Question
The following information is given during an audit: July 31 Income before tax: $0 Net Income: $0 Current Assets: $11,000,000 Total Assets: $21,000,000 Current Liabilities:
The following information is given during an audit:
July 31
Income before tax: $0
Net Income: $0
Current Assets: $11,000,000
Total Assets: $21,000,000
Current Liabilities: $9,000,000
Total Liabilities: $16,000,000
Total Revenues: $16,000,000
Total Equity: $6,000,000
Dec 31 (unaudited financial accounts)
Income before tax: $100,000
Net Income: $75,000
Current Assets: $11,000,000
Total Assets: $21,075,000
Current Liabilities: $8,150,000
Total Liabilities: 16,000,000
Total Revenues: 27,000,000 Total Equity: 6,075,000
The audit team finds that that
-
depreciation and accumulated depreciation was understated by $50,000
-
sales and accounts receivable was overstated by $75,000
By how much is Income overstated/understated? Please explain how this explains the account balances above
How do you calculate planning materiality given the following info?
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EH And S Auditing Made Easy A Checklist Approach For Industry
Authors: Kathleen Hess
1st Edition
0865875812, 978-0865875814
