A company is engaged in a seasonal business where a substantial portion of its annual sales...
A company is engaged in a seasonal business where a substantial portion of its annual sales occur in the last month of the fiscal year. Which of the following approaches to auditing revenues is most appropriate for this company?
A. The auditor should perform analytical procedures on sales at an interim date and discuss any changes between the interim date and fiscal year end with senior management.
B. The auditor should select an extended sample of transactions occurring in the last month of the fiscal year and review supporting documentation.
C. The auditor should perform transactions testing at an interim date and use analytical procedures to gather evidence on the last month's sales.
Homework Answers
Solution:
A company is engaged in a seasonal business where a substantial portion of its annual sales occur in the last month of the fiscal year. Approach that is most appropriate for auditing revenues is "The auditor should select an extended sample of transactions occurring in the last month of the fiscal year and review supporting documentation."
Hence option B is correct.
Add Answer to:
A company is engaged in a seasonal business where a substantial
portion of its annual sales...
Providence, CPA, is engaged in the December 31, Year 2, audit of Bedside Inc. Bedside Inc....
Providence, CPA, is engaged in the December 31, Year 2, audit
of Bedside Inc. Bedside Inc. is a nonissuer in the medical sales
industry. The company was founded by Jude Dean, M.D., and is backed
by a number of venture investors. Bedside is a new player in the
medical sales industry and as of Year 2, Bedside sells the
following: medical devices, surgical devices, and diagnostic
imaging equipment.
As part of the payroll analytical procedures, the auditor
needs to evaluate...
In the audit of the R.T. Company a large branch that maintains its own bank account,...
In the audit of the R.T. Company a large branch that maintains its own bank account, cash in periodically transferred to the central account in Cedar Rapids. On the branch account's records, bank transfers are recorded as a debit to the home office clearing account and a credit to the branch bank account. Similarly, the home office account is recorded as a debit to the central bank account and a credit to the branch office clearing account. Gordon Light is...
Which of the following matters would an auditor most likely consider to be a significant deficiency to be communicated to the audit committee
1. Which of the following matters would an auditor most likely consider to be a significant deficiency to be communicated to the audit committee? A. Management's failure to renegotiate unfavorable long-term purchase commitments.B. Recurring operating losses that may indicate going concern problems.C. Evidence of a lack of objectivity by those responsible for accounting decisions.D. Management's current plans to reduce its ownership equity in the entity. 2. After obtaining an understanding of internal control and arriving at a preliminary assessed level...
Case 14-6 Making Connections Social Konnections Inc. (SKI or the “Company”) is a global Internet company...
Case 14-6 Making Connections Social Konnections Inc. (SKI or the “Company”) is a global Internet company that runs Social Konnections, a large social media networking Web site. SKI has experienced steep growth since its launch in 2005, and the Company went public in 2010. SKI currently has over 500 million active users who visit the site to connect with others, express themselves, and play games. Last year, substantially all of SKI’s revenue came from advertisers who market their products and...
Problem One - Chapter 7: Part. A: You are the lead auditor for the Bella Luna...
Problem One - Chapter 7: Part. A: You are the lead auditor for the Bella Luna Tree Company, Inc. in Bethel, CT. The company has a June 30" year end, and the audit team is discussing strategies for confirming year end accounts receivable. The composition of the accounts receivable is as follows: Total Accounts Receivable (before any Allowance for Doubtful Accounts): $4,584,600 Aged Composition: $ 3.667.680 Zero - 30 days 687,690 Thirty-60 days 183,390 Sixty - 90 Days 45,840 Over...
King Companies, Inc. (KCI) is a private company that owns five auto parts stores in urban...
King Companies, Inc. (KCI) is a private company that owns five auto parts stores in urban Los Angeles, California. KCI has expanded from two auto parts stores to five stores in the last three years, and it plans continued growth. Eric and Patricia King own the majority of the shares in KCI. Eric is the chairman of the board of directors and CEO of KCI, and Patricia is a director as well as the CFO. Shares not owned by Eric...
Please list 5 inherent risk related items the assignment requires to list 5 inherent risks from...
Please list 5 inherent risk related items
the
assignment requires to list 5 inherent risks from the description
of the company that an auditor may take when deciding to accept
this new client.
Emphasis Heading 1 Heading 2 Heading 3 Heading 4 Description of Southwest Appliance, Inc. History and Corporate Structure Southwest Appliances, Inc. specializes in supplying a relatively small line of high-quality household appliances to residential construction contractors in a large and growing metropolitan area. Southwest has a large...
