The balance sheet and income statement for ABC Company for the years 2015 and 2016 are as follows:Question1. Perform vertical and/or horizontal analysis of the statements and identify two things that appear to be unusual and could be possible symptoms of fraud.2. explain horizontal/vertical analysis BALANCE SHEETCashAccounts receivableInventoryTotal assetsAccounts payableNotes payableCommon stockRetained earningsTotal liabilities andstockholders' equityIncome StatementNet salesCost of goods soldGross marginExpenses:SalariesWarehousing costsAdvertisingTaxesTotal expensesNet income2015$ 4606201,000$2,080$ 580500400600$2,080$ 550120$ 430$ 100806045$ 285$ 1452016$ 300480730$1,510$ 310100400700$1,510$ 840160$ 680$ 1501209075$ 435$ 245

Fraud seems to be purposefully dishonest behaviour in order to obtain an advantage or earn a profit.…

Answered: 1. Perform vertical and/or horizontal…

1. Perform vertical and/or horizontal analysis of the statements and identify two things that appear to be unusual and could be possible symptoms of fraud. 2. explain horizontal/vertical analysis

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter4: Accounting For Retail Operations

Section: Chapter Questions

Problem 4.1MBA

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Concept explainers

Fraud

Fraud in accounting is the planned manipulation of financial documents to make a false appearance of corporate financial health. Moreover, it includes an employee, accountant, or the company itself misleading investors and shareholders.

Question

The balance sheet and income statement for ABC Company for the years 2015 and 2016 are as follows:

Question

1. Perform vertical and/or horizontal analysis of the statements and identify two things that appear to be unusual and could be possible symptoms of fraud.

2. explain horizontal/vertical analysis

BALANCE SHEET
Cash
Accounts receivable
Inventory
Total assets
Accounts payable
Notes payable
Common stock
Retained earnings
Total liabilities and
stockholders' equity
Income Statement
Net sales
Cost of goods sold
Gross margin
Expenses:
Salaries
Warehousing costs
Advertising
Taxes
Total expenses
Net income
2015
$ 460
620
1,000
$2,080
$ 580
500
400
600
$2,080
$ 550
120
$ 430
$ 100
80
60
45
$ 285
$ 145
2016
$ 300
480
730
$1,510
$ 310
100
400
700
$1,510
$ 840
160
$ 680
$ 150
120
90
75
$ 435
$ 245

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