New Semester
Started
Get
50% OFF
Study Help!
--h --m --s
Claim Now
Question Answers
Textbooks
Find textbooks, questions and answers
Oops, something went wrong!
Change your search query and then try again
S
Books
FREE
Study Help
Expert Questions
Accounting
General Management
Mathematics
Finance
Organizational Behaviour
Law
Physics
Operating System
Management Leadership
Sociology
Programming
Marketing
Database
Computer Network
Economics
Textbooks Solutions
Accounting
Managerial Accounting
Management Leadership
Cost Accounting
Statistics
Business Law
Corporate Finance
Finance
Economics
Auditing
Tutors
Online Tutors
Find a Tutor
Hire a Tutor
Become a Tutor
AI Tutor
AI Study Planner
NEW
Sell Books
Search
Search
Sign In
Register
study help
business
auditing 12th
Modern Auditing 5th Edition Walter Gerry Kell, William C. Boynton, Richard E. Ziegler - Solutions
Describe or illustrate the two ways the attribute, proper granting of cash discounts, can be stated in a sampling plan.
Briefly explain the manner in which (a) input and output controls and (b) processing controls may be tested when an EDP system is used for cash receipts transactions.
Jerome Paper Company engaged you to review its internal control system. Jerome does not prelist cash receipts before they are recorded and has other weaknesses in processing collections of trade receivables, the Company's largest asset. In discussing the matter with the controller, you find he is
The following control procedures over cash receipts transactions are prescribed by the David Company:1. Restrictive endorsement of checks upon receipt.2. Daily cash register readings and cash counts by supervisors.3. Daily cash deposits.4. Internal verification of deposits and cash summaries by
Assume the following exceptions to prescribed control procedures over cash receipts transactions occurred in the Janz Company:1. A mail remittance was misappropriated after receipt.2. A cash sale was not registered.3. Cash on hand was \(\$ 5\) short of the cash register reading due to errors in
This is a continuation of comprehensive question.1. Since the Robinson Company is short of cash, the deposit of receipts is also expedited. The receptionist turns over all mail receipts and related correspondence to the accounts receivable clerk who examines the checks and determines that the
The town of Commuter Park operates a private parking lot near the railroad station for the benefit of town residents. The guard on duty issues annual prenumbered parking stickers to residents who submit an application form and show evidence of residency. The sticker is affixed to the auto and
You have been asked by the board of trustees of a local church to review its accounting procedures. As a part of this review, you have prepared the following comments relating to the collections made at weekly services and record-keeping for members' pledges and contributions:1. The church's board
The cashier of the Edgemont Company intercepted customer A's check, payable to the company in the amount of \(\$ 500\), and deposited it in a bank account which was part of the company petty cash fund, of which he was custodian. He then drew a \(\$ 500\) check on the petty cash fund bank account
You are auditing the Alaska Branch of Far Distributing Co. This branch has substantial annual sales which are billed and collected locally. As a part of your audit you find that the procedures for handling cash receipts are as follows:Cash collections on over-the-counter sales and C.O.D. sales are
Charting, Inc., a new audit client of yours, processes its sales and cash receipts documents in the following manner:1. Payment on account. The mail is opened each morning by a mail clerk in the sales department. The mail clerk prepares a remittance advice (showing customer and amount paid) if one
PML Manufacturing, Inc., a privately held corporation, manufactures office equipment. The cash receipts portion of the revenue cycle is described below:1. Mail is opened in the mailroom. Remittances (a check and a copy of the invoice) are separated.2. A control list of checks is prepared and sent
Untii recently, Consolidated Electricity Company employed a batch processing system for recording the receipt of customer payments. The following narrative describes the procedures involved in this system.The customer's payment and the remittance advice (a punch card) are received in the
Empire Oil Company, an integrated oil company, operates throughout the United States.Empire's treasury department is made up of two sections. One section handles cash receipts, and one section handles cash disbursements. The internal audit department approves all disbursements and reconciles all
What classes of transactions are included in the expenditure cycle?
What departments report to (a) the vice-president of manufacturing and (b) the controller in the expenditure cycle?
What are the materiality and audit risks associated with purchases and cash disbursements transactions?
The purchasing aspect of this cycle extends only to the acquisition of inventory items and cash disbursements applies to all payments. Discuss the validity of these assertions.
Identify the functions pertaining to the executing and the recording of purchases and cash disbursements transactions and custody of related assets.
Indicate the specific internal accounting control objectives and a proper departmental assignment of duties for the first four functions involved in executing purchase transactions.
a. What authorizations are necessary in executing purchases transactions?b. What errors and irregularities may occur when these transactions are not authorized?
Describe the primary activities of (a) the receiving, (b) stores, and (c) vouchers payable departments in executing transactions.
Enumerate the steps in (a) preparing vouchers and (b) issuing checks.
What are the specific accounting control objectives for the three functions involved in recording purchases and cash disbursements?
How may physical controls be used for these two classes of transactions?
State the steps in the audit program for the tests of transactions in a manual system that may involve the use of a random sample.
a. What is a proof of cash?b. What type of test is a proof of cash?c. How should a proof of cash be prepared?d. Explain the treatment of reconciling items in a proof of cash.
