Finally, the test of controls for the posting and summarization objective will be to examine evidence that the accounts receivable master file is reconciled to the general ledger and observe whether monthly statements are sent to customers. Transaction-Related Audit Objectives Key Internal Controls Tests of Controls Substantive Tests of Transactions Recorded sales transactions are accurate. Sales and amounts are internally verified for description of the order and quantity. Examine indication of internal verification Compare recorded transitions in the sales acquisitions journal with the vendor’s invoice, receiving report, and other supporting documents. Sales invoices, shipping documents, and sales orders are pre-numbered for Apollo.
Examine vendor’s invoices of closely related accounts such as repair and maintenance account, as well as the lease expense account, to determine whether some items should have been capitalized; 3. Review lease and rental agreements. | | | Rights and Obligations 1. Inquire of Apollo management whether assets have been pledged as collateral; 2.
12.6. Create a questionnaire checklist that can be used to evaluate controls for each of the four basic activities in the revenue cycle (sales order entry, shipping, billing, and cash collections). A.) For each control issue, write a Yes/No question such that a “No” answer represents a control weakness. For example, one question might be, “Are customer credit limits set and modified by a credit manager with no sales responsibility?” B.)
The existence assertion is to make sure that the client and accounts exist, the completeness is to make sure that all of the balances are recorded, and the valuation is to make sure that the balances are recorded at the correct amount. It is important that the auditor obtains a confirmation from a third party for the information in accounts receivables. After communicating and obtaining the information, the auditor is to evaluate the information (SAS No. 67, AU Section 330.11). The audit objectives auditors use to perform year-end sales cutoff tests are to determine if the information they obtained by the confirmation reduces the audit risk level.
Using accounting records prepare a balance sheet for a business and determine the balance of the cash and owner’s equity account. 4.29 Dual Effect of Transactions. For six cases, describe transactions that will cause the changes in different elements of the accounting equation. 4.30
Required a. Calculate the sample size and sampling interval. b. Hon Zhu, staff accountant, performed the audit procedures listed in the inventory audit program for each sample item. Calculate the upper limit on misstatement based on the following misstatements. What should Hon conclude about Coomes’s inventory account?
A pro forma cash receipt is a document narrating incoming payments from debtors or receivables and is issued by the business or creditor (Cash Receipts Function, 2011). Function of Cash Receipts Cash receipts give a quick snapshot of particular debtors and respective repayments, thus, helping the business to recognize the source of cash inflows with respect to receivables within the accounted date range (LexisNexis, 2013). I 2. Company’s Cheque to Supplier Next you are to prepare a company cheque to pay a supplier called Shakers Ltd the amount of an invoice that has a gross total of £3,250.00. You are paying the invoice within the credit terms and are entitled to a cash discount of 2%.
General and Commercial Basis Accounting Principles Generally accepted accounting principles (GAAP) state the standard framework of guidelines for financial accounting used in any given jurisdiction; commonly known as standard accounting practice or accounting standards. These contain the rules, standards, and conventions that accountants practice in recording, summarizing and in the preparation of financial statements. Hubpages.com discusses commercial accounting, also known as profit accounting, defining that it performs mainly by profit and loss. The reporting for a profit organization is directed to the investors. ("The Principles of Commercial Accounting and Fund Accounting", 2011).
Please refer to Zynga attachment. Answer the questions below. 1) What information does “Bookings” convey? Is the same information available in the GAAP-based financial statements? The information “Bookings” convey is that: the company record sale of virtual goods as deferred revenue and then recognize the revenue over the estimated average life the purchased virtual goods or as the virtual goods are consumed.
18-21 A) State whether each procedure above is primarily a test of control or substantive test of transactions. B) State the purpose(s) of each procedure. These are my answers for A and B above. 1. Trace transactions recorded in the acquisitions journal to supporting documentation, comparing the vendor’s name, total dollar amounts, and authorization for acquisition.