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GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
9th Edition
ISBN: 9781260089042
Author: J. David Spiceland
Publisher: McGraw-Hill Education
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Question
Chapter 13, Problem 13.8BYP
To determine
1 and 2
Contingent liability is one form of liability that arises based on a particular outcome of a specific event. They are possible obligation that might arise or might not arise based on the future events. It is otherwise called as probable liability or eventual liability. Following are examples of contingencies:
- Income tax disputes
- Discounted notes receivable
- Lawsuits
- Debt guarantees
- Failure to follow government regulations
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
- Credit all increase in liabilities, revenues, and stockholders’ equities, and all decrease in assets and expenses.
To prepare: Appropriate reporting of each situation and memo to audit manager explaining reasons for each situations.
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Management fraud (e.g., fraudulent financial reporting) is a relatively rare event. However, when it does occur, the frauds
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3 all 60%
The audit partner has just advised you that
he has been approached to accept the
appointment of auditor to Bungie Limited.
Bungie Limited is a manufacturer of gaming
machines and has been named in a recent
anti-corruption enquiry as having offered
incentives to state government members to
support a proposed bill that would allow an
increased number of gaming machines in
licensed premises. No charges have yet been
laid against Bungie Limited or any of its
employees. The audit partner explains to you
that
Bungie
Limited's
auditors
were
re-appointed for the current financial year at
the Annual General Meeting held two
months ago. However, Bungie Limited's
managing director is unhappy with the
existing auditing firm as the audit partner
assigned to Bungie Limited has
changed.
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Chapter 13 Solutions
GEN COMBO LOOSELEAF INTERMEDIATE ACCOUNTING; CONNECT ACCESS CARD
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