Audit hw 2 - Neal Patel Homework 2 5/23/11 Problem 7-32 1....

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Neal Patel Homework 2 5/23/11 Problem 7-32 1. Confirmation 2. Observation 3. Physical examination 4. Confirmation 5. Recalculation 6. Confirmation 7. Documentation 8. Analytical procedures 9. Inquiries 10. Documentation 11. Observation 12. RePerformance 13. Analytical Procedures 14. Documentation 15. Confirmation 16. Analytical Procedures 17. Reperformance 18. Recalculation 19. Reperformance 20. Confirmation Problem 7-37 A. Independence of the provider- must be outside the client organization. Effectiveness of internal control – originated inside the organization Auditor’s direct knowledge- see, observe is better than someone else observing Qualifications of Provider- has to know the subject Degree of objectivity- calculations Timeliness- recent or if it matters B. 1. Second 2. First 3. Second 4. First 5. First 6. Second 7. Second 8. Second 9. Second
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C. 1. Confirmation 2. Physical 3. Documentation 4. Physical 5. Confirmation 6. Analytical 7. Documentation 8. Physical 9. Physical Problem 8-24 Short-term debt paying ability - Current ratio and quick ratio Liquidity ratios -Accounts receivable turnover -Days to collect receivables -Inventory turnover -Days to sell inventory Ability to meet long-term debt obligations -Debt to equity ratio and times interest earned ratio Profitability ratios - EPS - Gross profit percentage -Profit margin Problem 8-36 A. Their earnings per share have been at a consistent price. Also that the return on equity is less every year which can mean they took on more debt. They also have more inventories on hand each year. There current ratio also dropped which could mean that the company is struggling or in a slump. B. How well their competitors are doing and how the industry averages
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This note was uploaded on 07/29/2011 for the course ACCT 4210 taught by Professor Burkette during the Summer '11 term at East Tennessee State University.

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Audit hw 2 - Neal Patel Homework 2 5/23/11 Problem 7-32 1....

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