These questions are from Brony's Bike Module-1

Prepare a complete organization chart for Brony's Bikes based on the narrative contained in Brony's Bikes Intro and Module 1, the section titled "Brony's Bikes Personnel" and identify the major strengths and weaknesses in Brony's Bikes' organizational structure.

b). Refer to your self-prepared organization chart and the Partially Completed Figure BB.A: Brony's Bikes Organization Chart. Compare your organization chart to the Partially Completed Figure BB.A: Brony's Bikes Organization Chart. Certain boxes in Figure BB.A are blank except for a question reference number 1-8. Each box should contain either the last name of a person or the one, two, or three word function that should appear in the blank box.

1.1. From the dropdown menu select the correct last name or the function for blank box #1 on the organization chart.

Select

product manager

accounts payable

transaction processing

chief accountant

factory supervisors

sales staff

vice president marketing

Item 1

1.2. From the dropdown menu select the correct last name or the function for blank box #2 on the organization chart.

Select

Rust

McAfee

Fenning

Johnstone

Lawton

Groth

Grambling

Item 2

1.3. From the dropdown menu select the correct last name or the function for blank box #3 on the organization chart.

Select

product manager

accounts payable

data entry

transaction processing

chief accountant

general ledger

factory supervisors

sales staff

Item 3

1.4. From the dropdown menu select the correct last name or the function for blank box #4 on the organization chart.

Select

accounts payable

data entry

transaction processing

chief accountant

general ledger

factory supervisors

sales staff

Item 4

1.5. From the dropdown menu select the correct last name or the function for blank box #5 on the organization chart.

Select

Rust

McAfee

Fenning

Johnstone

Lawton

Groth

Grambling

Item 5

1.6. From the dropdown menu select the correct last name or the function for blank box #6 on the organization chart.

Select

product manager

accounts payable

transaction processing

chief accountant

general ledger

factory supervisors

sales staff

Item 6

1.7. From the dropdown menu select the correct last name or the function for blank box #7 on the organization chart.

Select

product manager

accounts payable

data entry

transaction processing

chief accountant

general ledger

Item 7

1.8. From the dropdown menu select the correct last name or the function for blank box #8 on the organization chart.

Select

product manager

accounts payable

data entry

transaction processing

chief accountant

general ledger

factory supervisors

sales staff

vice president marketing

Item 8

1.9. Based on the organization chart you prepared, the internal audit function is independent of Brony's Bike's management.

Select

True

False

Item 9

1.10. With respect to the Controller, Gerald Groth, is Groth's previous employment with Vaughn & Co. a strength or weakness in the control environment over financial reporting of Brony's Bikes?

Select

strength

strength and weakness

weakness

neither strength nor weakness

Item 10

1.11. AU 315 Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement specifies that the auditor should, as part of understanding the entity, understand the organizational structure of the entity. State the specific citation within AU 315 that imposes this requirement on the auditor. Use the following form to enter your answer AU 315.paragraph number and any sub number.

Did WP A.4 all categories of inventory turnover increase or decrease?

Select

increase

decrease

Item 23

2. Did WP A.4 all inventory quantities increase or decrease?

Select

increase

decrease

Item 24

3. Did WP A.4 a majority of unit costs increase or decrease?

Select

increase

decrease

Item 25

4. Was the sales variance favorable or unfavorable? (Refer to WP A.5.)

Select

favorable

unfavorable

Item 26

5. State in millions the amount of sales variance (Refer to WP A.5.)

6. Was the gross profit rate variance favorable or unfavorable? (Refer to WP A.5.)

Select

favorable

unfavorable

Item 28

7. Is the gross profit rate variance consistent with the change in cost of goods sold rate between 20X8 and 20X9? (Refer to WP A.5.)

Select

yes

no

Item 29

8. Refer to WP A.5 schedule 2. This workpaper shows a large gain on disposal of plant assets. In the journal entry to record a gain on disposal of plant assets, proceeds is debited to which account?

Select

Cash

Prepaid Expenses

Inventories

Deferred income tax assets

Item 30

9. Refer to WP A.5 schedule 2. This workpaper shows a large gain on disposal of plant assets. In the journal entry to record a gain on disposal of plant assets, is accumulated depreciation debited or credited when a plant asset is disposed of?

Select

Debited

Credited

Item 31

10. Refer to WP A.5 schedule 2. This workpaper shows a large gain on disposal of plant assets. In the journal entry to record a gain on disposal of plant assets, if the disposal entry was incorrectly recorded in two journal entry lines as debit cash and credit gain on disposal would the gain be over or understated by this incorrect entry?

