Auditing means the inspection of financial accounts of the company to determine if the records are accurate as per the rules and regulations of accounting or not. There are two types of auditors i.e. internal auditors and external auditors, that carry out the auditing process. To state: To test the reconciliation of a client if inspecting the documents of reconciliation or reperforming the task of reconciliation is better. Also, state the factors that would lead one to choose reperforming over document inspection.

Question

Bergo Bay's accounting system generated the following account balances on December 31. The company's manager knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory and the accrued factory payroll (Factory Wages Payable) has not been recorded. Debit Credit Notes payable Cash Accounts receivable Raw materials inventory Work in process inventory Finished goods inventory Prepaid rent Accounts payable Common stock Retained earnings (prior year) Sales Cost of goods sold $ 75,000 44,000 27,000 0 12,000 4,000 $ 9,800 12,800 40,000 76,000 221,400 Factory overhead General and administrative expenses Totals 118,000 27,000 53,000 $ 360,000 $ 360,000 These six documents must be processed to bring the accounting records up to date. Materials requisition 10: Materials requisition 11: Materials requisition 12: Labor time ticket 52: Labor time ticket 53: $ 4,500 direct materials to Job 402 $ 7,000 direct materials to Job 404 $ 2,100…

Answer 1

Question

Chapter 5, Problem 33RQSC

To determine

Introduction: Auditing means the inspection of financial accounts of the company to determine if the records are accurate as per the rules and regulations of accounting or not. There are two types of auditors i.e. internal auditors and external auditors, that carry out the auditing process.

To state: To test the reconciliation of a client if inspecting the documents of reconciliation or reperforming the task of reconciliation is better. Also, state the factors that would lead one to choose reperforming over document inspection.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

Bergo Bay's accounting system generated the following account balances on December 31. The company's manager knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory and the accrued factory payroll (Factory Wages Payable) has not been recorded. Debit Credit Notes payable Cash Accounts receivable Raw materials inventory Work in process inventory Finished goods inventory Prepaid rent Accounts payable Common stock Retained earnings (prior year) Sales Cost of goods sold $ 75,000 44,000 27,000 0 12,000 4,000 $ 9,800 12,800 40,000 76,000 221,400 Factory overhead General and administrative expenses Totals 118,000 27,000 53,000 $ 360,000 $ 360,000 These six documents must be processed to bring the accounting records up to date. Materials requisition 10: Materials requisition 11: Materials requisition 12: Labor time ticket 52: Labor time ticket 53: $ 4,500 direct materials to Job 402 $ 7,000 direct materials to Job 404 $ 2,100…

Accurate Answer

General accounting