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ch 10 outline - Outlines Chapter 10-1 Chapter 10 Revenue...

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Outlines Chapter 10- 1 Chapter 10 Revenue Recognition and Cash 1. Illustrations _ Revenue Cycle 2. When should revenues be recorded? a. Overall rule—Title passage FOB shipping point—title passes when shipped. FOB destination—title passes when good received by purchaser b. More specific rules from the SEC--Staff Accounting Bulletin #104 3. Substantive procedures a. Cash 1. Overall--Types of Accounts (a) General—checking account (b) Savings—seldom used by companies (c) Imprest—Petty Cash, Payroll (d) Compensating balance 2. Fraud involving cash—generally misappropriation (a) Theft of cash before it has been properly recorded (skimming)—no journal entry made. Person literally steals cash (b) Theft of cash that has been properly recorded. (c) Theft of cash through inappropriate recording (ordinarily credit cash [that’s OK] , and debit something other than Theft Expense). Person converts check to own use. The following are specific tools for cash (bank confirmations, Bank cutoff statements, bank transfer schedules) 3. Bank confirmations a. The confirmation (a standard form) is sent out to the bank with the accounts listed, and perhaps the balances listed.
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Outlines Chapter 10- 2 b. Information obtained Cash accounts in bank Loans payable amounts Periodically may discover a cash or loan account the client has not disclosed to auditor.(if bank replies about
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