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Card Shop Inc. (CSI) is a small owner-managed greeting card specialty store. Due to the small size of the store, the bookkeeper has established a very simplistic accounting system. Inventory items are ordered by either the owner or the store manager using pre-numbered purchase orders. When items are received, they are recorded on pre-numbered receiving documents. When the vendor invoice is received from the supplier, the bookkeeper matches it to the purchase order and receiving documents. The bookkeeper records the purchase of the inventory or any items at the time the cheque is generated. The bookkeeper provides the owner with the unsigned cheques and the related supporting documentation. The owner reviews the documents and signs and mails all cheques. At the end of each quarter, the bookkeeper prepares financial statements for internal use. In order to record the payables, the bookkeeper prepares an excel spreadsheet listing all outstanding invoices. Included in the listing is the vendor name, invoice number, amount owed, and a receiving document reference. A separate file is maintained with hard copies of all outstanding invoices included in the spreadsheet. The bookkeeper then prepares an adjusting entry to record the accounts payable at the balance sheet date. The entry is then reversed at the beginning of the next period.RequiredExplain how the lack of an ongoing accounts payable system will affect the auditor tests for the purchases and payables cycle. Your answer should also identify assertions and account balances affected. When testing accounts payable, explain why an auditor would choose to select suppliers with nil balances in the accounts payable sub-ledger. Explain why it is unlikely that an auditor would do the same for accounts receivable. List four audit procedures, other than confirmations, that the auditor could perform to audit the completeness assertion for accounts payable.
What are some implications of currency depreciation, devaluation, and appreciation for the US Dollar compared to a foreign currency? How does a strong U.S. dollar affect the balance of trade for USA? Why?
Susco distributed two assets in a transaction that qualified as a redemption.One asset had an adjusted basis of $100,000 and a fair market of $135,000.
Swan Inc is an accural basis taxpayer. Swan uses the aging approach to calculate the reserve for bad debts. During 2010, the following occur associated with bad debts: What is the amount for bad debt expense?
Identify weaknesses in Consports expenditure cycle, explain the resulting problem, and suggest a control procedure that would best prevent or detect and correct each weakness. Use the labels next to each step to reference your answer.
Wade's outstanding stock consists of 40,000 shares of noncumulative 7.5% preferred stock with a $10 par value and also 100,000 shares of common stock with a $1 par value.
With the number of workers currently employed, that means that the company is committed tp paying its direct labor work force at lease 5600 hours in total each month even if there is not enought work to keep them busy. Construct the direct labor b..
Molly and Dolly form MD Corporation. Molly transfers a building with a fair market value of $800,000 and a basis of $400,000 that is encumbered by a $100,000 mortgage that the corporation assumes in exchange for 50 percent of MD's stock.
The Red Car Division has excess capacity and the 1,000 units can be produced without interfering with the current outside sales of 5,000. The 6,000 volume is within the division's relevant operating range.
A favorable cost variance of significant magnitude: A) Is strong evidence of tight financial control. B) Does not need to be investigated as to its underlying cause.
Short term debt has a few advantages such as the economical advantages of obtaining it at a short notice, the flexibility of being able to meet financial needs, and the possibility of renewal by extension.
What are the most important risks for the audit of the acquisition and payment cycles in the automotive industry?
Instead of investing the entire $1,000,000, Lee invests $300,000 today and plans to make 9 equal annual investments into the fund beginning one year from today. What amount should the payments be if Lee plans to establish the $1,898,000 foundation..
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