Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are a Public Accountant from PT Jaya Alami for the financial year ending on September 30, 2007. The company's main activities are design, manufacture

You are a Public Accountant from PT Jaya Alami for the financial year ending on September 30, 2007. The company's main activities are design, manufacture and sell clothes. For the book year ended 30 September 2007 the company suffered losses, but profit forecast for the year ended 30 September 2008 show profit. The loss suffered by the company was due to the loss of its main customer, a national retailer who had been ordering clothing for years companies with brands from these national retailers. Currently the company focusing on its own clothing brand that has been sold in the market for a long time high margin. The company also plans to expand its customer base for new model clothes and have signed several contracts with several new customers from abroad. The company has also negotiated a contract with a major supplier that causes the purchase price of materials to decrease monthly purchases. During the financial year ended September 30, 2007,The company experiences negative cash flow several times, but can survive thanks to the facilities overdraft from banks and slow down payments on trade debts and VAT payments. The company has credit from XYZ bank which is due in March 2008 and in the process of negotiating with KLM bank in order to repay loans from XYZ bank.

Question: a. Explain what is meant by the concept of going concern and why Public Accountants must consider going concern companies. b. Mention the things that the auditor should consider when reviewing profit and loss and cash flow forecost made by the company, in considering the company's going concern. c. Explain the effect on PT Jaya's audit report for the fiscal year ending September 30, 2007, if credit negotiations with KLM bank cannot be finalized when the audit report is signed.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Problems In Portfolio Theory And The Fundamentals Of Financial Decision Making

Authors: Leonard C Maclean, William T Ziemba

1st Edition

9814749931, 978-9814749930

More Books

Students also viewed these Finance questions

Question

=+ (c) Show that f is a measure on Fand agrees with a on Fo.

Answered: 1 week ago