Assume that a client has materiality of ($ 10) million for financial statements that has accounts receivable

Question:

Assume that a client has materiality of $\$ 10$ million for financial statements that has accounts receivable (net) of $\$ 20$ million and inventory of $\$ 80$ million.

a. What amount of tolerable misstatement would you establish for accounts receivable? Justify your answer.

b. What amount of tolerable misstatement would you establish for inventory? Justify your answer.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Auditing Assurance And Risk

ISBN: 9780324313185

3rd Edition

Authors: W. Robert Knechel, Steve Salterio, Brian Ballou

See More Books

Question Posted: May 03, 2024 02:02 AM

See More Questions

Consider the hole diameter data in Exercise 63 Estimate process capability using and R charts
Consider the figure. What is the formula for the area of a square? Use the formula to write an expression, in the form of a product, for the area of the blue square. a b b
Required a. Use professional judgment in deciding on the preliminary judgment about materiality for earnings, current assets, current liabilities, and total assets. Your conclusions should be stated...
Exam scores of 40 students in a statistics class are shown. (a) Estimate the mean and standard deviation from the sample. (b) Assuming that the data are from a normal distribution, de ne bins by...
Sales for the year for Victor Company were $1,000,000, 70 percent of which were on credit. The average gross profit on sales was 40 percent. Additional account balances were: Required: Compute the...
Why don't we multiply the cost of preferred stock by one minus the tax rate, as we do for debt?
The column is made of wood. It is fixed at its bottom and free at its top. Use the NFPA formulas to determine the largest allowable axial force $P$ that it can support if it has a length \(L=6...
PEMS Co. International, Inc., agreed to find a buyer for Rupp Industries, Inc., for a com-mission of 2 percent of the purchase price, which was to be paid by the buyer. Using PEMSs services, an...
Brittany is 2 7 years old, has one daughter who is blind, and files as Head of Household. What is the Standard deduction?
Armour Inc. has been in the defense contracting business for about 22 years. From its small factory in Wales, it manufactures boots, belts, ammo holders, and assorted accessories for foot soldiers in...
Using the audit risk model, compute the detection risk for the following values of audit risk, inherent risk, and control risk. Then answer the questions below. a. Which of the "points" yields the...
Recently, equity returns have been lower than the returns available from short-term government securities. Clearly, in such a period, the capital asset pricing model doesnt work because equity...
a. Explain the difference between a minimum wage and a living wage. b. What should governments use to base calculations of wage rates for the lower paid? Justify your response. c. Proponents of the...
What is uncertainty orientation?
What function is money playing in each of these situations? a. You walk into a store in Germany and see that all the prices are in euros. b. You buy a candy bar for $\$ 1.25$. c. Your aunt Jane...
a. To what extent should any model of the labour market take into consideration non-market labour employed in the home such as raising children and housework? b. Do social norms and the approaches...
What is power orientation?
Suppose that the three cast-iron pipes in Prob. 6.120 are instead connected to meet smoothly at a point B, as shown in Fig. P6.125. The inlet pressures in each pipe are: p1 = 200 kPa; p2 = 160 kPa;...
How does Kant answer Humes bundle theory of self? Do you think he is successful?
Based on the information above, in your group, use Column B to begin building Laura's budget. Does she have enough money to pay for everything? What changes might you recommend to Laura? Can she...
Assets (ROA) and price to earnings (PE) ratio for a company you are familiar with. What do these metrics tell you about the financial health of the company? What is the economic and market factors...
What is the ethical significance of how business expenses are reported? What impact does the accounting method a taxpayer uses have on their tax income? Use the IRS website or a tax journal to...

Assume that a client has materiality of ($ 10) million for financial statements that has accounts receivable

Question:

Step by Step Answer:

Auditing Assurance And Risk

Students also viewed these Business questions