PROJECT A 210.000 PROJECT B 20.000 Net cash inflows 12,000 10,500 9,500 8,200 Initial investment Net cash inflows 15,000 30,000 32.000 Year 1 2 3 425,000 4 Required: Using the payback period criterion (2 marks) Calculate each project's payback period. a) which project is preferable? HaC91 Business Finance b) Calculate the net present value for each project. Using the net present value criterion, which project is preferable? (4 marks) 1: In your own words, explain what the purpose of test of controls is? (2 marks)identify specific accounts on the financial statements that are affected by performing test of controls for the acquisition and payment cycle (2 marks) 2: Explain what is "going concern" and what are some of the financial indicators looked for by an auditor (identify a minimum of three)? 8: Explain the difference between "materiality" as it is used in accounting and auditing as per AASB 1013 "Materiality" and "Emphasis of Matter". 4: There are two types of sampling.risk, one for test of controls, the other involving substantive testing. For each of the tests, explain what the risks are? 5: Explain what are the major considerations that an auditor should take into account in determining what level of substantive testing should be carried out? PROJECT A 210.000 PROJECT B 20.000 Net cash inflows 12,000 10,500 9,500 8,200 Initial investment Net cash inflows 15,000 30,000 32.000 Year 1 2 3 425,000 4 Required: Using the payback period criterion (2 marks) Calculate each project's payback period. a) which project is preferable? HaC91 Business Finance b) Calculate the net present value for each project. Using the net present value criterion, which project is preferable? (4 marks) 1: In your own words, explain what the purpose of test of controls is? (2 marks)identify specific accounts on the financial statements that are affected by performing test of controls for the acquisition and payment cycle (2 marks) 2: Explain what is "going concern" and what are some of the financial indicators looked for by an auditor (identify a minimum of three)? 8: Explain the difference between "materiality" as it is used in accounting and auditing as per AASB 1013 "Materiality" and "Emphasis of Matter". 4: There are two types of sampling.risk, one for test of controls, the other involving substantive testing. For each of the tests, explain what the risks are? 5: Explain what are the major considerations that an auditor should take into account in determining what level of substantive testing should be carried out
