Questions from Auditing and Assurance

Q: The balance sheet of a company lists $25 million of inventory

The balance sheet of a company lists $25 million of inventory. What assertions is management making regarding inventory?

Q: Jones was engaged to examine the financial statements of Gamma Corporation for

Jones was engaged to examine the financial statements of Gamma Corporation for the year ended June 30. Having completed an examination of the investment securities, which of the following is the best...

Q: A loan covenant is a condition requiring the borrower to comply with

A loan covenant is a condition requiring the borrower to comply with the terms of a loan agreement. If the borrower does not act in accordance with the covenants, the loan can be considered in default...

Q: You have been engaged to audit the financial statements of Broadwall Corporation

You have been engaged to audit the financial statements of Broadwall Corporation for the year ended December 31, 2017. During the year, Broadwall obtained a long-term loan from a local bank pursuant t...

Q: Which cycle is not directly linked to the production cycle?

Which cycle is not directly linked to the production cycle? a. Acquisition and expenditure cycle. b. Payroll cycle. c. Revenue and collection cycle. d. Finance and investment cycle.

Q: The following covenants are extracted from the indenture of a bond issue

The following covenants are extracted from the indenture of a bond issue. The indenture provides that failure to comply with its terms in any respect automatically advances the due date of the loan to...

Q: What items could indicate a significant risk of fraud in the acquisition

What items could indicate a significant risk of fraud in the acquisition and expenditure cycle (i.e., be red flags)?

Q: You are the continuing auditor of Sussex Inc. and are beginning

You are the continuing auditor of Sussex Inc. and are beginning the audit of the common stock and treasury stock accounts. You have decided to design substantive procedures with reliance on internal c...

Q: Sammy Smith is the partner in charge of the audit of Blue

Sammy Smith is the partner in charge of the audit of Blue Distributing Corporation, a wholesaler that owns one warehouse containing 80 percent of its inventory. Smith is reviewing the audit documentat...

Q: You are a CPA engaged in an audit of the financial statements

You are a CPA engaged in an audit of the financial statements of Pate Corporation for the year ended December 31. The financial statements and records of Pate Corporation have not been audited by a CP...