Gingerbread House Inc. (GHI) is a bakery chain that sells both in a wholesale and retail environment. Gingerbread can be baked and sold up to five months after being packaged. Seasonal shapes and coloring are used for Valentine's Day, Halloween, and Christmas, with Christmas being the big seller.

GHI has an October year-end. It is now September, and the controller has brought into your planning meeting a bag of gingerbread in Halloween and Christmas shapes, telling you how great gingerbread tastes when it is fresh. He has agreed that, as usual, the company will provide you with aging lists and a list of inventories still held from last year (mainly flavorings and raw spices, such as ginger, which is purchased in 100-pound kegs). The inventory count will probably require more staffing, as GHI started its Christmas baking two months early this year, due to increased demand. The receivables will also be different since GHI has agreed to extended credit terms for customers that take their Christmas orders early. This is necessary due to limited warehousing space at GHI.

Required:

The changes that GHI has described are going to affect the audit work you need to do this year.

• Keeping in mind the changes, what are five key assertions for inventory and/or accounts receivable balances?
• For each assertion describe the concern that you might have because of the changes at GHI.
• Then, state specifically the type of evidence you will need to collect. (Use the table on the next page to answer this question.)

Assertion	Concern	Type of Evidence to be collected ( Be Specific)

Answer rating: 100% (QA)

Answer lets break down the key assertions for inventory and accounts receivable balances for Gingerbread House Inc GHI and address the concerns and ty... View the full answer