the rights and liabilities and priviliges of a trade union
xxFull description
Rights and Liabilities of the LessorFull description
this is a project work that touches upon the issue of duties and liabilities of director of a company.
Answers
liabilities and equityDeskripsi lengkap
Practice set solution for long term liabilities quizzer.Full description
Problem no.1 In connection with the audit of the PAKYO COMPANY for the year ended December 31 !"1" you are called u#on to $erify the account% #ayable tran%action%. You You find that the com#any doe% not ma&e u%e of a $oucher re'i%ter but enter% all merchandi%e #urcha%e% in a Purcha%e% (ournal from which #o%tin' are made made to a %ub%i %ub%idia diary ry account account% % #ayable #ayable led'er. led'er. )he %ub%id %ub%idiar iary y led'er led'er balanc balance e of P1*"" P1*""""" """ a% of December 31 !"1" a'ree% with the account% #ayable balance in the com#any+% 'eneral led'er. An analy%i% of the account di%clo%ed the followin', )rade creditor% credit balance% )rade creditor% debit balance% Net %timated warranty on #roduct% %old Cu%tomer+% de#o%it% Due Due to offic officer er% % and %har %hareh ehold older% er% for for ad$a ad$anc nce% e% 0ood% recei$ed on con%i'nment at %ellin' #rice off%ettin' debit made to Purcha%e%2
P 13-3""" -3""" P 13""""" 1""""" /""" *"" *"""" "" 1""" P 1*"""""
A further analy%i% of the 4)rade Creditor%5 debit balance% indicate%, Date
Item% Mi%cellaneou% debit balance% #rior to !""6. No information a$ailable due to lo%% of record% in a fire.
Amount
P 3"""
"37"37"6 "37"37"6 Manila Co. Co. 8Merchandi% 8Merchandi%e e returned returned for credit credit but the com#any i% now out of bu%ine%%
9"""
"-71"7"/ "-71"7"/ Cebu Cor#. Cor#. 8 Merchandi%e Merchandi%e returned returned but but Cebu %ay% 4ne$er recei$ed5 "671"71" "671"71" (olo Di%tribut Di%tributor% or% 8 Allowance Allowance 'ranted 'ranted on defecti$e merchandi%e after the in$oice wa% #aid 1"71"7 1"71"71" 1" :ula :ulaca can n Co 8 O$er O$er#a #aym yment ent of in$oic in$oice e
6"""
*"""
1!" 1!""" ""
1!7"*71" 1!7"*71" Ad$ance Ad$ance to ;ambale% ;ambale% Co. )hi% )hi% com#any com#any a'ree% a'ree% to %u##ly certain article% on a co%t 8#lu% ba%i% 1!7"*71" 1!7"*71" 0ood% returne returned d for credit credit and ad
!"""
"""
-3"""
Your ne>t %te# i% to chec& the in$oice% in both the #aid and the un#aid in$oice file% a'ain%t led'er account%. In thi% connection you di%co$er an in$oice from Atla% Co. of P*""" dated December 1! !"1" mar&ed 4Du#licate5 which wa% entered in the Purcha%e (ournal in (anuary !"11. ?#on in@uiry you di%co$er that the merchandi%e co$ered by thi% in$oice wa% recei$ed and %old but the ori'inal in$oice a##arently ha% not been recei$ed. In the ban& reconciliation wor&in' #a#er% there i% a notation that fi$e chec&% totalin' P -3""" were #re#ared and entered in the Ca%h Di%bur%ement% (ournal of December but the%e chec&% were not i%%ued until (anuary 1" !"11. )he in$entory in$entory analy%i% %ummary %ummary di%clo%e% di%clo%e% 'ood in tran%it tran%it of P -""" at December December 31 !"1" not ta&en u# by the com#any under audit durin' the year !"1". )he%e 'ood% are included in your ad
:. P 1-1""" D. P 166"""
!. )he net ad
:. Net credit of P 1""" C. Net debit of P 1"""" D. Net debit of P 63""" 3. )he entry to ad
:. P !3""" D. P 3/"""
. )he entry to adternal e$idence to %u##ort the balance% :. Corre%#ondence with the audit client% attorne y will re$eal all le'al a ction by $endor% for nonB#ayment C. )hi% i% a du#lication of cuto ff te%t D. Account% #ayable at the end of re#ortin' #eriod may not be #aid before the audit i% com#leted. Problem ! You were able to obtain the followin' from the accountant for Ma$eric% Cor#. elated to the com#any% liability a% of December 31 !"1". Account% #ayable Note% #ayable 8 trade Note% #ayable 8 ban& a'e% and %alarie% #ayable Intere%t #ayable Mort'a'e note% #ayable 8 1"F Mort'a'e note% #ayable 8 1!F :ond% Payable
P -*"""" 1/"""" 9""""" 1*""" E -""""" 1*""""" !""""""