Select

overstated

understated

Item 32

5. Open the Excel file 20X9 Analytic Procedures WP A.1-7. Examine WP A.6 carefully. WP A.6 contains the following schedules:

Comparative percentage balance sheets for 20X9 and 20X8

Comparative ratios: 20X9 vs. 20X8

Industry ratios for 20X8

After reviewing the documentation, perform the following:

a. Using WP A.6 complete a common sized balance sheet for 20X9. You may be able to copy the 20X8 balance sheet formulas with some editing into the 20X9 column.

b. Using WP A.6 calculate the following ratios for 20X9:

• Current ratio
• Quick ratio
• Times interest earned
• Return on stockholders' equity

c. Compare these four ratios calculated in part b with industry averages (these are located next to the 20X8 Brony's Bikes ratios in WP A.6). Are there any significant disparities between Brony's Bikes' ratios and the industry averages?

d. Wheels 4U Company is a competitor in the bicycle industry. Open WP A.7, which contains 20X9 Wheels 4U financial statements. Excel file named "20X9 Wheels 4U." Using the data contained in that report, perform the following:

1). Compare Wheels 4U's common-sized income statements with Brony's Bikes' common-sized income statements for the same years.

2). Go to Wheels 4U's comparative common-sized balance sheets and income statements and calculate the same ratios that you calculated for Brony's Bikes in (b) above

3). On the basis of (1) and (2) above, what strengths and weaknesses of Brony's Bikes relative to Wheels 4U can you identify?

e. Select the correct answer from the following:

1. Was Brony's Bikes gross profit higher or lower than Wheels 4U?

Select

higher

lower

Item 33

2. Is your answer to the above as you expected?

Select

yes

no

Item 34

3. Was Brony's Bikes net income higher or lower than Wheels 4U?

Select

higher

lower

Item 35

4. Is your answer to the above as you expected?

Select

yes

no

Item 36

5. Was Brony's Bikes current ratio higher or lower than Wheels 4U?

Select

higher

lower

Item 37

6. Was Brony's Bikes Net Income before Taxes and Extraordinary Items higher or lower than Wheels 4U?

Select

higher

lower

Item 38

7. Was Brony's Bikes quick ratio higher or lower than Wheels 4U?

Select

higher

lower

Item 39

This information relates to section 5e questions 8-16. AU 315 requires the use of analytic procedures in performing risk assessment before the audit begins and near the end of the audit. See separate Exhibit files BB1-6. 7-11, and 12-18.

8. Are analytic procedure results likely to change between the preliminary risk assessment and the time the audit is completed?

Select

yes

no

Item 40

9. Based on WP A.1-5, are the analytics you performed on Brony's Bikes' financial statements preliminary or final?

Select

preliminary

final

Item 41

10. Based on the information in WP A.7, are the analytics you performed on Wheels 4U's financial statements preliminary or final?

Select

preliminary

final

Item 42

11. Should the auditor presume that fraud exists in Brony's Bikes because the results of your analytics changed from the preliminary to the final figures?

Select

yes

no

Item 43

12. The purpose of performing analytical procedures during the planning phase of the audit is to identify Select

abnormal conditions

material misstatements

errors

control risks

Item 44

 . In response to these procedures the auditor may conduct further investigations into what was identified. For this reason, use of Select

analytical procedures

time budgets

student interns

generalized audit software packages

Item 45

 are critical to effective audit risk analysis.

13. The purpose of examining budgets and performance reports as part of the application of analytical procedures is to identify Select

significant variations

favorable variations

unfavorable variations

incompetent client employees

Item 46

 that could be indicative of errors or irregularities. A material favorable budget variation for repairs and maintenance expense, for example, could lead the auditor to suspect Select

misclassification of ordinary repairs as capital expenditures

the client has high quality fixed assets

the budget is incorrect

the client had no ordinary repairs

Item 47

 . After generating possible reasons for the unexpected differences (i.e., developing hypotheses) the auditor should pose inquiries to management to explain possible causes. The auditor may then decide to Select

modify

replace

discontinue using

reperform

Item 48

 the acquisition cycle audit program. The purpose would be to increase the extent of testing of additions to property, plant, and equipment.

Answer rating: 100% (QA)

10 Refer to WP A5 schedule 2 This workpaper shows a large gain on disposal of plant assets In the journal entry to record a gain on disposal of plant assets if the disposal entry was incorrectly recor... View the full answer