.Dan and Lily, two audit staff associates are discussing audit sampling while working on the audit of a major client. Dan is explaining to Lily the various audit sampling methods that he has seen being used by audit managers. Dan asks Lily if she has ever heard of the ratio method with respect to evaluating sample results. Lily replies that she has not, so they decide to ask their supervisor, Brad. What would be the best answer from Brad to appropriately answer this question
Q: Hillside issues $1,400,000 of 5%, 15-year bonds dated January 1, 2021, that pay interest…
A: Bond is a financial security which is issued by large organization in order to raise funds. Bonds…
Q: Revenue variances Lowell Manufacturing Inc. has a normal selling price of $20 per unit and has been…
A: VARIANCE ANALYSIS Variance Analysis is Nothing but the Difference between Standard Costing &…
Q: XYZ company bought a car with a list price of $30,000. They had to pay $1,500 sales tax in addition…
A: Cost of assets represents the costs involved in acquiring, installing and commissioning assets.
Q: Universal Semiconductors switched from the double-declining-balance depreciation method to…
A: Under straight-line depreciation method, depreciation expense is allocated equally over the useful…
Q: Sunland Appliance Co. manufactures low-price, no-frills appliances that are in great demand for…
A: Journal Entry is the primary step to record the transaction in the books of accounts. Sales can be…
Q: Industrial Development Corporation (IDC) granted Naseer Pty(Ltd) R20 000 on 01 January 2021 to…
A: Grant is, receiving of some amount of resources, for free. It may be conditional or unconditional.
Q: Wrexder plc bought machinery for £154,000. The machinery has an estimated useful life of 4 years and…
A: Depreciation :— It is the decrease in the value of asset due to continuos use of asset. Straight…
Q: Ending inventory for the year ended December 31, 2017, is understated by $15,000. How will this…
A: If the ending inventory of one year is overstated then the net income will be overstated of the…
Q: the year brenda(70) a single tax payer received 18000 social security benefits. Her only other…
A: Social security benefits are taxable upto certain limits but below that they are not taxable so it…
Q: National Co. manufactures and sells three products: red, white and blue. Their unit sales prices are…
A: The Breakeven Point is that level of sales at which there is no profit no loss. In other words it is…
Q: The Belvidere Pharmaceuticals Group is a group of companies with six divisions/branches within your…
A: Explanation - There are statements of the organization which show different accounting financials.…
Q: 000. Price $300 Maturity (years) 30
A: Answer :
Q: A company is considering two insurance plans with the following types of coverage and premiums: Plan…
A: In this question there are two options and we have to opt the best alternative to the company which…
Q: What would be the marginal tax rate for a single person who has a taxable income of: a) $31,560 b)…
A: The tax rate is the rate at which the taxpayer's tax is determined based on their taxable income.…
Q: A barn that cost $42,000 to construct is placed in service midyear as a 20-year property. What is…
A: Answer : Cost of Barn = $42,000 Depreciation rate for year 3 = 6.677% Depreciation expenses for Year…
Q: 17. Noah gave $750 to a good friend whose house was destroyed by an earthquake. In addition, Noah…
A: Introduction: Generally Gifts to individuals are not deductible as charitable contributions because…
Q: Can you please describe contingent liabilities and how to account for and/or report
A: Contingent liabilities are defined as liabilities that occur in the future. These liabilities are…
Q: a. Prepare a monthly factory overhead flexible budget for 9,000, 10,000, and 11,000 hours of…
A: Introduction:- A flexible budget is a budget that adjusts irrespective to the volume of a company.…
Q: Ralley Corporation sells a single product at a price of $550 per unit. Variable cost per unit is…
A: Introduction:- CVP analysis is used to identify the changes in costs and volume affect a company's…
Q: Mackinaw Inc. processes a base chemical into plastic. Standard costs and actual costs for direct…
A: Solution:- a-1)Calculation of direct material variance as follows under:- Direct material variance…
Q: Onslow Company purchased a used machine for $192,000 cash on January 2. On January 3, Onslow paid…
A: Straight line method is the depreciation method which allocates the depreciation expense on a…
Q: Smoky Mountain Corporation makes two types of hiking boots-the Xtreme and the Pathfinder. Data…
A: The question is related to the traditional costing and Activity Based Costing. Under traditional…
Q: What are examples of direct cost related to juvenile recidivism?