Identify the steps involved in designing an attribute sampling plan for cash disbursements?
Identify six attributes that may be applicable when the objective is testing for the proper preparation of checks.
Explain the nature of the magnetic tape symbols shown in Figure 9-10.Figure 9-10 Data Control Data Entry From Voucher Pavable Kevpunch and Verify Computer Processing Run 1 Card to Tape, Balance. and Edit Run Approved Voucher App Vouchers Assemble in Batches. Prepare Batch Totals Barched Approved
What aspects of the EDP system are subject to testing by the use of (a) test data and (b) generalized audit software?
Identify six types of invalid data that you might use in testing cash disbursements.
The following questions appear in Figures 9-4 and 9-5:1. Are imprinted and prenumbered checks used?2. Is each check supported by an approved voucher?3. Is supporting documentation mutilated after payment?4. Are two signatures required on each check?5. Does last check signer mail the check and
The following control procedures over purchases and cash disbursements transactions are prescribed by the Merlin Company:1. Approved purchase order for each purchase.2. Prenumbered receiving report for goods received.3. Signed receipt from preparer of purchase requisition upon acceptance of
Assume the following exceptions to prescribed control procedures over purchases and cash disbursements transactions occurred in the Theor Company:1. An unauthorized purchase requisition was processed.2. The quantity of goods ordered exceeded the quantity stated on the approved purchase
The Zero Company asks you to prepare a partial proof of cash for its regular bank account for the month of December 19X0.1. The bank statement for December is correct except that the bank incorrectly charged a check of the Nero Company on December 21 but credited the account the same day.2. A
In connection with your audit of the \(A B C\). Company at December 31, 19X0, you were given a bank reconciliation by a company employee which shows balance per bank \(\$ 15,267\), deposits in transit \(\$ 18,923\), checks outstanding \(\$ 21,378\), and balance per books \(\$ 12,817\). As part of
You are involved in an attribute sampling plan for testing the proper execution of vouchers in the Hickox Company. You elect to use the attributes shown in Figure 9-9 for testing. Your planned and actual test results differ from those shown in Figure 9-9 as follows:1. Planned reliability for
Long, CPA, has been engaged to examine and report on the financial statements of Maylou Corporation. During the review phase of the study of Maylou's system of internal accounting control over purchases, Long was given the document flowchart for purchases.Required:a. Identify the procedures,
The following information was obtained in an audit of the cash account of Tuck Company as of December 31, 19X0. Assume that the CPA has satisfied himself as to the validity of the cash book, the bank statements and the returned checks, except as noted.5. The Tuck Company discounted its own
Western Meat Processing Company buys and processes livestock for sale to supermarkets. In connection with the examination of the company's financial statements, you have prepared the following notes based on your review of inventory procedures:1. Each livestock buyer submits a daily report of his
During your examination of the financial statements of the Gary Manufacturing Company for the year ended December 31, 19X0, you find that at January 1, 19X0, the company has installed the following punched-card processing system for recording raw material purchases:1. Vendors' invoices are sent
William Green recently acquired the financial controlling interest of Importers and Wholesalers, Inc., importers and distributors of cutlery. In his review of the duties of employees, Mr. Green became aware of loose practices in the signing of checks and the operation of the petty cash fund.You
Kent County Grain and Milling Company decided to stimulate the sale of its flour by including a coupon, redeemable for fifty cents ( \(50 q\) ), in every 25 - and 50 -pound sack of flour produced subsequent to October 1, 19X0. The company contemplates that 150,000 coupons will be in the hands of
Anthony, CPA, prepared the flowchart on page 349 which portrays the raw materials purchasing function of one of Anthony's clients, a medium-sized manufacturing company, from the preparation of initial documents through the vouching of invoices for payment in accounts payable. The flowchart was a
You have completed an audit of activities within the Purchasing Department of Zale Company. The department employs thirty buyers, seven supervisors, a manager, and clerical personnel. Purchases total about \(\$ 500\) million a year. Your audit disclosed the following conditions:1. The company has
What are the functions in (a) executing, (b) recording, and (c) custody of payroll transactions?
Briefly explain the materiality and audit risk associated with payroll transactions.
Indicate the specific internal accounting control objectives in (a) hiring, (b) preparing the payroll, and (c) paying the payroll.
What authorizations are required for payroll transactions? For each authorization identify the department or individual who should make the authorization.
Explain the primary activities of the (a) timekeeping and (b) payroll departments.
Distinguish between a payroll summary and a payroll register.
Diagram the flow of payroll data within (a) the timekeeping and (b) the payroll departments.
Diagram the flow of payroll data within general accounting.
What control procedures should be prescribed and followed for proper custody over assets pertaining to payroll transactions?
Explain the applicability of independent internal verification to payroll transactions.
Describe the steps of the audit program for testing payroll transactions in a manual system that uses a random sample.
What controls should be observed in witnessing the distribution of a payroll?
What sampling units may be used in attribute sampling of payroll transactions?
Explain the nature of the production cycle.
Identify the departments reporting to the vice-president of production?
