Happiness Express Inc. 1. a) The primary audit objectives of confirming a client’s year-end accounts receivable include occurrence and accuracy of realizable value. Auditors would like to make sure that the transaction generating the accounts receivable actually occurs‚ and that the receivables are recorded at accurate value for the current reporting period. Usually they will send accounts receivable confirmations to client’s customers directly. b) The primary audit objectives of performing
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amortization (16‚000 ) Excess rent collected over rent earned 24‚000 Taxable income $124‚000 Current income taxes - 30% $37‚200 (b) Deductible Balance (Taxable) Future Tax Current Sheet Temporary Tax Asset Long- Account Differences X Rate (Liability) Term PP & E ($16‚000)* 30% ($4‚800) LT Unearned Rent revenue 24‚000 30% 7‚200 C Future income tax asset‚ Dec. 31‚ 2009 2‚400 Future income tax asset before adjustment 0 Incr. in
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records‚ and methods that collect and process data from transactions and events‚ organize them in useful forms‚ and communicate results to decision makers Accounts payable ledger Subsidiary ledger listing individual creditor (supplier) accounts Accounts receivable ledger Subsidiary ledger listing individual customer accounts. Batch processing Accumulating source documents for a period of time and then processing them all at once such as once a day‚ week‚ or month. Cash disbursements
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is 23.7%‚ so in comparison to the industry‚ Coca-Cola’s investors receive a greater return on their investment. The days’ receivable ratio calculates the how many days on average it takes for a company to collect on its sales to customers in credit (http://www.zenwealth.com/BusinessFinanceOnline/RA/AssetManagementRatios.html) . First‚ one must determine the accounts receivables turnover ratio‚
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company does not seem to have any high risk of fraud or material misstatement‚ so we are very comfortable with the quality of its financial reporting. A misstatement of 5% or above in any of the significant company accounts‚ or a combined misstatement of 5% or above for the company accounts as a whole‚ would require increased investigation and would reduce our confidence in the records. Any misstatement under 5% would be permissible. Journal Entry The journal entry for the August 2007 issue of
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d 1. Financial reports are used by a.|management| b.|creditors| c.|investors| d.|all are correct| C 2. Which of the following is not a characteristic of a corporation? a.|Corporations are organized as a separate legal taxable entity.| b.|Ownership is divided into shares of stock.| c.|Corporations experience an ease in obtaining large amounts of resources by issuing stock.| d.|A corporation’s resources are limited to their individual stockholders’ resources.| D 3. Which of the following are guidelines
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from its receivables and by selling inventories. ACID-TEST RATIOS Quick Asset = Current Assets - Inventories Acid-Test Ratio = Quick Assets /Current Liabilities | | 2010$000 | 2009$000 | Current Assets | 89‚725 | 67‚653 | Inventories | (26‚218) | (22‚605) | Quick Assets | 63‚507 | 45‚048 | Current Liabilities | 82‚832 | 59‚320 | | 0.8 : 1 | 0.8 : 1 | The traditional rule of thumb for this ratio has been 1:1. Anything below this level requires further analysis of receivables to understand
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uncollectible accounts receivable: These accounts match them against revenues in the same accounting period. 2. “Record estimated uncollectible as an increase (a debt) to bad debt expense and an increase ( a credit) to Allowance for Doubtful Accounts through an adjusting entry at the end of each period”. 3. Debt Actual uncollectibles- actual accounts are debited to the Allowance for Doubtful Accounts and then credits them to accounts receivable at the time the specific account is written
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The internal controls provide a safeguard against errors in the accounting system as well as the detection and prevention of fraud. With the inflows of the company come many risks that need to be considered. The ways in which cash‚ sales‚ accounts receivable‚ inventory‚ and production are handled within the company are different for each division. The internal controls may vary from department to department‚ but the end result is to protect the company from the risks that can arise. Cash Cash
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general ledger‚ and it holds accounts with similar attributes. The purpose is that is can contain things such as accounts receivable and accounts payable and it can show the sum total. The advantages of using subsidiary ledgers is that the sum of all the accounts is kept in the General Ledger and all of the details of the accounts are kept in the subsidiary ledger which is separate so you can keep them in different columns so to not get confused. A control account is an account that contains the total
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