You are an auditor. Please identify 3 unaudited financial statement items for 2023 that you consider to have the highest risk of material misstatement. Explain in detail why they are higher risk, CONSOLIDATED STATEMENTS OF INCOME (in USD)2022(audited)278,481,969Net salesCost of salesGross marginSelling and shipping expensesGeneral and administrative expensesIncome from operationsInterest - netEarnings before income taxesIncome taxesNet earningsASSETSCashAccounts receivable, grossAllowance for bad debtInventoriesPrepaid expenses and other current assetsDeferred income taxesnetOTHER ASSETSTOTAL ASSETSTOTAL CURRENT ASSETSPROPERTY, PLANT AND EQUIPMENT,CONSOLIDATED BALANCE SHEETS (in USD)2022(audited)LIABILITIESAccounts payableCurrent portion of capital leasesMortgage payable - currentIncome taxes payableAccrued expenses and other currentliabilitiesTOTAL CURRENT LIABILITIESDEFERRED INCOME TAXESREVOLVING CREDIT LOANSUBORDINATED DEBTLONG-TERM CAPITAL LEASESMORTGAGE PAYABLEOTHER LIABILITIESTOTAL LIABILITIESSHAREHOLDERS' EQUITYCommon stockAdditional paid-in capitalRetained earningsTreasury stockTOTAL SHAREHOLDERS' EQUITY2021(audited)176,281,035(146,351,545) (232,932,864)29,929,49045,549,105(14,045,503) (21,892,885)(4,421,124)(6,913,721)(18,466,627) (28,806,606)TOTAL LIABILITIES AND EQUITY11,462,863(4,328,838)7,134,025(2,926,000)4,208,0252021(audited)358,214950,12136,577,832 63,097,198(570,290)(770,290)35,918,72051,630,343596,023755,067228,00089,00073,108,499115,751,4397,085,9487,181,20816,742,499(5,920,618)10,821,881(4,437,000)6,384,8811,804,5282,027,06981,998,975 124,959,71612,123,099550,76149,2201,710,0002,409,8391,715,327868,46861,488,31313,989,065609,69053,57416,842,9191,120,00030,441,599 65,887,00010,500,000 10,500,0001,105,637814,9201,539,0003,743,91719,935,246749,00098,991,80346,55511,365,20715,998,7712023(unaudited)420,363,14281,998,975 124,959,716(355,409,651)64,953,491(31,360,045)(8,770,662)(40,130,707)24,822,784(10,033,104)14,789,680(5,916,000)8,873,6802023(unaudited)609,527102,652,554(770,290)74,514,662985,627308,000178,300,08010,560,5131,551,696190,412,28926,434,121510,15557,7852,587,7594,720,33545,98858,67911,247,15419,444,3199,613,89024,872,451(396,370) (1,442,620) (1,547,620)20,510,662 25,967,91342,827,82934,310,155780,90099,265,26210,500,000595,481757,6611,375,001147,584,460190,412,289 CONSOLIDATED STATEMENTS OF CASH FLOWS (in USD)20212022(audited)(audited)4,208,025CASH FLOWS FROM OPERATING ACTIVITIES:Net earningsAdjustments:Depreciation and amortizationProvision for doubtful accountsDeferred income tax provision (recovery)Changes in operating assets and liabilities:Accounts receivableInventoriesPrepaid expenses and other current assetsPrepaid income taxesOther assetsAccounts payableIncome taxes payableAccrued expenses and other current liabilitiesOther liabilityNet cash used in operating activitiesCASH FLOWS FROM INVESTING ACTIVITIES:Payments for purchase of property and equipmentNet cash used in investing activitiesCASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from revolving credit loanRepayment of revolving credit loanPrincipal payments of mortgagePrincipal payments of capital leasesProceeds from public offering (net)Proceeds from exercise of stock optionsAcquisition of treasury stockNet cash provided by financing activitiesNET INCREASE (DECREASE) IN CASHCASH, beginning of yearCASH, end of year876,8751,431,340100,000200,000122,000 (232,000)6,384,8811,710,000 (171,000)944,6191,334,078(187,100)(12,867,732) (26,519,366) (39,555,356)(7,406,790) (15,711,623) (22,884,319)92,094 (159,044) (230,560)235,348(371,770) (1,072,541)4,653,677 1,865,966(7,703,654) (32,649,309)4,167(396,370)8,239,248(131,676)489,890358,2142023(unaudited)8,873,6801,330,042(667,270) (676,600) (4,084,347)(667,270) (676,600) (4,084,347)118,620(1,046,250)33,917,81654,302,599 85,920,000 144,934,999(45,123,000) (50,474,599) (111,556,737)(47,182)(49,194)(53,048)(500,966)(550,761)(609,691)591,907358,214950,121(149,627)12,445,0561,048,759976,4181,375,001(36,958,006)7,974,161117,075(105,000)40,701,759(340,594)950,121609,527You are an auditor for this company. Please Identify 3 high risk accounts and explain why they're risky.

Answered: ou are an auditor. Please identify 3…

ou are an auditor. Please identify 3 unaudited financial statement items for 2023 that you consider to have the highest risk of material misstatement. Explain in detail why they are higher risk,

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.23E: Unusual income statement items Assume that the amount of each of the following items is material to...

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