)he followin' additional information #ertain% to the%e liabilitie%, a. All trade note% #ayable are due within %i> month% of the balance %heet date. b. :an& note% #ayable include two %e#arate note% #ayable Allied :an&. 12 A P3""""" 9F note i%%ued March 1 !""9 #ayable on demand. Intere%t i% #ayable e$ery %i> month%. !2 A 1Byear P*""""" 11 GF note i%%ued (anuary ! !"1". On December 3" !"1" Ma$eric&% ne'otiated a written a'reement with Allied :an& to re#lace the note with !Byear P*""""" 1"F note to be i%%6ued (anuary ! !"11. )he intere%t wa% #aid o n December 31 !"1" c. )he 1"F mort'a'e note wa% i%%ued October 1 !""6. ith a term of 1" year%. )erm% of the note 'i$e the holder the ri'ht to demand immediate #ayment of the com#any fail% to ma&e a monthly intere%t #ayment within 1" day% of the date the #ayment i% due. A% of December 31 !"1" Ma$eric&% i% three month% behind in #ayin' it% re@uired intere%t #ayment. d. )he 1!F mort'a'e note wa% i%%ued may 1 !""1 with a term of !" year%. )he current #rinci#al amount due i% P 1*""""". Princi#al and intere%t #ayable annually on A#ril 3" A #ayment of P!!"""" i% due A#ril 3" !"11. )he #ayment include% intere%t of P 19"""". e. )he bond% #ayable i% 1"Byear 9F bind% i%%ued (une 3" !""1. Intere%t i% #ayable %emiBannually e$ery (une 3" and December 31. :a%ed on the abo$e and the re%ult of your audit an%wer the followin', 1. Intere%t #ayable a% of December 31 !"1" i% a. P1**""" b. 13""" c. !"3""" d. !1*"""
!.
3.
.
)he #ortion of the Note% #ayable 8 ban& to be re#orted under current liabilitie% a% of December 31 !"1" i% a. P 3""""" b. *""""" c.9""""" d. " )otal current liabilitie% a% of December 31 !"1" i% a. P 3/*"""" b. 139""" c. 3/39""" d. 3//9""" )otal noncurrent liabilitie% a% of December 31 !"1" i% a. P16-"""" b. !*-"""" c. 3/-"""" d. 1/-""""
Problem no. 3 In conamination of the financial %tatement% of PI)ON COMPANY a% of December 31 !"1" you obtained from the $oucher re'i%ter the information %hown in the wor&in' #a#er below. Item no. 1
Entry Date 1!.19.1"
Voucher Ref. 1!B!"!
!
1!.19.1"
1!B!"
3
1!.!1.1"
1!B!"-
1!.!1.1"
1!B!1
*
1!.!1.1"
1!B!1/
-
1!.!-.1"
1!B!!1
6 9
1!.!9.1" 1!.!9.1"
1!B!3" 1!B!3
/
1!.!9.1"
1!B!3
1"
"1."!.11
"1B""1
11
"1."*.11
"1B""!
1!
"1."*.11
"1B""3
13
"1."*.11
"1B""
1
"1.1".11
"1B""*
1*
"1.1!.11
"1B""-
1-
"1.1!.11
"1B""6
Description
Amount
Account Charged
u##lie% #urcha%ed HO: de%tination !3.!-.!"= recei$ed 1!.16.1" Auto in%urance 1!.1*.1" 1!.!".11 e#air% %er$ice%= recei$ed 1!.!".1" Merchandi%e %hi##ed HO: hi##in' #oint 11.!".1"= recei$ed 1!.".1" Payroll 1!."-.1" to 1!.!".1" 1! wor&in' day%2 ub%cri#tion to )a> e#ortin' er$ice for !"11 ?tilitie% for December !"1" Merchandi%e %hi##ed HO: de%tination 1!.!.1"= recei$ed "1."!.11 Merchandi%e %hi##ed HO: de%tination 1!.!-.1"= recei$ed 1!.!/.1" e'al %er$ice%= recei$ed 1!.!9.1"
P !""""
u##lie% on hand
!"""
