the last day of the year even though the goods werenot shipped until 3 days later.4. Merchandise was shipped to a customer, but no bill of lading was prepared. Becausebillings are prepared from bills of lading, the customer was not billed.5. The controller approved a payment to a consulting firm owned by his sister. Theconsulting firm did not actually perform any services for the company.6. The shipping clerk included several additional valuable items to a shipment that werenot included in the customer’s order and were not invoiced to the customer. Theshipping clerk has an arrangement…arrow_forwardWhich of the following errors would not affect net income?A. Post-dated checks are classified as cash upon receipt from customersB. Purchases on account are unrecorded because the goods are still in transit : butthe goods were included in inventoryC. Depreciation expense was recorded twice for the same yearD. The client charged an ordinary repair as part of equipment cost.arrow_forwardWhich of the following would provide an auditor with the most reliable evidence reguarding the existence of accounts receivable? A. A copy of the invoice sent to the customer. B. Acopy of the customer's sales order held by the client. C. An accounts receivable confirmation received by the auditor from the client's customer. D. An aging schedule showing the composition of the year-end-accounts receivable balance.arrow_forward
- If an accountant mistakenly uses the General journal to record a payment of cash for a bill that is due, instead of the Cash Payments journal, will this mistake cause the corresponding accounts in the General ledger to be off?arrow_forwardWhich of the following statements is true? A. Window dressing is a practice of closing the books of accounts at the end of the accounting period for a better financial position and performance. B. Lapping is a transfer of cash from one bank to another bank. C. Kiting consists of misappropriating a collection from one customer and concealing this defalcation when collection is made from another customer. D. The imprest system required that all cash receipts should be deposited intact and all cash payments should be made by means of check.arrow_forwardCash receipts from sales on account have been misappropriated. Which of the following acts would conceal this defalcation and be least likely to be detected by an auditor?a. Understating the sales journal.b. Overstating the accounts receivable control account.c. Overstating the accounts receivable subsidiary ledger.d. Understating the cash receipts journal.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
How Accounting Systems Work (Bookkeeping); Author: WolvesAndFinance;https://www.youtube.com/watch?v=aDtN9LEc2lM;License: Standard Youtube License