answer question q1-ii and q1-iii showing on top of the image

4 Q1-1 5 ANSWER: Analyze the change in the accounts indicated below in yellow. Think about what could be causing this change? What concerns does this raise for you? Perform your analysis in the yellow cells below. See Accounts Receivable as an example of what an answer should look like. 6 Q2-lii 7 ANSWER: What phase of the audit would this analytic (Vertical Analysis) most likely be performed? (Planning, substantive, completion-Pick 1) Briefly Explan why (1 sentence). (EX: Substantive-because it would be useful for the auditor to detect a material misstatement as this analytic is very detailed and provides very reliable evidence). Healthy Web, Inc. BALANCE SHEET December 31, 20X8 and 20X7 (in thousands) % of Assets 2027 20x8 20x % of Assets 20x7 Change Analysis of Change Assets Current assets Cash and cash equivalents | $3,019 $2,800 Accounts receivables 2,000 1,000 16 7% Accounts Receivable are a larger percentage of total Assets. This could be indicative of the company giving out credit more loosely, or customers paying back the company more slowly. This could represent a big risk to the audit and would require additional analysis. Hint: consider the change in sales to determine if the change is reasonable. Hint: Unless something significant occurred this % should probably stay the same year over year. Inventory 1 4000 175 9,194 3500 170 7,470 32% 1% 31% 1% Prepaid expenses and other current assets 0% Total current assets 3.321 3.928 279 34% -8% Hint: Unless something significant occurred this % should probably stay the same year over year. Property Plan & Equipment (PP&E), net Total assets Liabilities and shareholders' equity Current liabilities $12,515 $11.396 Accounts payable $1,070 $909 31.10% Hint: Consider this in relation to the change in inventory- generaly accounts payable are for -2.80% inventory purchases. Hint: Compare to the Long-term Debt to see if there is any correlation, also consider looking at 3.95% changes in PP& E. Current maturities of notes payable/ Long term debt payable 200 501 5.81% 1.86% Deferred revenue Other current liabilities Total current liabilities 1,973 1711 3,414 1,396 150 2,505 Long-term debt, less current maturity 26 176 0.76% 6.56% Hint: Compare to the "Current maturities of notes payable/ Long term debt payable" to see if there is any correlation, also consider looking at changes -5.81% in PP&E. 4 Q1-1 5 ANSWER: Analyze the change in the accounts indicated below in yellow. Think about what could be causing this change? What concerns does this raise for you? Perform your analysis in the yellow cells below. See Accounts Receivable as an example of what an answer should look like. 6 Q2-lii 7 ANSWER: What phase of the audit would this analytic (Vertical Analysis) most likely be performed? (Planning, substantive, completion-Pick 1) Briefly Explan why (1 sentence). (EX: Substantive-because it would be useful for the auditor to detect a material misstatement as this analytic is very detailed and provides very reliable evidence). Healthy Web, Inc. BALANCE SHEET December 31, 20X8 and 20X7 (in thousands) % of Assets 2027 20x8 20x % of Assets 20x7 Change Analysis of Change Assets Current assets Cash and cash equivalents | $3,019 $2,800 Accounts receivables 2,000 1,000 16 7% Accounts Receivable are a larger percentage of total Assets. This could be indicative of the company giving out credit more loosely, or customers paying back the company more slowly. This could represent a big risk to the audit and would require additional analysis. Hint: consider the change in sales to determine if the change is reasonable. Hint: Unless something significant occurred this % should probably stay the same year over year. Inventory 1 4000 175 9,194 3500 170 7,470 32% 1% 31% 1% Prepaid expenses and other current assets 0% Total current assets 3.321 3.928 279 34% -8% Hint: Unless something significant occurred this % should probably stay the same year over year. Property Plan & Equipment (PP&E), net Total assets Liabilities and shareholders' equity Current liabilities $12,515 $11.396 Accounts payable $1,070 $909 31.10% Hint: Consider this in relation to the change in inventory- generaly accounts payable are for -2.80% inventory purchases. Hint: Compare to the Long-term Debt to see if there is any correlation, also consider looking at 3.95% changes in PP& E. Current maturities of notes payable/ Long term debt payable 200 501 5.81% 1.86% Deferred revenue Other current liabilities Total current liabilities 1,973 1711 3,414 1,396 150 2,505 Long-term debt, less current maturity 26 176 0.76% 6.56% Hint: Compare to the "Current maturities of notes payable/ Long term debt payable" to see if there is any correlation, also consider looking at changes -5.81% in PP&E