In audit planning the audit of Circuits Technology, Inc. (CTI). CTI resells, installs, and provides computer-networking products
Question:
In audit planning the audit of Circuits Technology, Inc. (CTI). CTI resells, installs, and provides computer-networking products (client software, gateway hardware and software, and twinax hardware) to other businesses. Figure provides some summary information from CTI's financial statements.
Required
a. Calculate purchases, gross margin, inventory turn days, accounts receivable turn days, and accounts payable turn days for the years ended 20x2, 20x3, 20x4, 20x5.
b. Describe the trends identified by performing analytical procedures in the gross operating cycle, the net operating cycle, and gross margin.
[342] PART 2 / AUDIT PLANNING
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c. If tolerable misstatement is $45,000 for inventory, develop an expectation range for inventory turn days.
d. With respect to inventory, what might these trends indicate about the potential misstatement in inventory?
Figure CTI Selected Financial Information($000)
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Step by Step Answer:
A The following table calculates the purchases percentage of gross margin inventory turn days accoun...View the full answer
Auditing A Practical Approach with Data Analytics
ISBN: 978-1119401742
1st edition
Authors: Raymond N. Johnson, Laura Davis Wiley, Robyn Moroney, Fiona Campbell, Jane Hamilton