LO 10-6, 10 10-36 Based on an assessment of audit risk, the auditors are concerned with...
LO 10-6, 10 10-36 Based on an assessment of audit risk, the auditors are concerned with the following two risks: 1. The risk that that the client might be making duplicate payments to vendors. 2. The risk that the client's accounting clerk might be making unauthorized payments to himself. a. Assuming that the client has a manual accounting system, describe how the auditors can design a test to identify the duplicate payments and unauthorized payments. b. Assuming that the client...
1) UMGC Industries capital-asset procurement policy requires the board of directors (BOD) approve any single acquisition...
1) UMGC Industries capital-asset procurement policy requires the board of directors (BOD) approve any single acquisition over $500,000. If the BOD approves a project, then the treasurer will transfer the funds to the respective plant. Within one year, the internal auditing function is charged with reviewing each acquisition to check the propriety of the purchase and disbursal of funds. UMGC Industries plant controller prepared the first proposal for a DEK cutting machine. Other plants were told to wait until internal...
Providence, CPA, is engaged in the December 31, Year 2, audit
of Bedside Inc. Bedside Inc. is a nonissuer in the medical sales
industry. The company was founded by Jude Dean, M.D., and is backed
by a number of venture investors. Bedside is a new player in the
medical sales industry and as of Year 2, Bedside sells the
following: medical devices, surgical devices, and diagnostic
imaging equipment.
As part of the payroll analytical procedures, the auditor
needs to evaluate...
In the audit of the R.T. Company a large branch that maintains its own bank account, cash in periodically transferred to the central account in Cedar Rapids. On the branch account's records, bank transfers are recorded as a debit to the home office clearing account and a credit to the branch bank account. Similarly, the home office account is recorded as a debit to the central bank account and a credit to the branch office clearing account. Gordon Light is...
Problem One - Chapter 7: Part. A: You are the lead auditor for the Bella Luna Tree Company, Inc. in Bethel, CT. The company has a June 30" year end, and the audit team is discussing strategies for confirming year end accounts receivable. The composition of the accounts receivable is as follows: Total Accounts Receivable (before any Allowance for Doubtful Accounts): $4,584,600 Aged Composition: $ 3.667.680 Zero - 30 days 687,690 Thirty-60 days 183,390 Sixty - 90 Days 45,840 Over...
Please list 5 inherent risk related items
the
assignment requires to list 5 inherent risks from the description
of the company that an auditor may take when deciding to accept
this new client.
Emphasis Heading 1 Heading 2 Heading 3 Heading 4 Description of Southwest Appliance, Inc. History and Corporate Structure Southwest Appliances, Inc. specializes in supplying a relatively small line of high-quality household appliances to residential construction contractors in a large and growing metropolitan area. Southwest has a large...
LO 10-6, 10 10-36 Based on an assessment of audit risk, the auditors are concerned with the following two risks: 1. The risk that that the client might be making duplicate payments to vendors. 2. The risk that the client's accounting clerk might be making unauthorized payments to himself. a. Assuming that the client has a manual accounting system, describe how the auditors can design a test to identify the duplicate payments and unauthorized payments. b. Assuming that the client...
Most questions answered within 3 hours.
-
1. When a nearsighted person looks at an object that is in the
distance with their...
asked 1 hour ago -
QUESTION 8
Both of these statements will store the same value in the
variable $number
$number...
asked 1 hour ago -
The price of 1 lb of potatoes is $1.75. If all the potatoes sold
today at...
asked 2 hours ago -
Garcia Company issues 20.00%, 15-year bonds with a par value of
$470,000 and semiannual interest payments....
asked 2 hours ago -
In C++ Programming, Try using loops only.
This lab demonstrates the use of the While Loop...
asked 3 hours ago -
Effect of DCMU and sodium azide on Chlamydomonas? We did an
experiment where we had Chlamydomonas...
asked 4 hours ago -
1a) According to the ideal gas law, _______________.
a. a gas has infinite volume at absolute...
asked 5 hours ago -
Oakdale Fashions, Inc. had $245,000 in 2018 taxable income.
Using the tax schedule in Table 2.3...
asked 5 hours ago -
The marketing class at CSUS had an average score of 150. An
educational analyst determined that...
asked 7 hours ago -
Justin Case has purchased a $250 000 home by putting 20 % down
and taking out...
asked 7 hours ago -
1. In a labor market, marginal cost for a firm is
____________.
a. recruiting cost
b....
asked 7 hours ago -
On January 1, 2019, ABC Company issued $60,000,000 of 20-year,
10.5% bonds when the market rate...
asked 8 hours ago