A: Some examples of direct costs related to juvenile recidivism include the costs of: -Hiring…
Q: Action Travel has 10 employees each working 40 hours per week and earning $20 an hour. Fede income…
A: ANSWER:- $ 916 (option 4) is correct answer $916 is the employer's total payroll tax expense for…
Q: dentify the effect of each of the following on the earnings credit allowance: A decrease in the…
A: The earnings credit allowance is the money that is allowed to be earned without the reduction in the…
Q: 1) In 2016 Kiran sold, for $450,000, the house where he and his family had lived for the last seven…
A: Note: “Since you have asked multiple questions, we will solve the first question for you. If you…
Q: Anderson Winery in Napa Valley, California, has two departments: Fermenting and packing. Direct…
A: The equivalent units are calculated on the basis of percentage of the work completed during the…
Q: Find the gross income, the adjusted gross income, and the taxable income Base the taxable income on…
A: The tax is essentially levied on taxable income at the rate specified by the tax authorities. The…
Q: Under prospect theory, the shape of the utility function implies that investors are
A: Under prospect theory, the shape of the utility function implies that investors are: (A) Always risk…
Q: Tweet Incorporated included the following disclosure note in an annual report: Share-Based…
A: Restricted stock units are a part of the company’s stock that an entity provides to its employees…
Q: following are selected operating data for Jackson Company's Blending Department for April 2019.…
A: Equivalent units of production are based on whole units and their percentage of completion. Cost…
Q: 8. Which one of the following statements is correct ? Public companies, that are listed on a Stock…
A: Answer:- Environmental audit meaning:- An independent evaluation known as a "environmental audit"…
Q: 12 13 9 10 5 6 4 3 1 2 33 34 35 36 24 25 26 27 28 29 30 31 32 22 23 19 20 21 16 17 DATE Oct. 2 15 14…
A: Trial balance is the statement that accumulates the balances of all ledgers. It has three columns…
Q: taxes
A: Taxes are compulsory obligations on those who earn over and above the specified limit. All entities…
Q: Neverstop Corporation sells item A as part of its product line. Information about the beginning…
A: FIFO Method :— Under this method, Beginning inventory and old purchases is used for output or sales…
Q: A recent annual report for Celtic Air Lines included the following note: NOTE 1: SUMMARY OF…
A: The frequent usage of the assets for business reasons reduces the value. Throughout the asset's…
Q: The Belvidere Pharmaceuticals Group is a group of companies with six divisions/branches within your…
A: Explanation - There are three statements of the organization which show different accounting…
Q: Steve Jobs has employment income of $150,000 for 2021. He is single and lives alone. Steve's…
A: Introduction When transform the values of different goods in the balance sheet and profit and loss…
Q: Silver Corporation produces a single product. During the current year, Silver produced 30,000 units…
A: The major difference in the income of variable costing and absorption costing occurs due to the…
Q: Find the gross income, the adjusted gross income, and the taxable income. Base the taxable income on…
A: Every individual, firm, and company earns income by doing business and giving services. The earned…
Q: Instruction: (Horizontal Analysis) Present an interpretation and conclusions about the result of…
A: There are various methods used for analysis of financial statements. Commonly used methods are *…
Q: Ending inventory for the year ended December 31, 2017, is understated by $15,000. How will this…
A: 2017 ending inventory is the beginning inventory for 2018. So, the beginning inventory of 2018 is…
Q: Use the weighted-average inventory method to calculate the cost of the ending inventory for the…
A: Ending inventory is the amount of inventory that an entity have, at the end of the period. It is…
Q: Obtain a copy of The State of New Jersey's Comprehensive Annual Financial Report Fiscal Year Ended…
A: The State of New Jersey's comprehensive annual financial report is the report of financial…
Q: Horn Industries uses a standard cos on machine hours. Here are data re
A: Manufacturing overhead variance shows the difference between the actual performance and standard…
Q: stributed $10,000 to Terry, its sole shareholder, on May 1, 2022. Terry’s stock basis in Cane…
A: A dividend refers to the sum value of money distributed by a company to its shareholders from the…
Q: The following data relating to direct materials cost for October of the current year are taken from…
A: Standard cost is the cost which is budgeted or estimated and expected to be achieved in the normal…
Q: There is a link between organisational ethics and the business model. In this case study the author…
A: Making information available to everyone is called "democratizing information." Google and Facebook…
Q: Gecko Company's budgeted monthly sales are as follows: April $220,000, May $260,000, June $190,000,…
A: Budgeted cash collection is based on cash sales and credit sales. Credit sales are collected in…
