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Final Exam For Accounting 13 Applied Auditing
Final Exam For Accounting 13 Applied Auditing
COLLEGE OF BUSINESS
Garden Park Village, Bajada, Davao City
Accounting 13
Final Examination
I.TRUE or FALSE. Write T if the statement is true and write F is the statement is false.
II. IDENTIFICATION. Write your correct answer on the space provided. NO ERASURES.
1. The process of matching the balances in an entity’s accounting records for a cash 1._______________________
Account to the corresponding information on bank statement.
3. A balance sheet item, that records the value of promissory note that a business 3. _______________________
Is owed and should received payment for.
4. This method migt be used to estimate inventory on hand for purposes of preparing 4.________________________
monthly or quarterly financial statement.
5. A method that is wildly used by merchandising firms to value or estimate ending 5._______________________
Inventory.
6. Refer to a contract that generates a financial asset to one of the parties involved, 6._______________________
And an equity instrument or financial liability to the other entity.
7. A method used for either joint ventures or significant influence investment. 7.______________________
8. An Accounting term that refers to goods that are in various stages of being made 8.______________________
eady for sale.
10. Popular method to record and report revenue, expenses and income, it is better 10._____________________
than accrual accounting.
III. CASE STUDY (30 Pts)
Case Problem # 1
a. When the cashier isn’t available, Sally prepares both the deposit and opens the mail.
b. The Mail clerk may not prepare a remittance advice for the A/R department if a customer does not
submit a one with a payment.
c. Sometimes, the treasurer’s department does not stop the supporting documents for cash disbursements.
d. Ben handles both the customer correspondence concerning monthly statements and making the bank
deposits.
e. Sam handles incoming mail and also prepares bank reconciliations; however, the bank reconciliations
are not done in a timely manner.
Determine what applicable audit procedure(s) should be conducted to identify whatever any material
misstatement exist.
Explain why you think procedure is best for this situation.
Consider each deficiency independently of the others. While each deficiency presents potential issues, identify
two that stand out as the worse with your professional knowledge. Explain your rationale also. Also, how
would you implement a change to improve those deficiencies?
Case Problem # 2
Audit Case: You are in the risk assessment phase of your audit. Your client, Fraud-O Corporation,
manufactures products which are extremely small, yet commands a high price in the market. It is in the process
of stock listing in the stock exchange. However, recent developments in the industry indicate product saturation
in late 2014 up to the year under audit (2015) due to a high degree of competition. Because of this, in June
2015, Client management initially expected a decline in revenues and operating margins.
You have known that the basis for determining management compensation and bonuses is the
achievement of a 40 % increase in revenues. The 2015 financial statements were completed by the client in
January 2016. Using analytical procedures, you noted that said performance target was met by the company.
However, you noted a large negative net operating cash inflow in the statement of cash inflows.