Chapter 3 (H.W. Ansers)

Chapter 3 (H.W. Ansers) - 3.45 Errors and Frauds Note to my...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
3.45 Errors and Frauds Note to my dear hard-working students : You all can probably think of many examples for each of the cases. This solution does not purport to be exhaustive. a. Overstate an asset, understate another asset Hold cash receipts journal open past the year end (cutoff date) and record additional cash receipts occurring after year end, reducing accounts receivable. b. Overstate an asset, overstate stockholder equity Record appraised value of property, plant, and equipment, with a corresponding credit to a capital account. c. Overstate an asset, overstate revenue (1) Hold the sales journal open past the year end (cutoff date) and record too much sales revenue and cash or accounts receivable. (2) Record fictitious sales and accounts receivable. d. Overstate an asset, understate an expense (1) Capitalize maintenance expense, making the asset amount higher than warranted and the expense amount lower. Subsequent depreciation would reverse this misstatement, but the first effect would be to overstate the asset and understate the expense. (2) Record an expenditure as a prepaid expense instead of a current expense. e. Overstate a liability, overstate an expense Accrue too much liability for expenses not yet paid, such as wages, rent, interest, product warranties, etc. f. Understate an asset, overstate an expense (1) Calculate too much depreciation expense on assets. (2) Classify expenditures as current expenses when they should be classified as prepaid expenses. g.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Chapter 3 (H.W. Ansers) - 3.45 Errors and Frauds Note to my...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online