Pre#aid in%urance
!""" 16"""
e#air% and maintenance In$entory
-/"""
alarie% and wa'e%
*""" !/""" 111*""
Due% and %ub%cri#tion ?tilitie% e>#en%e In$entory
9"""
In$entory
-"""
e'al and #rofe%%ional e>#en%e
Medical %er$ice% for em#loyee% for December !"1" Merchandi%e %hi##ed HO: %hi##in' #oint 1!.!/.1"= recei$ed "1.".11 Payroll 1!.!1.1" to "1."*.11 1! wor&in' day% in total wor&in' day% in (an. !"11 Merchandi%e %hi##ed HO: %hi##in' #oint "1."!.11= recei$ed "1."*.11 Manufacturin' royaltie% December !"1" Merchandi%e %hi##ed HO: de%tination "1."3.11= recei$ed "1.1".11
!*"""
Medical e>#en%e
**"""
In$entory
6!"""
alarie% and wa'e%
-"""
In$entory
3/"""
Manufacturin' co%t
39"""
In$entory
16
"1.13.11
"1B""9
19
"1.1.11
"1B""/
1/
"1.1*.11
"1B"1"
!"
"1.1*.11
"1B"11
Maintenance e %er$ice%= recei$ed "1."/.11 Intere%t on ban& loan 1"B 1!B1" to "!1.1".11 Manufacturin' e@ui#ment in%talled on 1!.!/.1" Di$idend% declared 1!.1*.1"
/""" 3"""" !*""" 1-""""
e#air% and maintenance Intere%t >#en%e Machinery and e@ui#ment Di$idend% #ayable
Accrue% liabilitie% a% December 31 !"1" were a% follow%, Accrued #ayroll P 9""" Accrued intere%t #ayable !---6 Di$idend% #ayable 1-"""" Accrue% royaltie% #ayable 3/""" )he accrue% #ayroll accrued intere%t #ayable and accrued royaltie% #ayable account% were re$er%ed on (anuary 1 !"11. J?ID, Pre#are ad
Amount Due P """"" -""""" 3""""" 3""""" 1!"".""" 1"""""" 9""""" 1"""""" P 6""""""
E"$IMA$ED %ARRA$IE" Heel Na Heel ha% a oneByear #roduct warranty on %ome %elected item% in it% #roduct line. )he e%timated warranty liability on %ale% made durin' the !""9B!""/ fi%cal year and %till out%tandin' a% of March 31 !""/ amounted to P19"""". )he warranty co%t on %ale% made from A#ril 1 !""/ throu'h March 31!"1" are e%timated a% P*!"""". )he actual warranty co%t incurred durin' the current !""/B!"1" fi%cal tear are a% follow%, arranty claim% honored on !""9B!""/ %ale% P 19"""" arranty claim% honored on !""/B!"1" %ale% 169""" )otal warranty claim% honored P 3*9""" O$&ER I'ORMA$IO 1.
!.
)AD PAYA: Account% #ayable for %u##lie% 'ood% and %er$ice% #urcha%ed on o#en account amount to P6"""" a% March 31 !"1" PAYO A)D I)M
Merchandi%e %hi##ed HO: de%tination 1!.!.1"= recei$ed "1."!.11 Accrued alarie% and wa'e% P 3""""" ithholdin' ta>e% #ayable /""" Other #ayroll deduction% 1"""" 3. MICANO? ACC?A Other accrual% not %e#arately cla%%ified amount to P1*"""" a% of March 31 !"1" .
