CHAPTER 10 Auditing Revenue and Related Accounts 1 Explain the concept of accounting cycles and their impact on audit approaches, and identify the accounts in the revenue cycle. 2 Discuss the importance of proper revenue recognition and the characteristics of revenuerelated fraud. 3 Describe the major types of fraud and misstatements that have occurred in the revenue accounts. 4 Describe how to use analytical procedures to identify possible misstatements in the revenue cycle. 5 Assess
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True / False Questions 1. A company's fiscal year must correspond with the calendar year. FALSE AACSB: Communications AICPA BB: Industry AICPA FN: Decision Making Difficulty: Easy Learning Objective: C1 2. The time period principle assumes that an organization's activities can be divided into specific time periods. TRUE AACSB: Communications AICPA BB: Industry AICPA FN: Decision Making Difficulty: Easy Learning Objective: C1 3. Interim statements report
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an accounting period which transfer the balances of temporary accounts to permanent accounts. Closing entries are based on the account balances in an adjusted trial balance and the reason closing entries are prepare is when the revenue, expense, and drawing accounts, Dividend, Drawings or Withdrawals Accounts, Income Summary Account(the temporary accounts) are closed, their balance returns to zero in preparation for the new accounting period. Trial balance is the process of totaling the debits
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Consumer Decision Process and Problem recognition LEARNING OBJECTIVES 1) Understand the impact of purchase involvement on the decision process. 2) Know the various types of decision making used by consumers. 3) Know what problem recognition is, how it occurs, and how it fits into the consumer decision-making process. 4) Know how to measure problem recognition. 5) Understand how marketing strategy can be developed based on problem recognition. SUMMARY Consumer decision
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of amortized over multiple ones. This would result in cost savings, as the company would not need to hire as many accountants or spend as much money on overtime for them. Moreover, expensing all company purchases would be more in line with the Recognition Principle of the GAAP, which states that costs should be recognized in the accounting period in which they are incurred. However, expensing all purchases will negatively affect the company’s financial statements. When office supplies are purchased
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CASE10-3 Restructuring Costs Summary: In the case, Pharma is a subsidiary in the US, and the parent company is located in U.K. So when prepare the financial statement, it should repot both under IFRS and U.S. GAAP. Now, the company considers a program of restructuring, which is relocation of a manufacturing operation, and the plan would terminate some employees. At Dec.15, 2011 the company have a announcement that plan to vacate the plan on Jan.31, 2012, and the Dec 27,2011, the company
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......................................................................... 32 Income taxes ................................................................. 35 Provisions and contingencies ......................................... 37 Revenue recognition ...................................................... 39 Share-based payments................................................... 41 Employee benefits other than share-based payments ..... 43 Earnings per share ..............................
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accounts in the assets, liabilities, and stockholders' equity (including the temporary accounts). All normal accounts on the left side of the accounting equation (assets) are increased by debits and decreased by credits whereas accounts on the right side of the equation (liabilities and stockholders' equity) are increased by credits and decreased by debits. A permanent account is an account whose balance at the end of the accounting period is carried forward into the next accounting period. Examples:
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liabilities. Example of current liabilities include accounts payable, short-term notes payable, commercial paper, trade notes payable, and other liabilities incurred in the normal operations of the business. Some of these normal operating costs include salaries payable, wages payable, interest payable, income tax payable, and the current balance of a long-term debt that will be due within a single year. Other long-term obligations, such as bonds, can be classified as current because they are callable by the
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CHAPTER 9 Inventories: Additional Valuation Issues ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Concepts for Analysis Exercises Problems 1, 2, 3, 9, 10 1, 2, 3, 5 6 1. Lower-of-cost-or-market. 1, 2, 3, 4, 5, 6 1, 2, 3 1, 2, 3, 4, 5, 6 2. Inventory accounting changes; relative sales value method; net realizable value. 7, 8 4 7, 8 3. Purchase commitments. 9 5, 6 9, 10 9 4. Gross profit method.
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