Q: Quick Construction Company builds bridges and uses the percentage of completion method. Data on its…
A: The calculation of balances of Accounts Receivables at the end of the first month, second month and…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Jason and Marco are working on the audit of Jackson Enterprises, Inc., a large national retailer of fireworks and other pyrotechnic products. Jason, an audit intern has been learning about audit sampling techniques, in particular probability-proportionate-to-size sampling. Marco asks Jason how auditors using this sampling method determine the risk of incorrect rejection. What should Jason's response be to this? When using this particular sampling method, the auditors typically do not concern themselves with the risk of incorrect rejection, as this sampling method tests the entire population. When using this sampling method, the auditors specify the risk of incorrect rejection as the assessed level of audit risk multiplied by the determined level of inherent risk. When it comes to probability-proportionate-to-size sampling, the auditors do not specify a risk of incorrect rejection; rather auditors control this risk indirectly. O When it comes to probability-proportionate-to-size…Blake and Caroline, two audit managers assigned to the audit of Legolas Enterprises are discussing samples and sample sizes in conjunction with the audit of the client's system of internal control. Blake mentions that back in college when he took an auditing class, he recalled the professor saying that audit sample size was tied to the level of assurance that the auditor ultimately wished to obtain. Which of the following responses by Caroline is most likely to help Blake understand this connection? O The professor was mistaken. There really isn't any relationship between the level of assurance the auditor wishes to obtain and the sample sizes used in an audit. O Although there is a definite relationship between desired level of assurance and sample size, most auditors simply audit the population of interest when they wish to increase the desired level of assurance. O Generally speaking, if an auditor wishes to increase the desired level of assurance, he or she will typically increase…Nazril is a new audit trainee at Faezi & Co. In assisting the audit seniors to undertake the audit work, the audit seniors always advise her to properly maintain all the working papers. From there on, whenever she does any audit work, she will make sure all information is properly documented and properly kept in a proper file. In practice, there are several audit sampling techniques that are associated with either the non-statistical or statistical sampling approaches. Clarify which is and briefly explain the differences between statistical and non-statistical sampling approach.
- Can someone please help? Thank you. John and Susan are discussing the various audit sampling techniques available to auditing firms after their auditing class one day. John mentions to Susan that he heard the auditing professor discussing standard deviation and sample size as part of classical variables sampling and was confused as he always thought standard deviation had more to do with statistics than auditing. John asks Susan if she understood what the professor was referring to, and if there is any connection to classical variables sampling. What is Susan's best response to this question.Ja'Niya, a recent college graduate has started working for Cline CPA Firm. Ja'Niya is currently taking part in her first audit, and is discussing the management letter with her supervisor, Jamie. Jamie has just explained why the CPA firm sends management letters to its audit clients, however Ja'Niya is still confused as to the purpose of the letter and asks Jamie to provide some examples of items that might be in the letter. Which of the following would represent examples of items that an auditor might apprise management of in a management letter? • Generally accepted auditing standards require drafting and transmittal of the management letter by the external auditors for all public and private clients. Once the management letter has been received by management, the auditors' requests written assurances from management confirming the effectiveness of internal controls in the noted areas. • The external auditing firm might use a management letter to communicate important matters and…During the audit of Seahorse LLC, the external auditors, Packhorse CPAS, have just completed their audit of the clients system of internal control and have documented their findings accordingly. One of Packhorse CPAs audit managers is discussing the results of the internal control audit with an audit intern, Halle. Halle is curious as to what the auditing firm will do with this information and these findings, and whether it affects any future parts of the audit. Which of the following responses is correct with respect to helping Halle understand this? • The audit of internal control is performed by the audit firm to comply with generally accepted auditing standards. With this part of the audit complete, the auditor can render an opinion on the client's financial statements. • Once the audit of the client's system of internal control is complete, the auditor examines the findings and apprises the client's management of any weaknesses in a timely manner. If weaknesses in internal control…
