Homework_2_Key - Chapter 6 Audit Responsibilities and...

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Chapter 6 Audit Responsibilities and Objectives ± Multiple Choice Questions From CPA Examinations 6-19 a. (2) b. (2) c. (1) 6-20 a. (1) b. (2) c. (1) ± Discussion Questions And Problems 6-21 a. The purpose of the first part of the report of management is for management to state its responsibilities for internal control over financial reporting. The second part of the report states management’s responsibility for the fair presentation of the financial statements. b. The auditor’s responsibility is to express an opinion on the fairness of the presentation of the financial statements and an opinion on the effectiveness of internal control over financial reporting.
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6-24 a. CYCLE BALANCE SHEET ACCOUNTS INCOME STATEMENT ACCOUNTS SALES AND COLLECTION Accounts receivable Cash Notes receivable—trade Allowance for doubtful accounts Interest receivable Sales Bad debt expense Interest income ACQUISITION AND PAYMENT Income tax payable Accounts payable Unexpired insurance Furniture and equipment Cash Accumulated depreciation of furniture and equipment Inventory Property tax payable Income tax expense Advertising expense Travel expense Purchases Property tax expense Depreciation expense— furniture and equipment Telephone and fax expense Insurance expense Rent expense PAYROLL AND PERSONNEL Cash Accrued sales salaries Sales salaries expense Salaries, office and general INVENTORY AND WAREHOUSING Inventory Purchases CAPITAL ACQUISITION AND REPAYMENT Bonds payable Common stock Cash Notes payable Retained earnings Prepaid interest expense Interest expense b. The general ledger accounts are not likely to differ much between a retail and a wholesale company unless there are departments for which there are various categories. There would be large differences for a hospital or governmental unit. A governmental unit would use
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Homework_2_Key - Chapter 6 Audit Responsibilities and...

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