You are doing a review services and related tax work engagement for QC Construction Company. You have made extensive inquiries of management about their financial statements and have concluded that management has an excellent understanding of its business and is honest but is lacking in knowledge of technical accounting issues. In doing the review you […]
EVIEW FOR CONTINGENT LIABILITIES AND COMMITMENTS Conduct a review for contingent liabilities and commitments.
In an audit of the Marco Corporation as of December 31, 2019, the following situations exist. No entries have been made in the accounting records in relation to these items. 1. During the year 2019, the Marco Corporation was named as a defendant in a suit for damages by the Dalton Company for breach of […]
The following are sales, cost of sales, and inventory data for Aladdin Products Supply Company, a wholesale distributor of cleaning supplies. Dollar amounts are in millions. In-class Discussion Required Required 726Part 4 / APPLICATION OF THE AUDIT PROCESS TO OTHER CYCLES 2019 2018 2017 2016 Sales $92.8 $86.8 $78.4 $69.6 Cost of sales 68.9 67.2 […]
Following are audit procedures commonly performed in the inventory and warehousing cycle for a manufacturing company: 1. Account for a sequence of raw material requisitions and examine each requisition for an authorized approval. 2. Trace the recorded additions on the finished goods perpetual inventory master file to the records for completed production. 3. Compare the […]
In a letter to the audit committee of the Cline Wholesale Company, Jerry Schwartz, CPA, informed them of material weaknesses in the controls over inventory. In a separate letter to senior management, he elaborated on how the material weak- nesses could result in a significant misstatement of inventory by the failure to recognize the existence […]
The following questions concern communications between management, those charged with governance, and the auditor. Choose the best response. a. Which of the following is not a required item to be communicated by the auditor to the audit committee or others charged with governance? (1) Information about the auditor’s responsibility in an audit of financial statements […]
You are auditing general cash for the Pittsburgh Supply Company for the fiscal year ended July 31, 2019. The client has not prepared the July 31 bank reconciliation. After a brief discussion with the owner, you agree to prepare the reconcili- ation, with assistance from one of Pittsburgh Supply’s clerks. You obtain the following information: […]
ACCOUNTS IN THE CYCLE Identify the accounts and the unique characteristics of the capital acquisition andrepayment cycle.
List four examples of interest-bearing liability accounts commonly found in balance sheets. What characteristics do these liabilities have in common? How do they differ? 22-2 (OBJECTIVE 22-2) It is common practice to audit the balance in notes payable in conjunction with the audit of interest expense and interest payable. Explain the advantages of this approach. […]