DILIDND On march 1* !"1" Heel Na Heel+% board of director% declared a ca%h di$idend of P".!" #er common %hare and a 1"F common %toc& di$idend. :oth di$idend% were to be di%tributed on A#ril 1! !"1" to the common %toc&holder% of record at the clo%e of bu%ine%% on march 31 !"1". Data re'ardin' Heel Na Heel common %toc& are a% follow%, Per Lalue P *."" #er %hare Number of %hare% i%%ued and out%tandin' -"""""" %hare% Mar&et Lalue% of Common toc&, March 1* !"1" March 31 !"1" A#ril 1! !"1"
P !!."" #er %hare !1.*" #er %hare !!.*" #er
%hare
1.
!.
3.
ow much wa% recei$ed by Heel Na Heel from the bond% i%%ued on (uly 1 !""9E a. P99*!/-" b. 1""""""" c. 1"*""""" d. 1"-6"" On March 31 !"1" Heel Na Heel+% %tatement% of financial #o%ition would re#ort total current liabilitie% of a. P*!9-""" b. 39-""" c. *33-""" d. *-!""" On March 31 !"1 Heel Na Heel+% %tatement of financial #o%ition would re#ort total noncurrent liabilitie% of a. P139/.3*" b. 13*!!16 c. 136"693 d. 1!*!/-"
PROBLEM O. ( On (anuary 1 !""/ I;AD COPOA)ION i%%ued !""" of it% *Byear P1""" face $alue 11F bond% date (anuary 1 at an effecti$e annual intere%t rate yield2 of /F. Intere%t i% #ayable each December 31. iard% u%e% the effecti$e intere%t method of amortiation. On December 31 !"1". )he !""" bond% were e>tin'ui%hed early throu'h ac@ui%ition on the O#en Mar&et by iard for P1/9"""" #lu% accrued intere%t. On (uly 1 !""/ iard% i%%ued *""" of it% P1""" face $alue 1"F con$ertible bond% at #at. Intere%t i% #ayable e$ery (une 3" and December 31. On the date of i%%ue the #re$ailin' mar&et intere%t rate for %imilar debt without the con$er%ion o#tion i% 1!F. On (uly 1 !"1" an in$e%tor in iard% con$ertible bond% tendered 1*"" bond% for con$er%ion into 1*""" %hare% of iard% common %toc& which had a fair $alue of P1"* and a #ar $alue of P1 at the date of con$er%ion. :a%ed on the abo$e and the re%ult of your audit determine the followin', ound off #re%ent $alue factor% to four decimal #lace%.2 1.
)he i%%ue #rice on the !""" *Byear P1""" face $alue bond% in (anuary 1 !""/ i% a. P!1**.*"" b. P!"""""" c. 19"" d. !169""
!.
)he carryin' $alue of the !""" *Byear P1""" face $alue bond% on December 31 !""/ i% a. 19/9"" b. !1!/*"" c. !"""""" d. !1!11"" )he 'ain on early retirement of bond% on December 31 !"1" i% a. P!"""" b. 11!""" c. 1!1!"" D. " )he carryin' $alue of the *""" - year P1""" face $alue bond% on December 31 !""/ i%
3. .
a.
*.
P-"*9"" b. *"""""" c. 63!.96* d. -1*"" )he con$er%ion of the 1*"" -Byear% P1""" face $alue bond% on (uly 1 !"1" will increa%e APIC by a. P19*""" b. 136""" c. 11*."* d. P1366-/6
PROBLEM O. ) )he followin' data were ob tained from the initial audi t of :I:I COMPANY, *(+, *- year, onds paya/e, dated 0anuary *, 1--2 Deit Ba/ance Ca%h #roceed% from i%%ue on (anuary 1 !""/ Of 1""" P1""" bond%. )he mar&et rate of Intere%t on the date of i%%ue wa% 1!F Bond Interest E3pense Ca%h #aid 17!71" Ca%h #aid 67171" Accrual 1!73171" Accrued Interest on Bonds :alance 17171" Accrual 1!73171" $reasurer onds edem#tion #rice and intere%t to date on !"" bond% #ermanently retired on 1!73171" !-*"""
P 116!"
Credit
P116!."
