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BUS051 HW13

BUS051 HW13 - Sharon Ng Professor Henderson BUS051 18 July...

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Sharon Ng Professor Henderson BUS051 18 July 2011 Lesson 13 Homework Mary Ann has always loved to cook and is interested in starting a catering business. Being aware of the failure rate of new businesses, she is considering buying an existing catering business that is up for sale. The current owners claim that the business is highly profitable, but Mary Ann has her doubts. She wonders why the owners would be so interested in selling the business if it was such a money maker. Furthermore, the price that they are asking seems high to Mary Ann. Without any formal training in accounting, Mary Ann asks a friend, Rolanda, for advice. 1. Rolanda suggests that Mary Ann hire an accountant to audit the financial statements. Mary Ann isn't sure what an audit involves. Explain auditing. Answer: An audit examines a company’s accounting system to determine whether its financial reports reliably represent its operations. 2. The auditor's report has come back and Mary Ann is reviewing the financial statements. What
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