Ch6 Solutions - 1Chapter 6 - Audit Responsibilities and...

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1 Chapter 6 - Audit Responsibilities and Objectives Multiple Choice Questions From CPA Examinations 6-18 a. (2) b. (2) c. (1) 6-19 a. (1) b. (2) 6-20 a. (3) b. (4) c. (4)
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6-24 CLASS OF TRANSACTIONS a. FINANCIAL STATEMENT BALANCE b. TITLE OF JOURNAL c. TRANSACTION CYCLE PURCHASE RETURNS RENTAL REVENUE CHARGE-OFF OF UNCOLLECTIBLE ACCOUNTS Purchase returns Rent revenue Bad debts Acquisitions Journal Revenue Journal Adjustments Journal Payment Collection Collection ACQUISITION OF GOODS AND SERVICES Repair and maintenance Acquisitions Journal Acquisition RENTAL ALLOWANCES ADJUSTING ENTRIES (FOR PAYROLL) Rental allowances Accrued payroll Adjustments Journal Adjustments Journal Collection Personnel PAYROLL PAYMENTS Sales salaries Payroll Journal Personnel CASH DISBURSEMENTS CASH RECEIPTS Accounts payable Accounts receivable Cash Disburse- ments Journal Cash Receipts Journal Acquisition Collection d. Rental revenue is likely to be recorded in the cash receipts journal at the time the cash is received from renters. It is therefore likely to be recorded as a debit to cash receipts and a credit to rental revenue. The journal will be summarized monthly and posted to the general ledger. There will be required adjusting entries for unearned rent and for rent receivable. A record will be kept of each renter and a determination made whether rent is unpaid or unearned at the end of each accounting period. The entries that are likely to be made in the adjustments journal are posted to the general ledger. Then the financial statements are prepared from the adjusted general ledger. Reversing entries may be used to eliminate the adjusting entries.
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6-25 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
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Ch6 Solutions - 1Chapter 6 - Audit Responsibilities and...

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