P 6*""" 6*""" 6*"""
P 6*""" 1*"""" !!*"""
P 6*""" P 6*""" 6*""" 1*""""
P !-*"""
:a%ed on the #recedin' information determine the followin', 1. Carryin' $alue of bond% #ayable at December 31 !"1" a. P93111" b. 9""""" c. 11*1*93 /!1!-!. o%% on :ond redem#tion a. P-93 b. P1/-93 c. 1*""" 3. Accrued Intere%t on :ond% at December 31 !"1" a. P6*""" b. 13*""" c. -"""" . :ond Intere%t >#en%e for the year ended December 31 !"1" a. P1*"""" b. 13/916 c. -/6*
P
d.
d. 3-93 d. *!*"" d. 1-"9!-
PROBLEM 4 N?00) COPOA)ION manufacture% and %ell% food #roduct% and food #roce%%in' machinery. It% re#ortin' date i% December 31. ele$ant e>tract% from it% financial %tatement% at December 31 !""/ are a% follow%, Current /iai/ities Pro$i%ion Pro$i%ion for warrantie%
P!6""""
oncurrent /iai/ities Pro$i%ion Pro$i%ion for warrantie%
P19""""
ote 5)6Contigent Liai/ities N?00) i% en'a'ed in the liti'ation with $ariou% #artie% in relation to aller'ic reaction t o trace% of #eanut% alle'ed to ha$e been found in #ac&et% of fruit 'um%. N?00) %trenuou%ly denie% the alle'ation and a% at the %ame date authoriin' the financial %tatement% for i%%ue i% unable to e%timate the financial effect if any of any co%t or dama'e% that may be #ayable to the #laintiff%. )he #ro$i%ion for warrantie% at December 31 !""/ wa% calculated u%in' the followin' a%%um#tion%, )here wa% no balance carried forward from the # rior year.
%timated co%t of re#air% 8 Product% with minor defect% %timated co%t of re#air% 8 Product% with minor defect% >#ected F of #roduct% %old durin' !""9 ha$in' no defect% in !"1" >#ected of #roduct% %old durin' !""9 ha$in' minor defect% in !"1" >#ected of #roduct% %old durin' !""9 ha$in' Ma
P 1"""""" P -"""""" 9"F 1* F *F all in
!"1" >#ected timin' of %ettlement of warranty #ayment% Btho%e with ma
"F
in !"1" -"F in !"1" Durin' the year ended December 31 !"1" the followin' occurred, 1.
!.
3.
. *.
-.
In a relation to the warranty #ro$i%ion of P*"""" at December 31 !""/ P!""""" wa% #aid out of the #ro$i%ion. Of the amount #aid P1*"""" wa% for #roduct% with minor defect% and P*"""" wa% for #roduct% with ma#ected to be #aid in !"1"7 In calculatin' it% warranty #ro$i%ion for December 31 !"1" N?00) made the followin' ad#ected F of #roduct% %old durin' !"/ ha$in' no defect% in !"11 9*F >#ected F of #roduct% %old durin' !""/ ha$in' minor defect% in !"11 13F >#ected F of #roduct% %old durin' !""/ ha$in' ma#ected timin' of %ettlement of warranty #ayment% !"F in !"11 Btho%e with ma
:a%ed on the abo$e and the re%ult of your audit an%wer the followin',
1.
!.
3.
.
)he warranty e>#en%e in !"1" i% a. P1""""" b. """"" c. 1-"""" d. !3"""" )he #ro$i%ion for warrantie% a% of December 31 !"1" i% a. P*9"""" b. !3"""" c. 9"""" d. 1"""" )he #ro$i%ion for warrantie% to be re#orted a% current liability a% of December 31 !"1" i% a. !!"""" b. 1*"""" c. """"" d 33"""" )he #ro$i%ion for warrantie% to be re#orted a% noncurrent liability a% of December 31 !"1" i%
a.
*.
P. 9"""" b. P!-"""" c. 1*"""" d. 33"""" )otal #ro$i%ion% to be re#orted in the %tatement of financial #o%ition a% of December 31 !"1" i% a. P9"""" b. 1"""" c. 119"""" d. 13-""""
PROBLEM O 7 elect the be%t an%wer for each of the followin', 1.
!.
3.
.
*.
-.
6.
