Homework Answers
Answer- C. Both a and b.
Explanation-
Inventory is one of the most important asset in any financial statement as it has direct impact on the net income of the organisation as well as it is reportable to various outside entities such as bank for giving loan.
Generally inventories are control with high internal control procedure and implementing segregation of duties between custodian of the inventory and a person who maintain the record of Such Inventory.
For maintaining a proper check on inventory there are various audit procedures. As a part of analytical review or analytical procedure, the auditor will focus on -
(a). the gross margin compare with previous year.
(b). Inventory turnover ratio compared with previous year.
(c.) Unit cost of inventory compared with previous year.
In the option given in point a. above is the formula for calculating gross margin and compare it with previous year.
Gross margin = (Net Sales - Cost of goods sold)/Net Sales
In the option given in point b. above is the formula for calculating inventory turnover ratio and compared it with previous year.
Inventory turnover ratio =cost of goods sold/average inventory.
Thus, Both a and b are the tools used in the analytical review of inventory to see if inventory is being stolen.
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whenever possible? a. Requisition, control, and disbursement of inventory b. Requisition of inventory and conversion of...
b.) measures Will III ligner Income taxes than FIFO. 39. Inventory turnover a. is computed by...
b.) measures Will III ligner Income taxes than FIFO. 39. Inventory turnover a. is computed by dividing average inventory by cost of merchandise sold measures the relationship between the volume of goods sold and amount of inventory carried c. increases the risk of loss from damaged merchandise d. is computed by dividing the beginning inventory plus the ending inventory by two 40. The number of days' sales in inventory a. measures the length of time it takes to acquire, sell,...
13) Beginning inventory plus purchases quals A) ending inventory B) net purchases C) cost of goods...
13) Beginning inventory plus purchases quals A) ending inventory B) net purchases C) cost of goods sold oods available for sale D frue? 14) Which of the following statements and the r e who is A) A periodic inventory system kes detailed inventory records of the inventory on hand throughout the period. B) A perpetual inventory system does nor track the change in the inventory account as a result of a sale C) A periodic inventory system does not track...
8-33 (Objective 8-4) You have performed preliminary analytical procedures on one of your audit engagements and...
8-33 (Objective 8-4) You have performed preliminary analytical procedures on one of your audit engagements and observed the following independent situations: 1. The allowance for obsolete inventory increased from the prior year, but the allowance as a percentage of inventory decreased from the prior year. 2. Long-term debt increased from the prior year, but total interest expense decreased as a percentage of long-term debt. 3. The dollar amount of operating income is consistent with the prior year, although the entity...
only question b please. PRIOR COMPANY BALANCE SHEET Cash Accounts Receivables (net) Short Term Investments Inventory...
only question b please.
PRIOR COMPANY BALANCE SHEET Cash Accounts Receivables (net) Short Term Investments Inventory Prepaid expenses Total Current Assets Property, plant and Equipment (net) Total Assets Current Liabilities Bonds Payable Common stockholder's equity Total liabilities and stockholder's equity Dec. 31 2017 $ 52,000 198,000 80,000 440,000 3,000 $ 773,000 857,000 $ 1,630,000 240,000 400,000 990,000 $ 1,630,000 Dec 31 2016 $ 60,000 80,000 40,000 360,000 7,000 $ 547,000 853,000 $ 1.400,000 160,000 400,000 840.000 $1,400,000 INCOME STATEMENT FOR...
only question b please. PRIOR COMPANY BALANCE SHEET Cash Accounts Receivables (net) Short Term Investments Inventory...
only question b please.
PRIOR COMPANY BALANCE SHEET Cash Accounts Receivables (net) Short Term Investments Inventory Prepaid expenses Total Current Assets Property, plant and Equipment (net) Total Assets Current Liabilities Bonds Payable Common stockholder's equity Total liabilities and stockholder's equity Dec. 31 2017 $ 52,000 198,000 80,000 440,000 3,000 $ 773,000 857,000 $ 1,630,000 240,000 400,000 990,000 $ 1,630,000 Dec 31 2016 $ 60,000 80,000 40,000 360,000 7,000 $ 547,000 853,000 $ 1.400,000 160,000 400,000 840.000 $1,400,000 INCOME STATEMENT FOR...
Post the entries to Work in Process Inventory, and prove the agreement of the control account...
Post the entries to Work in Process Inventory, and prove the
agreement of the control account with the job cost sheets.
Exercise 15-02 a-b (Video) (Part Level Submission) Bonita Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,890 and two jobs in process: Job No. 429 $2,540, and Job No. 430 $1,350. During May, a summary of source documents reveals the following. Materials Labor Time Job Number...
Analytical Procedures: Ratio Relationships. The following situations represent errors and frauds that could occur in financial...
Analytical Procedures: Ratio Relationships. The following situations represent errors and frauds that could occur in financial statements Required State how the ratio in question would compare (higher, equal, or lower) to what the ratio should have been had the error or fraud not occurred. a. The company recorded fictitious sales with credits to sales revenue accounts and debits to accounts receivable. Inventory was reduced, and cost of goods sold was increased for the profitable "sales." Is the current ratio higher...
