Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Textbook Question
Chapter 10, Problem 3RQSC
Match the following assertions with their associated description: (a) existence/occurrence, (b) completeness. (c) rights and obligations, (d) valuation or allocation, (e) presentation and disclosure.
1. Cash accounts arc properly classified on the
2. Cash balances exist at the balance sheet date.
3. The recorded balances reflect the true underlying economic value of those assets.
4. The company has title to the cash accounts as of the balance sheet date.
5. Cash balances include all cash transactions that have taken place during the period.
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Assets and liablities are classified on the balance sheet into correct and long-term categories in order to
a. determine the value of the businessb. determine the cash flows of the businessc. yield information about liquidityd. distinguish them from extraordinary items
Briefly describe the types of information concerningfinancial position, income, and cash flows that might beprovided (a) within the main body of the financial statements,(b) in the notes to the financial statements, or (c) assupplementary information.
1. Which financial statement will reflect the balance of accounts receivables?
a. Cash Flow Statement
b. Income Statement
c. Balance Sheet
d. Staternent of Retained Earnings
2. Which of the following is not an asset?
a. Work in Process
b. invertory
c. Accounts Payable
d. Land
3. The statement of cash flows would disclose the withdrawal of cash by the owners?
a. In the Financing Activities Section
b. In the Financing Activities Section
c.In the Operating Activities Section
d.In the Notes to the Financial Statements
Chapter 10 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
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- The system of preparing financial statements based on recording events when the cash is received and reporting expenses when the cash is paid is called: a. Accrual basis accounting. b. Operating cycle accounting. c. Cash basis accounting. d. Revenue recognition accounting. e. Current basis accounting.arrow_forwardWhat type of financial information are accessed by the users to make decisions? a. Composition of the management b. Bank accounts of the company c. Property of the company d. Expected future cash inflowsarrow_forwardBecause receipts and payments must be classified in the statement of cash flows as to whether they are from Operating, Investing, or Financing activities, the ____________________________ audit objective is especially important.arrow_forward
- Accounts Receivable will appear on which of the following financial statements?a. Income statementb. Statement of retained earningsc. Balance sheetd. Statement of cash flowsarrow_forwardWhen income is to be recognized on cash basis. by Safe Trust Bank, a distinction should be made between a. Banking and Non-banking assets b. Monetary and Non-banking assets c. Current and Non-current assets d. Performing and Non-performing assetsarrow_forwardArrange the following items in current assets according to its liquidity: A . Cash, Inventories, Marketable Securities, Account Receivable. B. Cash, Account Receivable, Inventories, Marketable Securities. C. Cash, Marketable Securities, Account Receivable, Inventories. D. Cash, Account Receivable, Marketable Securities, Inventories.arrow_forward
- describe accounting methods (choices and estimates) that could be used to manage earnings,cash fl ow, and balance sheet itemsarrow_forwardExercise 1-2 The following items are included in the Cash general ledger account of SANTAN COMPANY as of Dec. 31, 2019: 1. Current account with MBTC 2. Current account with MBTC (overdraft) 3. Petty cash fund (with P350 unreplenished vouchers) 4. Change fund (originally set up by retaining P250 in each of the five cash registers) 5. Cash in bank established as sinking fund 6. Undeposited cash collections (including one check for P400 dated Jan. 2, 2020) 7. Cash deposited with a government agency as bidder's bonds 8. Cash advances for travelling salesmen 9. Cash in bank (under receivership) 10. Cash for meter deposit with a public utility (Meralco) Exercise 1-3 P100,000 20,000 1,000 1,230 40,000 REQUIRED: 1. At what amount should cash as a current asset appear in the balance sheet? 2. How will the other accounts be reported? accounts 5. Change fund 6. Promissory note from cashier with no due date 12,400 7. Currency and coins per count 8. Cash in bank (outstanding checks amounting to…arrow_forwardDissect the connection between the income statement, the balance sheet (or cash flow statement), and the retained earnings statement.arrow_forward
- How does the double-entry accounting system ensure the accuracy of financial transactions and maintain the balance between assets, liabilities, and equity?arrow_forwardWhich of the following is not one of the four basic financial statements?a. The balance sheetb. The audit reportc. The income statementd. The statement of cash flowsarrow_forward1. Which of the following will not be classified under operating activities in a cash flow statements?a. Cash receipts from sale of goods or rendering of services.b. Cash receipts from sale of equity and debt instruments of other entities held primarily for the purpose of being traded.c. Cash receipts from sale of equity instruments representing interests in joint ventures.d. Cash payments to employees for short-term employee benefits. 2. Which of the following is a correct computation of cash flows from operation using the indirect method? a. Profit less depreciation expense, add increase in accounts receivable, less increase in accounts payable. b. Profit less depreciation expense, add decrease in accounts receivable, deduct increase in accounts payable. c. Profit add depreciation expense, add decrease in accounts receivable, deduct increase in accounts payable. d. Profit add depreciation expense, add decrease in accounts receivable, less decrease in…arrow_forward
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