QUESTION 4

1. During your audit of Cuccia Coal Co., the controller, Tracy Tricks, refuses to allow you to confirm accounts receivable b/c she is concerned about complaints from her customers. You are unable to satisfy yourself about AR by other audit procedures and you are concerned about Tracys true motives. Assume that all companies mentioned are private companies and that each item is at least material.

   1.		unqualified
   2.		unmodified
   3.		unqualified/unmodified with explanatory paragraph
   4.		qualified
   5.		qualified or disclaimer, depending on materiality
   6.		disclaimer, b/c auditor suspects fraud
   7.		adverse, b/c auditor suspects fraud

0.5 points

QUESTION 5

1. On 1/31, Asare Toy Manufacturing hired your firm to audit the companys financials for the prior year. You were unable to observe the clients inventory on 12/31. However, you were able to satisfy yourself about the inventory balance using other auditing procedures. Assume that all companies mentioned are private companies and that each item is at least material.

   1.		unqualified
   2.		unmodified
   3.		unqualified/unmodified w/ explanatory paragraph
   4.		qualified
   5.		disclaimer

0.5 points

QUESTION 6

1. Gelato Bros., Inc., leases its manufacturing facility from a partnership controlled by the CEO and major shareholder of Gelato. Your review of the lease indicates that the rental terms are in excess of rental terms for similar buildings in the area. The company refuses to disclose this related-party transaction in the footnotes. Assume that all companies mentioned are private companies and that each item is at least material.

   1.		unqualified
   2.		unmodified
   3.		Unqualified/unmodified with explanatory paragraph
   4.		qualified only
   5.		qualified or adverse, depending on materiality
   6.		adverse only

0.5 points

QUESTION 7

1. Johnstone Manufacturing Company has used the double-declining balance method to depreciate its machinery. During the current year, management switched to straight-line b/c it felt that it better represented the utilization of the assets. You concur with its decision. All information is adequately disclosed in the financial statements. Assume that all companies mentioned are private companies and that each item is at least material.

   	1.	unqualified
   	2.	unmodified
   	3.	unqualified/unmodified with explanatory paragraph
   	4.	qualified
   	5.	disclaimer

please solve it with explaination :)