In Auditin' account% #ayable an auditor #rocedure% mo%t li&ely will focu% #rimarily on mana'ement% a%%ertion of. a. >i%tence c. Com#letene%% b. Pre%entation and di%clo%ure d. Laluation and allocation An auditor #erform% a te%t to determine whether all merchandi%e for which the client wa% billed wa% recei$ed. )he #o#ul ation for thi% te%t con%i%t of all a. Merchandi%er recei$ed c. Canceled chec&% b. Lendor+% in$oice% d. recei$in' re#ort% )he #rimary audit te%t to determine if account% #ayable are $alued #ro#erly i% a. Confirmation of account% #ayable b. Louchin' account% #ayable to %u##ortin' documentation c. An analytical #rocedure d. Lerification that account% #ayable wa% re#orted a% a current liability in the balance %heet. hich of the followin' #rocedure% i% lea%t li&ely to be #erformed before the balance %heet dateE a. Ob%er$ation of in$entory count. b. )e%tin' of internal control o$er ca%h. c. earch for unrecorded liabilitie%. d. Confirmation of recei$able%. An audit a%%i%tant found a #urcha%e order for a re'ular %u##lier in the amount P **"" the #urcha%e order wa% date after recei#t of 'ood%. )he #urcha%in' a'ent had for'otten to i%%ue the #urcha%e order. Al%o a di%bur%ement of P*" for material% did not ha$e recei$in' re#ort. )he a%%i%tant wanted to %elect additional #urcha%e order% for in$e%ti'ation but wa% unconcerned about lac& of recei$in' re#ort. )he audit director %hould. a. A'ree with the a%%i%tant becau%e the amount of the #urcha%e order e>ce#tion wa% con%iderably lar'er than the recei$in' re#o rt e>ce#tion b. A'ree with the a%%i%tant becau%e the ca%h di%bur%ement cler& had been a%%ured by the recei$in' cler& that the failure to fill out a re#ort didn+t ha##en $ery often. c. Di%a'ree with the a%%i%tant becau%e two #roblem% ha$e an e@ual ri%& of lo%% a%%ociated with them d. Di%a'ree with the a%%i%tant becau%e the lac& of a recei$in' re#ort ha% a 'reater ri%& of lo%% a%%ociated with it. hen u%in' confirmation to #ro$ide e$idence about com#letene%% a%%ertion for account #ayable the a##ro#riate #o#ulation mo%t li&ely i% a. Lendor% with whom the entity ha% #re$iou%ly done bu%ine%% b. Amount% recorded in the account% #ayable %ub%idiary led'er c. Payee% of chec&% drawn in the month after the year end. d. In$oice% filed in the entity+% o#en in$oice file. hich of the followin' i% a %ub%tanti$e te%t than an auditor i% mo%t li&ely to #erform to $erify the e>i%tence and $aluation of recorded account% #ayableE a. In$e%ti'atin' the o#en #urcha%e order file to a%certain that #reB numbered #urcha%e order% are u%ed and accounted for.
b.
9.
/.
ecei$in' the client+% mail uno#ened for a rea%onable #eriod of time after year end to %earch for u nrecorded $endor+% in$oice% c. Louchin' %elected entrie% in the account% #ayable %ub%idiary led'er to #urcha%e order% and recei$in' re#ort%. d. Confirmin' account% #ayable balance% with &now %u##lier% who ha$e ero balance%. Only one of the followin' four %tatement% which com#are confirmation of account% #ayable with %u##lier% and confirmation of account% recei$in' with debtor% i% fal%e. )he fal%e %tatement% i% that a. Confirmation of account% recei$in' with debtor% i% a more widely acce#ted auditin' #rocedure than u% confirmation of account% #ayable with %u##lier% b. tati%tical %am#lin' techni@ue% are more widely acce#ted in the confirmation of account% #ayable than in the confirmation of account% recei$able c. A% com#ared with the confirmation of account% recei$able the confirmation of account% #ayable will tend to em#ha%ie account% with ero balance% at the balance %heet date. d. It i% le%% li&ely that the confirmation re@ue%t %ent to the %u##lier will %how the amount owed than that re@ue%t %ent to the debtor will %how the amount date. hen title to merchandi%e in tran%it ha% #a%%ed to the audit client the auditor en'a'ed in the #erformance of a #urcha%e cutBoff will encounter the 'reate%t difficulty in 'ainin' a%%urance with re%#ect to the a. Juantity C. Price b. Juality d. )erm%
1". hich of liabilityE a. b. c. d.