Enumerate the functions related to the production cycle.
Indicate the specific accounting control objectives for each function in the execution of manufacturing transactions.
Indicate the purposes served by production orders in the production cycle.
What purposes are served by accounting records and procedures in the production cycle?
The following questions are included in Figure 10-3:1. Are hirings, pay rates, payroll deductions, and terminations a:t thorized in writing by the personnel department?2. Are payroll deduction authorizations signed by employees and filed in personnel records?3. Are time clocks and clock cards used
The following controi procedures over payroll transactions are prescribed by the Hahn Company:1. Operating department requisition for each hiring.2. Personnel department authorizations for termination of employment.3. Employee authorizations for payroll deductions.4. Supervised clock card
Assume the following exceptions to prescribed control procedures over payroll transactions occurred in the Haze Company:1. A fictitious employee is on payroll.2. A fictitious pay rate is used in calculating an employee's gross earnings.3. An employee is paid for unauthorized overtime hours.4. A
In the Sumet Company, two employees were terminated for falsifying their time records. The two employees had altered overtime hours on their time cards after their supervisors had approved the hours actually worked.Several years ago, the company discontinued the use of time clocks. Since then, the
The Kowal Manufacturing Company employs about fifty production workers and has the following payroll procedures.The factory foreman interviews applicants and on the basis of the interview either hires or rejects the applicants. When the applicant is hired he prepares a W-4 form (Employee's
In connection with his examination of the financial statements of the Olympia Manufacturing Company, a CPA is reviewing procedures for accumulating direct labor hours. He learns that all production is by job order and that all employees are paid hourly wages, with time-and-one-half for overtime
The Generous Loan Company has 100 branch loan offices. Each office has a manager and four or five subordinates who are employed by the manager. Branch managers prepare the weekly payroll, including their own salaries, and pay employees from cash on hand. The employee signs the payroll sheet
You are engaged in auditing the financial statements of Henry Brown, a large independent contractor. All employees are paid in cash because Brown believes this arrangement reduces clerical expenses and is preferred by his employees.During the audit, you find in the petty cash fund approximately
The Vane Corporation is a manufacturing concern which has been in business for the past eighteen years. During this period, the company has grown from a very small family-owned operation to a medium-sized manufacturing concern with several departments. Despite this growth, a substantial number of
The prescribed control procedures over manufacturing transactions in the Adrian Company are as follows:1. Bills of materials for each production order.2. Authorized production order for each job or process.3. Approved materials requisition slips.4. Approved time tickets.5. Quality control
The following errors or irregularities could occur in the executing and recurding of manufacturing transactions and in the safeguarding of work in process in the Leslie Company:1. Goods of inferior quality may be produced.2. Materials may be released from the storeroom without proper
You have been engaged by the management of Alden, Inc. to review its internal control over the purchase, receipt, storage, and issue of raw materials. You have prepared the following comments which describe Alden's procedures:1. Raw materials, which consist maninly of high-cost electronic
Identify the three techniques of estimating dollar values.
What are the two risks an auditor faces in using estimation sampling for variables?
Explain the meaning of the following terms in variables sampling: (a) precision, (b) reliability, and (c) variability.
Distinguish among the terms (a) normal distribution, (b) population standard deviation, (c) sample standard deviation, and (d) distribution of the sample means.
a. What is meant by the term standard error of the mean?b. What is the formula for computing the standard error?c. What alternative terms may be used for this term?
How should the objective of a variable sampling plan be stated in a two-tail test?
How does the auditor control the risk of rejecting a fairly stated book value?
How may the auditor estimate the population standard deviation?
Give the formula for calculating sample size. Define each part of the formula.
What steps are involved in drawing the sample and computing the sample mean and sample standard deviation?
Give the formula and accompanying explanation of terms for computing achieved precision.
Define alpha and beta risks.
What factors should be considered in setting alpha risk? How is this risk controlled?
What factors are relevant in setting beta risk?
What is ultimate risk? Give and explain the formula for ultimate risk.
What is combined reliability?
a. What factors are relevant in controlling beta risk?b. Indicate the formula for controlling this risk.
a. What alternatives exist when a book value is unacceptable?b. What factors affect the amount of any proposed adjustment?
a. Distinguish between ratio and difference estimation.b. What conditions are necessary to use these techniques?
Enumerate the steps in using (a) ratio and (b) difference estimation.
The following data apply to each of four different populations:Required:a. Compute the planned beta risk for each population.b. Calculate the precision to be used in determining sample size for each population, assuming a \(5 \%\) alpha risk in each case. Effectiveness of Popu- lation Combined
Four different populations and related statistical objectives are:Required:a. Compute the sample size for each population.b. Assuming the standard deviation of the sample values is 20 percent lower than the estimated standard deviation (rounded to the nearest dollar), compute the average achieved
Data pertaining to four populations are presented below:Required: For each population,a. Compute the new precision \(\left(A^{\prime \prime}\right)\) and the precision interval.b. Indicate whether the statistical evidence supports fair statement. Book value Materiality Planned precision Audited
Showing 300 - 400
of 1793
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Last
Step by Step Answers
Get 50% OFF
Claim Now