- Marissa is an audit intern working at Marshall CPA firm. Her supervisor at Marshall CPA firm has explained that the audit of property, plant and equipment and the related accounts ties in to management's expectations of the firm's earnings. Marissa is unclear as to how this relationship works and asks the supervisor to elaborate. Which of the following would be the most accurate response? O The relationship is fairly straightforward. If the client's management is keen to show strong earnings to beat analysts' expectations, they may manipulate depreciation expenses to boost these earnings. O The best way to think about this relationship is to think about how fixed assets are depreciated over time, and the incentive management has to shorten useful lives to decrease depreciation expenses. The relationship works on the premise that when property, plant and equipment is amortized, the firms earnings are boosted through the accelerated amortization of fixed assets. O None of these answer…John Josephs an audit manager for Tip, Acanoe & Tylerto, was asked to speak at a dinner meeting of the local Small Business Administration Association. The president of the association has suggested that he talk about the various phases of the audit process. John has asked you, his trusted assistant, to prepare an outline for his speech. He suggests that you answer the following. Required: A) List and describe the various phases of an audit. B) Describe how audit procedures designed for one purpose might provide evidence for other purposes. Give an example. C) One of the phases involves understanding an entity's internal control. Why might the members of the association be particulary interested in the work conducted by auditors in this phase of the audit?Sarah O’Hann enjoyed taking her first auditing course as part of her undergraduate accounting program. While at home during her semester break, she and her father discussed the class, and it was clear that he didn’t really understand the nature of the audit process as he asked the following questions. What is the main objective of the audit of an entity’s financial statements? Given the CPA firm is auditing financial statements, why would they need to understand anything about the client’s business? What does the auditor do in an audit other than verify the mathematical accuracy of the numbers in the financial statements? The audit represents the CPA firm’s guarantee about the accuracy of the financial statements, right? Isn’t the auditor’s primary responsibility to detect all kinds of fraud at the client?
- Saleha was recently hired by the accounting firm of Haron & Associates. After two weeks of joining the firm, Saleha was sent to the first-year staff training course. The instructor asked her to prepare answers for the following questions:a. Briefly explain the definition of Audit Evidence.b. How does evidence relate to assertions and to the audit report?c. What are the characteristics of evidence should an auditor be concerned with when searching for and evaluating evidence? d.List and explain the objective and benefits of financial statement audit.Kelly Griffin, an audit manager, had begun preliminary analytical procedures of selected statistics related to the Majestic Hotel. Her objective was to obtain an understanding of the hotel’s business in order to draft a preliminary audit plan. She wanted to see whether she could detect any troublesome areas or questionable accounts that couldrequire special audit attention. Unfortunately, Griffin caught the flu and was hospitalized. From her sickbed, she sent you the schedule she had prepared (Exhibit 4.55.1) and has asked you to write a memorandum identifying areas of potential misstatements or other matters that the preliminary audit plan should cover. Check the below image for Exhibit 4.55.1 Required:Write a memorandum describing Majestic’s operating characteristics compared to the industry average insofar as you can tell from the statistics. Do these analytical procedures identify any areas that could represent potential misstatements in the audit?Dave and Charlie are sitting at lunch one day on the premises of one of their large audit clients when the topic of going concern comes up. Dave mentions to Charlie that he vaguely recalls hearing this term in his accounting classes back in college, but doesn't remember what this means or why it is part of the audit. Which of the following responses by Charlie would help Dave to understand this? (Select all that apply.) Going concern deals with the entity's ability to continue operating as an enterprise, and is an important assumption that the auditor should evaluate. The going concern assumption is required to be evaluated by management each year for the forthcoming year. The going concern assumption is tested by evaluating management's breach of loan and debt covenants over the past three years. Going concern really speaks to the client firm's ability to pay its short-term liabilities when they come due, and whether the firm will need to refinance maturing loans to conserve cash.