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(e)Assess and explain the risks of material misstatement relating to the occurrence assertion of RWs revenue for the year ended 31 December 2021. (5 marks)
(e)Assess and explain the risks of material misstatement relating to the occurrence assertion of RWs revenue for the year ended 31 December 2021. (5 marks)
Question 1 (25 marks) You are the audit manager for the financial statements of Red Wood Furniture Limited ("RW") for the year ended 31 December 2021. RW is a furniture manufacturer registered in Hong Kong. It runs a factory in Dongguan, China. During the planning stage of the engagement, you obtain the following financial information from RW: Amount in 2021 Financial statement item Amount in 2020 (HK$'000) (HK$'000) Revenue 525 Cost of Goods Sold 350 Gross Profit 175 PPE 425 Account Receivables 232 Account Payables 155 285 242 43 495 75 105Step by Step Solution
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