Loose-leaf For Auditing & Assurance Services: A Systematic Approach
11th Edition
ISBN: 9781260687637
Author: William F Messier Jr, Steven M Glover Associate Professor, Douglas F Prawitt Associate Professor
Publisher: McGraw-Hill Education
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Chapter 4, Problem 4.18MCQ
To determine
Concept Introduction:
Misappropriation of assets is a fraudulent activity in which assets like cash, inventory, supplies etc. Misappropriation is a planned stealing or embezzlements performed by the employees of the organization.
To choose: The activity that is a misappropriation of assets.
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A lender that makes a loan to an individual whose only income is commission based and who hasn't made a sale in six weeks may be violating which of the 6 C's of lending? O Character O Capacity O Cash Control
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If sales were overstated by recording a false credit sale at the end of the year, where could you find the false “dangling debit”?a. Inventory.b. Cost of goods sold.c. Bad debt expense.d. Accounts receivable.
Chapter 4 Solutions
Loose-leaf For Auditing & Assurance Services: A Systematic Approach
Ch. 4 - Prob. 4.1RQCh. 4 - Prob. 4.2RQCh. 4 - Prob. 4.3RQCh. 4 - Prob. 4.4RQCh. 4 - Prob. 4.5RQCh. 4 - Prob. 4.6RQCh. 4 - Prob. 4.7RQCh. 4 - Prob. 4.8RQCh. 4 - Prob. 4.9RQCh. 4 - Prob. 4.10RQ
Ch. 4 - Prob. 4.11RQCh. 4 - Prob. 4.12RQCh. 4 - Prob. 4.13MCQCh. 4 - Prob. 4.14MCQCh. 4 - Prob. 4.15MCQCh. 4 - Prob. 4.16MCQCh. 4 - Prob. 4.17MCQCh. 4 - Prob. 4.18MCQCh. 4 - Prob. 4.19MCQCh. 4 - Prob. 4.20MCQCh. 4 - Prob. 4.21MCQCh. 4 - Prob. 4.22MCQCh. 4 - Prob. 4.23PCh. 4 - Prob. 4.24PCh. 4 - Prob. 4.25PCh. 4 - Prob. 4.26PCh. 4 - Prob. 4.27PCh. 4 - Prob. 4.28PCh. 4 - Prob. 4.29PCh. 4 - Prob. 4.30PCh. 4 - Prob. 4.31PCh. 4 - Prob. 4.32P
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- Firm A had no credit losses last year, but 1% of Firm Bs accounts receivable proved to be uncollectible and resulted in losses. Can you determine which firms credit manager is performing better? Why or why not?arrow_forwardWhich of the following best represents a positive product of a lower number of days sales in receivables ratio? A. collection of receivables is quick, and cash can be used for other business expenditures B. collection of receivables is slow, keeping cash secured to receivables C. credit extension is lenient D. the lender only lends to the top 10% of potential creditorsarrow_forward1. What should the company maintain to pay the bills as they come due? 2. Managing inventory is a juggling act. 3. Most businesses fail for lack of cash that for want of profit. Justify. not less than 5 sentencearrow_forward
- 1.) A Credit memo is a note from a seller indicating its intent to credit a customer’s accounts receivable. Select one: True False 2.) In a period of rising prices, the FIFO method of costing inventory results in income tax savings for companies. Select one: True False 3.) A debit memo represents a decrease to accounts payable and therefore results in less money owed to the seller. Select one: True Falsearrow_forwardWhich of the following did NOT help trigger the subprime crisis in 2007? Housing prices stopped climbing and actually started falling around 2006 Borrowers were offered teaser loans like 2/28 to get them into loans they could not otherwise qualify for Mortgage brokers were required by Sarbanes Oxley to personally pledge that all the loan information provided on loan applications was correct and they could be held personally responsible for any losses due to fraud Banks made loans to borrowers with very questionable income by using “liar loans”arrow_forwardCredit Card Fraud and Identity Theft Loss of a credit card, the information on it, or your personal information can cause serious problems. For example, you could be required to pay for purchases you didn't make, or you could spend years repairing the damage to your credit rating. Consider the following two alternative behaviors. Behavior A If I receive an e-mail with a sales offer I like, rather than provide my account number through the e-mail link, I open a separate browser window and directly access the company's website to make my purchase. B I save all my charge receipts and reconcile them to my monthly statement, most often by accessing my account online. Which behavior is likely to reduce your chance of experiencing credit card fraud or identity theft? O Alternative A O Alternative B Both Alternatives A and B ONeither Alternative A nor Barrow_forward
- Customers who do not pay for the merchandise that they bought on credit are referred to as: Delinquent accounts Unpaid transactions Bad debts Lost sales revenue.arrow_forward2. Which is a true statement? Federal law requires all businesses to offer credit to customers. A customer may claim dissatisfaction with a product as a means of refusing to make payments. A business has the legal right to harass a customer until a debt is paid. If a company is run correctly, it will not have to deal with uncollectibles. 3. Why might a customer frequently ask for changes in the payment schedule? They are traveling a lot. Their pay day changes depending on their schedule. They are sick a lot. The customer may be having trouble making payments.arrow_forwardWhen a customer is delinquent on paying a notes receivable, your company has the option to continue to attempt collection or sell the debt to a collection agency. Research the benefits and challenges with each of these options and in a short essay, answer the following questions. Required part B What are the benefits and challenges of continuing to attempt collection yourself? What are the benefits and challenges of selling debt to a collection agency? If you had a dishonored notes receivable, which option would you select and why? Would you weight certain benefits or challenges differently when making your selection? How?arrow_forward
- You have just received notice that a customer of yours with an account receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to debit Allowance for Doubtful Accounts and credit Bad Debt Expense. debit Bad Debt Expense and credit Allowance for Doubtful Accounts. debit Allowance for Doubtful Accounts and credit Accounts Receivable. debit Bad Debt Expense and credit Accounts Receivable.arrow_forwardAccording to the article, why are interest rates on credit cards higher than interest rates on cars or homes? Choose one or more: A. People who use credit cards take more financial risks than people who buy cars or homes. ⒸB. Credit card issuers are londing money that is unsecured. C. Credit card debts are among the first written off when people file for bankruptcy. O D. Credit card debt typically is for a shorter time period than a loan for a car or home.arrow_forwardWhich of the following scenarios increases accounts payable? A customer fails to pay an invoice. A supplier delivers raw materials on credit. Office supplies are purchased with cash. None of the abovearrow_forward
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