EBK AUDITING+ASSURANCE SERVICES
EBK AUDITING+ASSURANCE SERVICES
17th Edition
ISBN: 9780135171219
Author: ARENS
Publisher: PEARSON CO
Question
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Chapter 23, Problem 8RQ
To determine

Identify the reason behind auditors being less concerned about client’s cash receipts cutoff than the cutoff for sales. Also, describe the procedure involved in testing the cutoff for cash receipts.

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In 2010, the BowWow Company purchased 11,992 units from its supplier at a cost of $11 per unit. BowWow sold 11,829 units of its product in 2010 at a price of $22 per unit. BowWow began 2010 with $845,463 in inventory (inventory is carried at a cost of $11 per unit). Using this information, compute BowWow's gross profit for 2010.
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