Ch10 - EOC # 14 Chapter 10 10-7 The analytical procedures...

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Chapter 10 10-7 The analytical procedures that can be used to test revenue-related accounts and the possible misstatements that can be detected by each analytical procedure are (also see Table 10-9): Analytical Procedure Possible Misstatement Detected Revenue: Comparison of gross profit percentage by product line with previous years' and/or industry data. Comparison of reported revenue to budgeted revenue. Unrecorded (understated) revenue Fictitious (overstated) revenue Changes in pricing policies Product-pricing problems Accounts Receivable, Allowance for Uncollectible Accounts, and Bad-Debt Expense: Comparison of receivables turnover and days outstanding in accounts receivable to previous years' and/or industry data. Comparison of aging categories on aged trial balance of accounts receivable to previous years. Under- or overstatement of allowance for uncollectible accounts and bad-debt expense Comparison of bad-debt expense as a percentage of revenue to previous years' and/or industry data. Comparison of the allowance for uncollectible accounts as a percentage of accounts receivable or credit sales to previous years' and/or industry data. Examination of large customer accounts individually and comparison to previous year. Sales Returns and Allowances and Sales
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This note was uploaded on 11/02/2011 for the course ACCOUNTING ACC511 taught by Professor Awe during the Spring '11 term at Prince George's Community College, Largo.

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Ch10 - EOC # 14 Chapter 10 10-7 The analytical procedures...

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