In the audit of Alpha Brewery Corporation ( ABC), Jack's audit team foundthat overstated sales causednet income, retained earnings, current assets, working capital, and total assets to be overstated.Overstated cash collectionsdid not change the total current assets or total assets, but they increased theamount of cash and decreased the amount of accounts receivable by an offsetting amount, affecting thequick ratio that ABC monitors. ABC recorded sales of $672,000 and gross profit of $268,800 over theJanuary 1-4 period. Cash Collections on customers' accounts amounted to $800,000.ABC generally has good control policies and procedures related to authorization of transactions foraccounting entry, and the accounting manual has instructions for recording sales transactions in theproper accounting period. The company closes the accounting process each Friday at 5 PM to prepareweekly management reports. The year-end (cut-off) date is December 31, and, in 20X0, December 31was a Monday. However, the accounting was performed through Friday as usual, and the accounts wereclosed for the year on January 4.

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1 Additional information that could have been obtained from these procedures to help in detecting the overstatement of sales and cash collections includes Detailed analysis of the companys revenue rec... View the full answer