8. Which of the following accounts has a normal debit balance? a. Accounts Payable b. Sales...
8. Which of the following accounts has a normal debit balance? a. Accounts Payable b. Sales Returns and Allowances c. Sales d. Interest Revenue 9. Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a a. debit to Sales b. debit to Merchandise Inventory c. credit to Merchandise Inventory d. credit to Sales 10. A retailer purchases merchandise with a catalog list price of $15,000. The retailer receives a 30%...
1) 1) Goods in transit are automatically included in inventory regardless of whether title has passed...
1) 1) Goods in transit are automatically included in inventory regardless of whether title has passed to the buyer. A) True B) False 2) 2) An advantage of FIFO is that it assigns the most recent costs to cost of goods sold, and does a better job of matching current costs with revenues on the income statement. A) True B) False 3) 3) Errors in the period-end inventory balance only affect the current period's records and financial statements. A) True...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter a. As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances: S 51,000 208,800 59,400 361,000 Accounts receivable Buildings and equipment (net) Accounts payable Common stock Retained earnings $88,425 500,000 91,775 S 680,200 680,200 b. Actual sales for December...
b.) measures Will III ligner Income taxes than FIFO. 39. Inventory turnover a. is computed by dividing average inventory by cost of merchandise sold measures the relationship between the volume of goods sold and amount of inventory carried c. increases the risk of loss from damaged merchandise d. is computed by dividing the beginning inventory plus the ending inventory by two 40. The number of days' sales in inventory a. measures the length of time it takes to acquire, sell,...
13) Beginning inventory plus purchases quals A) ending inventory B) net purchases C) cost of goods sold oods available for sale D frue? 14) Which of the following statements and the r e who is A) A periodic inventory system kes detailed inventory records of the inventory on hand throughout the period. B) A perpetual inventory system does nor track the change in the inventory account as a result of a sale C) A periodic inventory system does not track...
only question b please.
PRIOR COMPANY BALANCE SHEET Cash Accounts Receivables (net) Short Term Investments Inventory Prepaid expenses Total Current Assets Property, plant and Equipment (net) Total Assets Current Liabilities Bonds Payable Common stockholder's equity Total liabilities and stockholder's equity Dec. 31 2017 $ 52,000 198,000 80,000 440,000 3,000 $ 773,000 857,000 $ 1,630,000 240,000 400,000 990,000 $ 1,630,000 Dec 31 2016 $ 60,000 80,000 40,000 360,000 7,000 $ 547,000 853,000 $ 1.400,000 160,000 400,000 840.000 $1,400,000 INCOME STATEMENT FOR...
only question b please.
PRIOR COMPANY BALANCE SHEET Cash Accounts Receivables (net) Short Term Investments Inventory Prepaid expenses Total Current Assets Property, plant and Equipment (net) Total Assets Current Liabilities Bonds Payable Common stockholder's equity Total liabilities and stockholder's equity Dec. 31 2017 $ 52,000 198,000 80,000 440,000 3,000 $ 773,000 857,000 $ 1,630,000 240,000 400,000 990,000 $ 1,630,000 Dec 31 2016 $ 60,000 80,000 40,000 360,000 7,000 $ 547,000 853,000 $ 1.400,000 160,000 400,000 840.000 $1,400,000 INCOME STATEMENT FOR...
Post the entries to Work in Process Inventory, and prove the
agreement of the control account with the job cost sheets.
Exercise 15-02 a-b (Video) (Part Level Submission) Bonita Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,890 and two jobs in process: Job No. 429 $2,540, and Job No. 430 $1,350. During May, a summary of source documents reveals the following. Materials Labor Time Job Number...
Analytical Procedures: Ratio Relationships. The following situations represent errors and frauds that could occur in financial statements Required State how the ratio in question would compare (higher, equal, or lower) to what the ratio should have been had the error or fraud not occurred. a. The company recorded fictitious sales with credits to sales revenue accounts and debits to accounts receivable. Inventory was reduced, and cost of goods sold was increased for the profitable "sales." Is the current ratio higher...
8. Which of the following accounts has a normal debit balance? a. Accounts Payable b. Sales Returns and Allowances c. Sales d. Interest Revenue 9. Using a perpetual inventory system, the entry to record the purchase of $30,000 of merchandise on account would include a a. debit to Sales b. debit to Merchandise Inventory c. credit to Merchandise Inventory d. credit to Sales 10. A retailer purchases merchandise with a catalog list price of $15,000. The retailer receives a 30%...
1) 1) Goods in transit are automatically included in inventory regardless of whether title has passed to the buyer. A) True B) False 2) 2) An advantage of FIFO is that it assigns the most recent costs to cost of goods sold, and does a better job of matching current costs with revenues on the income statement. A) True B) False 3) 3) Errors in the period-end inventory balance only affect the current period's records and financial statements. A) True...
Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter a. As of December 31 (the end of the prior quarter), the company's general ledger showed the following account balances: S 51,000 208,800 59,400 361,000 Accounts receivable Buildings and equipment (net) Accounts payable Common stock Retained earnings $88,425 500,000 91,775 S 680,200 680,200 b. Actual sales for December...
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