the followin' audit #rocedure% i% lea%t li&ely to detect an unrecorded Analy%i% and recom#utation of intere%t e>#en%e Analy%i% and recom#utation of de#reciation e>#en%e. Mailin' of %tandard ban& confirmation form%. eadin' of the minute% of meetin'% of the board of director%
11. ?nrecorded liabilitie% are mo%t li&ely to be found durin' the re$iew of which of the followin' document%E a. ?n#aid bill% c. bill% of ladin' b. hi##in' record% d. ?nmatched %ale% in$oice 1!. hich of the followin' audit #rocedure% i% be%t for identifyin' unrecorded trade account% #ayableE a. e$iewin' ca%h di%bur%ement recorded %ub%e@uent to the balance %heet date to determine whether the related #ayable% a##ly to the #rior #eriod. b. In$e%ti'atin' #ayable% recorded aminin' unu%ual relation%hi#% between monthly account% #ayable balance% and recorded ca%h #ayment%. d. econcilin' $endor% %tatement to the file of recei$in' re#ort% to identify item% recei$ed aminin' the #urcha%e a. (ournal c. Order b. e@ui%ition% d. In$oice%. 1. hich of the followin' #rocedure% relatin' to the e>amination of account% #ayable could the auditor dele'ate entirely to the client% em#loyee% a. )e%t footin'% in the account% #ayable led'er b. econcile un#aid in$oice% to $endor% %tatement%
1*.
1-.
16.
19.
1/.
!".
c. Pre#are a %chedule of account% #ayable d. Mail confirmation for %elected account balance% An auditor% #ur#o%e in re$iewin' the renewal of a note #ayable %hortly after the balance %heet date mo%t li&ely i% to obtain e$idence concernin' mana'ement% a%%ertion% about a. >i%tence c. Com#letene%% b. Pre%entation and di%clo%ure d. Laluation An auditor% #ro'ram to audit lon'Bterm debt %hould include %te#% that re@uire a. >aminin' bond tru%t indenture% b. In%#ectin' the account% #ayable %ub%idiary led'er c. In$e%ti'atin' credit% to the bond intere%t income account d. Lerifyin' the e>i%tence of the bondholder%. In an audit of bond% #ayable an auditor e>#ect% the tru%t indenture to include the a. Auditee+% debtBtoBe@uity ratio at the %ame time of i%%uance b. ffecti$e yield of the bond% i%%ued c. ub%cri#tion li%t d. De%cri#tion on the collateral In auditin' lon'Bterm bond% #ayable an auditor mo%t li&ely will a. Perform analytical #rocedure% on the bond #remium and di%count account% b. >amine documentation of a%%et% #urcha%ed with the bond #roceed% or lien% c. Com#are intere%t with the bond #ayable amount for rea%onablene%% d. Confirm the e>i%tence of indi$idual bondholder% at yearBend )he audit #rocedure% u%ed to $erify accrued liabilitie% differ from tho%e em#loyed for the $erification of a ccount% #ayable becau%e a. Accrued liabilitie% u%ually #ertain to %er$ice% of a continuin' nature while account #ayable are the re%ult of com#leted tran%action b. Accrued liability balance% are le%% material than account #ayable balance%. c. $idence %u##ortin' accrued liabilitie% i% none>i%tent while e$idence %u##ortin' account #ayable i% readily a$ailable d. Accrued liabilitie% at year end will become account #ayable durin' the followin' year )he auditor i% mo%t li&ely to $erify accrued commi%%ion% #ayable in conamination of trade account% #ayable
Suggested Answers Problem 1 1. D 2. C 3. A 4. B 5. A Problem 2 1. B 2. A 3. C 4. D Problem 3 Adust!ng entr!es Problem 4 1. A 2. A 3. C Problem 5 1. A 2. B 3. C 4. A 5. B Problem 6 1. D 2. B 3. C 4. C 5. D 6. A 7. C Problem 7 1. C 2. D 3. 4. A 5. B
Problem 8 1. C 2. B 3. C 4. C 5. D 6. A 7. C 8. B 9. B 10. B 11. A 12. A 13. D 14. C 15. D 16. A 17. D 18. C 19. A 20. A
