Smith Company, a CPA firm, conducted an audit for the 2020 financial statements of Sara Corporation. The auditors made a comparison of current-year amounts with prior-year amounts. This is an example of the following audit procedure: * O Confirmation O Observation OInquiry Analytical procedures None of the above

Smith Company, a CPA firm, conducted an audit for the 2020 financial statements of Sara Corporation. The auditors made a comparison of current-year amounts with prior-year amounts. This is an example of the following audit procedure: * O Confirmation O Observation OInquiry Analytical procedures None of the above

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

See similar textbooks

Similar questions

Sarah O’Hann enjoyed taking her first auditing course as part of herundergraduate accounting program. While at home during her semester break, she andher father discussed the class and it was clear that he didn’t really understand the natureof the audit process as he asked the following questions:a. What is the main objective of the audit of an entity’s financial statements?b. The audit represents the CPA firm’s guarantee about the accuracy of the financialstatements, right?
4. If a shareholder wanted to know how money flowed into and out of the company, which financial statement would the shareholder use? A. income statement B. statement of cash flows C. statement of retained earnings D. balance sheet 5. The debit side of an account A. is the left side of the account B. can be either side of the account depending on how the accountant set up the system C. is the right side of the account D. depends on whether the account is an asset, liability, or stockholders' equity 6. The process of initially recording a business transaction is called A. journalizing B. correcting C. balancing D. posting
Queenstar Company manufactures smartphones and tablets. Its main customers are retailers who then sell to the general public. The company’s manufacturing is spread across five sits and goods are stored in its nine warehouses located across the country. You are an audit supervisor of Akof & Co and in preparation for the forthcoming audit for the year ending 30 June 20X7, you are reviewing the following notes your audit manager has provided you with in relation to the company’s internal controls. Queenstar Company has a small internal audit (IA) department. During the year, the IA started a programme of physically verifying the company’s assets and comparing the results to the non-current assets register, as this type of reconciliation had not occurred for some time. To date only 15% of assets have had their existence confirmed as IA has experienced significant staff shortages and several members of the current IA team are new to Queenstar Company. During the year, Queenstar Company…
Which amortization method should be used for intangibles that are amortized? a. a method based on the expected pattern of benefits to be produced by the assetb. a method based on an annual review for impairmentc. the straight-line method; all others are inappropriated. any method is appropriate
Registered external auditors must have the knowledge and skills to perform their function and should be honest. There are also a number of other attributes or fundamental principles of ethical behavior, which all auditors should have and these are identified in professional external auditing standards issued by IRBA as follows:· integrity· objectivity· professional competence and due care· confidentiality· professional behaviorThe following actions taken by registered external auditors are example of non-compliance with one or more principles listed above; Question 2 Because the budget for the audit of Afrimat Ltd would be exceeded and because he felt that, he had acompetent audit team, A Smith the registered auditor in charge of the audit decided not to spend thenecessary time on reviewing the work papers of the audit team.
The return of a positive confirmation of accounts receivable without an exceptionattests to the(1) collectibility of the receivable balance.(2) accuracy of the allowance for uncollectible accounts.(3) accuracy of the aging of accounts receivable.(4) accuracy of the receivable balance.
List the factors that should affect the auditor’s decision whetherto analyze an account balance. Considering these factors, list four expense accounts thatare commonly analyzed in audits.
The following questions deal with discovering fraud in auditingyear-end cash. Choose the best response.a. The auditor should control and verify all liquid assets simultaneously to prevent(1) unrecorded disbursements.(2) conversion of assets to conceal a shortage.(3) unauthorized disbursements.(4) embezzlement
1 a) Which of the following statements is correct? A. Firms that use large amounts of operating leverage will find that their EBIT will be more variable than firms that do not. B. If a 20% change in sales results in a 10% change in EBIT, we would say that the degree of operating leverage (DOL) is 2. C. The use of higher debt financing concentrates the firm’s business risk onto more shareholders, making the stock less risky. D. All the answers are correct. E. If a firm’s operating costs are all variable, then any variation in sales will be less than the variation in EBIT. ------------------------------------------------------------------------------------------------------------------------------------ 1 b)Which of the following statements is incorrect? A. We would say that a firm with the high variability of EBIT has high levels of business risk. B. If a firm is selling widgets for $30 per unit, while variable costs are $20 per unit and fixed costs total $100,000, then the firm must…
aren Johnson, CFO for Raucous Roasters (RR), a specialty coffee manufacturer, is rethinking her company’s working capital policy considering a recent scare she faced when RR’s corporate banker, citing a nationwide credit crunch, balked at renewing RR’s line of credit. Had the line of credit not been renewed, RR would not have been able to make payroll, potentially forcing the company out of business. Although the line of credit was ultimately renewed, the scare has forced Johnson to examine carefully each component of RR’s working capital to make sure it is needed, with the goal of determining whether the line of credit can be eliminated entirely. In addition to (possibly) freeing RR from the need for a line of credit, Johnson is well aware that reducing working capital can also add value to a company by improving its EVA (Economic Value Added). In her corporate finance course Johnson learned that EVA is calculated by taking net operating profit after taxes (NOPAT) and then subtracting…
24. When opening a subsidiary in a foreign country, the business may be concerned with expropriation of assets belonging to foreign companies by the local government. This is known as Group of answer choices Political risk inflation risk financial institution risk Interest rate risk 25 Which of the following loss exposures can be managed by good treasury managment techniques? Group of answer choices Sales decreases deterioration of investment principle Excessive product recalls PCAOB violations
Explain the circumstances under which an auditor should performaudit tests primarily designed to uncover fraud in the payroll and personnel cycle. Listthree audit procedures that are primarily for the detection of fraud and state the type offraud the procedure is meant to uncover.