whether it is a factual misstatement or a judgmental misstatement. [Choose] A sales transaction is included in the year ended December 2022, but evidence from the cutoff procedure demonstrates the sale should be dated January 1, 2023 ($1,250,000). [Choose] At December 31, 2021, the balance of the Liability for Warranty Claims account was $100,000 (credit balance). During 2022, $150,000 of warranty claims was processed Inspection of correspondence suggests that an additional $200,000 in warranty claims could result from ongoing disputes with customers. No adjustment for these claims has been made. Management has booked a warranty liability accrual at the end of December 2022 of $120,000, Judgmental misstatement Restructuring expenses related to reorganization of head office administration were incorrectly Question 7 1 pts North West Paper Inc. (North West) provides cardboard, paper, and plastic packaging materials to a large number of manufacturers and distributors in all states. The cardboard and paper division is a well-established business, but North West has been providing plastic products only since its takeover of Plastic Products Inc. 18 months ago. The takeover doubled North West's revenue and caused changes in its management structure, adding another two divisional managers. These new divisional managers are in charge of plastic product sales to different areas of the country. Plastic (Eastern) and Plastic (Western), and they join the Paper (Eastern) and Paper (Western) division managers in reporting directly to the CEO. All internal operating reports are now structured along the four divisional reporting lines, although external financial statements continue to be produced for the whole business. All purchasing and billing systems are fully integrated, although it is possible to extract data along divisional lines, and by state (as before). North West purchases bulk supplies of raw plastic and paper and makes boxes. rolls, and sheets of these materials to fill customer orders. Production processes in the paper divisions have not changed, and North West has made minimal changes to the production processes used by Plastic Products Inc. Which of the following is not an inherent risk at the financial statement level caused by the takeover of Plastic Products Inc. If employees were laid off as part of the takeover, there could be disgruntled employees who have caused harm to the company through system hacking or theft of assets. Integrating the IT systems is a challenging and intricate project that could cause errors in recording and reporting of transactions. Any time there is wide-scale change for a company, there is increased risk for errors The production of plastic products for just 18 months will make year-over-year comparisons impossible Previous Question 6 1 pts Anna has the task of designing the audit program for the payroll area. There have been no recent changes to the payroll system or to its interface with the general ledger. Among other tests, Anna is considering using the following substantive analytical procedures to gather evidence: 1. Compare payroll tax expenses (such as state and federal unemployment taxes) to the annual payroll multiplied by the statutory tax rates. 2. Compare the relationship between direct labor costs and number of employees with prior periods. Evaluate the persuasiveness of the evidence obtained from each substantive analytical procedure. Neither test is necessary if internal controls are strong. #2 is more persuasive since prior year data has been audited #1 is more persuasive since the tax rates are set by governmental units. Neither test is very persuasive since payroll is always a difficult area to audit - Previous Next > MacBook Air ER Question 5 Question 4 Question 5 Question 6 Question 7 Question 8 1 pts James and Katie will be auditing the revenue account for their retail client, Go Big Tires. They disagree about how to test the occurrence assertion for the revenue account. James thinks they should use Procedure A, while Katie thinks Procedure B is appropriate. Which procedure is appropriate for testing the occurrence assertion, and which is better suited for testing of the completeness assertion? Time Elapsed: Hide Attempt due: Mar 25 at 11:59pm 1 Day, 2 Hours, 19 Minutes, 33 Seconds A select a sample of sales from the sales journal and agree the details in the journa the invoices sent to customers, shipping documents, and customer orders. choose Starting with recorded activity in the sales lournal and vouching back to supporting details is an appropriate testo occurrence Starting with supporting documents and tracing up to the accounting records is an appropriate test of completeness B. Select a sample of invoices sent to customers, shipping documents, and customer orders and agree to the details recorded in the sales journal. [Choose]