Questions from Auditing and Assurance

Q: Lee Wong, CPA, is auditing the financial statements of the

Lee Wong, CPA, is auditing the financial statements of the Alexandria Corporation, which has a batch-processing IT-based system for shipping and invoicing that it purchased from a software vendor. The...

Q: Orange Corp., a high-technology company, utilizes the following

Orange Corp., a high-technology company, utilizes the following procedures for recording materials and transferring them to work in process. (1) Upon receipt of raw materials by stores, the storekeepe...

Q: Island Trading Co., a client of your CPA firm, has

Island Trading Co., a client of your CPA firm, has requested your advice on the following problem. It has three clerical employees who must perform the following functions: (1) Maintain general ledger...

Q: Describe the risk of material misstatement of an assertion. List the

Describe the risk of material misstatement of an assertion. List the two components that make up this risk.

Q: Prospect Corporation, your new audit client, processes its sales and

Prospect Corporation, your new audit client, processes its sales and cash receipts in the following manner: (1) Sales. Salesclerks prepare sales invoices in triplicate. The original and second copy ar...

Q: You are invited by John Bray, the president of Cheviot Corporation

You are invited by John Bray, the president of Cheviot Corporation, to discuss with him the possibility of your conducting an audit of the company. The corporation is a small, closely held manufacturi...

Q: Precision Industries, Inc., is a manufacturer of electronic components.

Precision Industries, Inc., is a manufacturer of electronic components. When a purchase order is received from a customer, a sales clerk prepares a serially numbered sales order and sends copies to th...

Q: You have been asked by the board of trustees of a local

You have been asked by the board of trustees of a local church to review its accounting procedures. As part of this review, you have prepared the following comments relating to the collections made at...

Q: The Ultimate Life Insurance Company has a database system that stores policy

The Ultimate Life Insurance Company has a database system that stores policy and payment information. The company is now planning to provide its branch offices with terminals that have online access t...

Q: CPAs may audit around or through computers in the audit of the

CPAs may audit around or through computers in the audit of the financial statements of clients who use IT to process accounting data. a. Describe the auditing approach referred to as “auditing around...