CHRISTOPHER T. ESPENILLA, CPA MBA FACULTY – SAINT LOUIS UNIVERSITY, BAGUIO CITY REVIEWER – REVIEW SCHOOL OF ACCOUNTANCY, MANILA
AUDITING (2016 EDITION) CTESPENILLA
SOLUTIONS GUIDE 1 of 155
CHAPTER 1: THE AUDIT PROCESS PROBLEM 1: CLIENT ACCEPTANCE AND CONITINUANCE 1 D
11 B
2 D
12 C
3 D 4 A 5 D 6 B 7 B 8 A 9 D 10 D
PROBLEM 2: UNDERSTANDING THE BUSINESS AND THE INDUSTRY 1 D
11 C
2 D
12 B
3 C
13 B
4 D
14 D
5 D
15 D
6 D
16 B
7 A 8 D 9 C 10 E
PROBLEM 3: INTERNAL CONTROL 1 C
11 E
21 B
2 D
12 B
22 A
3 C
13 D
23 C
4 C
14 C
24 B
5 A
15 C
25 C
6 D
16 C
26 A
7 C
17 C
8 D
18 D
9 D
19 D
10 A
20 A
PROBLEM 4: RISK BASED AUDIT PLANNING 1 D
11 C
2 C
12 B
3 D 4 B 5 B 6 B 7 C 8 A 9 D 10 C
CHAPTER 1: THE AUDIT PROCESS
AUDITING (2016 EDITION) CTESPENILLA
SOLUTIONS GUIDE 1 of 155
CHAPTER 1: THE AUDIT PROCESS PROBLEM 1: CLIENT ACCEPTANCE AND CONITINUANCE 1 D
11 B
2 D
12 C
3 D 4 A 5 D 6 B 7 B 8 A 9 D 10 D
PROBLEM 2: UNDERSTANDING THE BUSINESS AND THE INDUSTRY 1 D
11 C
2 D
12 B
3 C
13 B
4 D
14 D
5 D
15 D
6 D
16 B
7 A 8 D 9 C 10 E
PROBLEM 3: INTERNAL CONTROL 1 C
11 E
21 B
2 D
12 B
22 A
3 C
13 D
23 C
4 C
14 C
24 B
5 A
15 C
25 C
6 D
16 C
26 A
7 C
17 C
8 D
18 D
9 D
19 D
10 A
20 A
PROBLEM 4: RISK BASED AUDIT PLANNING 1 D
11 C
2 C
12 B
3 D 4 B 5 B 6 B 7 C 8 A 9 D 10 C
CHAPTER 1: THE AUDIT PROCESS
AUDITING (2016 EDITION) CTESPENILLA PROBLEM 5: SUBSTANTIVE TESTING 1 B
21 B
2 A
22 D
3 C
23 B
4 C
24 D
5 C
25 C
6 D
26 C
7 C
27 B
8 D
28 B
9 C
29 B
10 C
30 B
11 A
31 D
12 B
32 A
13 B
33 A
14 A 15 A 16 B 17 A 18 A 19 D 20 A
PROBLEM 6: AUDIT REPORTING 1 C 2 B 3 B 4 B 5 B 6 C 7 A 8 B 9 C 10 C 11 A 12 C
CHAPTER 1: THE AUDIT PROCESS
SOLUTIONS GUIDE 2 of 155
AUDITING (2016 EDITION) CTESPENILLA
SOLUTIONS GUIDE 3 of 155
CHAPTER 2: AUDIT OF CASH DISCUSSION PROBLEMS CHAPTER 2-PROBLEM 1 1 B 2 D 3 A 4 B 5 D 6 D 7 D 8 D 9 D 10 D 11 D 12 B 13 C 14 B 15 B 16 C 17 B 18 D 19 D 20 B 21 C 22 D 23 C 24 D 25 B
AP02-PROBLEM 2: MAPERA CORPORATION 1. Ans. P3,445,000 Current account at Metrobank Post-dated disbursement check - adjusted to AP Undelivered disbursement check - adjusted to AP Adjusted current account at Metrobank
3,250,000 75,000 120,000 3,445,000
2. Ans. P2,250,000 Savings account at Rural Bank Compensating balance - legally restricted Adjusted savings account at Rural Bank
2,750,000 (500,000) 2,250,000
3. Ans. Zero The bank overdraft balance with BDO shall be presented as a current liability since there is no right of offset, that is the company has no bank account with BDO. 4. Ans. P738,000. Undeposited collections, unadjusted balance Customer stale check - adjusted to AR Custo mer post-dated check - adjusted to AR Customer DAUD check - Adjusted to AR Officer's NSF check - Adjusted to AR-no ntrade Adjusted undeposited collections
1,278,000 (180,000) (125, 000) (155,000) (80,000) 738,000
5. Ans. P18,500 Bills and coins Replenishment check A dju ste d pe tty ca sh fun d a s of 12 /3 1/1 4 6. Ans. P613,500 Travel fund Interest and dividend fund Payroll fund Change fund Petty cash fund Adjusted cash fund - Cash and cash equivale
7,000 11,500 1 8,5 00
50,000 120,000 400,000 25,000 18,500 613,500
7. Ans. P900,000 Debt security investment due 3/31/15 purchased 12/31/14 Preference shares redeemable on 2/28/15 purchased 12/1/14 Debt and equity securities - Cash and cash equivalent 8. Ans. P7,946,500 Adjusted current account at Metrobank Adjusted savings account at Rural Bank Adjusted undeposited collections Adjusted cash fund - Cash and cash equivalent Debt and equity securities - Cash and cash equivalent Cash and cash equivalents, adjusted balance
600,000 300,000 900,000
3,445,000 2,250,000 738,000 613,500 900,000 7,946,500
CHAPTER 2: AUDIT OF CASH AND CASH EQUIVALENTS
