Acc 491
Ch. 8: Comprehensive Questions: Analytical procedures ( 8-15 and 8-16)
Ch. 10: Comprehensive Questions: Components of internal control (10-31 and 10-32)
Ch. 11: Comprehensive Questions: Assessing control risk
(11-21)
8-15 | (Analytical procedures) In audit planning the audit of Construction Industry Resources, Inc., a building supply company. You have completed analytic procedures relevant to purchases and inventory. The results of these procedures are included in Figure 8.13.Figure 8.13. Selected Financial Information ($000) | X1 | X2 | X3 | X4 | X5 | Building supply revenues | $ 90,100 | $ 99,380 | $ 117,468 | $ 137,085 | $ 160,800 | Lumber brokerage revenues | $ — | $ — | $ 45,021 | $ 63,480 | $ 90,141 | | $ 90,100 | $ 99,380 | $ 162,489 | $ 200,564 | $ 250,941 | Inventory turn days | | | | | | Building supplies | 32 | 34 | 31 | 33 | 27 | Lumber brokerage | | | 7 | 6 | 6 | Gross margin | | | | | | Building supplies | 20.1% | 18.5% | 18.6% | 19.1% | 18.0% | Lumber brokerage | | | 3.9% | 4.1% | 4.2% |
Required * Analytical procedures show that inventory turnover decreased from 31–34 days to 27 days, and gross margins declined to the lowest level in five years. What might this indicate about the risk of misstatement with respect to inventory and inventory purchases? |
(Analytical procedures) In audit planning the audit of Circuits Technology, Inc. (CTI). CTI resells, installs, and provides computer networking products (client software, gateway hardware and software, and twinax hardware) to other businesses. Figure 8.14 provides some summary information from CTI 's financial statements.
Figure 8.14. CTI Selected Financial Information ($000) | 20x1 | 20x2 | 20x3 | 20x4 | 20x5 | Accounts receivable, net | $ 837 | $ 1,335 | $ 1,121 | $ 962 | $ 822 | Inventory | $ 1,025 | $ 1,327 | $ 1,099 | $ 1,003 | $ 1,027 | Accounts payable | $ 164 | $ 380 | $ 225 | $ 201 | $ 175 | Sales | $ 3,780 | $
Ch. 10: Comprehensive Questions: Components of internal control (10-31 and 10-32)
Ch. 11: Comprehensive Questions: Assessing control risk
(11-21)
8-15 | (Analytical procedures) In audit planning the audit of Construction Industry Resources, Inc., a building supply company. You have completed analytic procedures relevant to purchases and inventory. The results of these procedures are included in Figure 8.13.Figure 8.13. Selected Financial Information ($000) | X1 | X2 | X3 | X4 | X5 | Building supply revenues | $ 90,100 | $ 99,380 | $ 117,468 | $ 137,085 | $ 160,800 | Lumber brokerage revenues | $ — | $ — | $ 45,021 | $ 63,480 | $ 90,141 | | $ 90,100 | $ 99,380 | $ 162,489 | $ 200,564 | $ 250,941 | Inventory turn days | | | | | | Building supplies | 32 | 34 | 31 | 33 | 27 | Lumber brokerage | | | 7 | 6 | 6 | Gross margin | | | | | | Building supplies | 20.1% | 18.5% | 18.6% | 19.1% | 18.0% | Lumber brokerage | | | 3.9% | 4.1% | 4.2% |
Required * Analytical procedures show that inventory turnover decreased from 31–34 days to 27 days, and gross margins declined to the lowest level in five years. What might this indicate about the risk of misstatement with respect to inventory and inventory purchases? |
(Analytical procedures) In audit planning the audit of Circuits Technology, Inc. (CTI). CTI resells, installs, and provides computer networking products (client software, gateway hardware and software, and twinax hardware) to other businesses. Figure 8.14 provides some summary information from CTI 's financial statements.
Figure 8.14. CTI Selected Financial Information ($000) | 20x1 | 20x2 | 20x3 | 20x4 | 20x5 | Accounts receivable, net | $ 837 | $ 1,335 | $ 1,121 | $ 962 | $ 822 | Inventory | $ 1,025 | $ 1,327 | $ 1,099 | $ 1,003 | $ 1,027 | Accounts payable | $ 164 | $ 380 | $ 225 | $ 201 | $ 175 | Sales | $ 3,780 | $