Auditing Homework - Chapter 16-17

Auditing Homework - Chapter 16-17 - Auditing Chapter 16...

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Auditing Chapter 16 Homework 16-1 Identify three revenue accounts that are verified during the audit of balance sheet accounts; also, identify the related balance sheet accounts? Balance Sheet Item Revenue Accounts Receivable Sales Notes Receivable Interest Securities and other investments interest, dividends, gains on sales, share of investee Income PP&E Rent, gains on sales Intangible Assets Royalties 16-2 How are analytical procedures used in the verification of revenue? 1) comparison of years revenue to last year 2) compare month-by month review in the current year 3) compare monthly revenue with last years 4) compare budget to actual expenses 5) compare revenue to sales or production. 16-3 Identify three items often misclassified as miscellaneous revenue. 1) collections on previously written-off accounts or notes receivable. 2) Write-offs of old outstanding checks or unclaimed wages. In many states, unclaimed properties revert to the state after statutory periods. 3) Proceeds from sales of scrap which generally should be applied to goods sold. 4) Rebates or refunds of insurance premiums which should be offset against related expense or unexpired insurance. 5) Proceeds from sales of plant assets where proceeds should be accounted for in the determination of the gain or loss of the asset sold. 16-4 Identify three expense accounts that are verified during the audit of balance sheet accounts; also identify the related balance sheet accounts. Balance Sheet Items Expense Accounts & notes receivable uncollected accounts & notes expense Inventories purchases, cost of good sold and payroll PP&E deprec., repairs & maintenance, depletion Intangible assets amortization Accrued Liabilities commissions, fees, bonus, product warranty Interest-bearing assets interest
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16-14 What is the purpose of analytical procedures performed as a part of the overall review? Assists the auditors in assessing the validity of the conclusions reached, including the opinion to be issued. The final review may identify areas that need to be examined further as well as provide a consideration of the adequacy of data gathered in response to unusual or unexpected relationships identified during the audit. 16-15 List the audit procedures that must be completed near the date of the audit report.
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