Consider the following items of income and expense and state: whether they bear a relationship to each
Question:
Consider the following items of income and expense and state: whether they bear a relationship to each other or not; if they are related in any way, in what way they should move in relation to each other; the reasons for your answer in each case.
(a) Sales of manufacturing concern:
• bank interest
• administrative expense
• commission to sales personnel
• distribution cost
• production royalties.
(b) Cost of production of a manufacturing concern:
• trade receivables
• cost of non-current assets in use
• loss on disposal of factory equipment
• inventory levels
• directors’ emoluments.
(c) Gas company income
• number of units of gas used
• temperature in winter months
• electricity company prices
• number of employees.
Step by Step Answer:
The Audit Process Principles Practice And Cases
ISBN: 9781473760189
7th Edition
Authors: Iain Gray, Louise Crawford, Stuart Manson