ACC 225 ACC225 Module 3 Homework Assignment Solution (AAU Online)
ACC 225 Module 3 Homework Assignment (AAU Online)
Part I: Short Response
1.How can a person tell whether an entry to an expense account is payment for a legitimate expenditure or a means of concealing a theft of cash?
2.As a result of the Sarbanes-Oxley Act, public companies were required to change the way they do business. What practices does Sarbanes-Oxley forbid?
3.How do internal auditors add to the credibility of financial statements?
4.What are the duties of the Public Company Accounting Oversight Board?
5.A manufacturing corporation recently reassigned one of its accounting managers to the internal audit department. He had successfully directed the western-area accounting office, and the corporation thought his skills would be value to the internal audit department. The director of the internal audit division knew of this individual's experience in the western-area accounting office and assigned him to audit that same office. Should the internal auditor be assigned to audit the same office in which he recently worked? What problems could arise in this situation?
6.As an investor, you are considering buying stock in a relatively new company. Medical Horizons, Inc., has been in existence for 10 years and is now about to go public. The first stock offering will be listed on the New York Stock Exchange next week.
7.How would the following errors affect the account balances and the basic accounting equation: assets = liabilities + owners' equity? How do the misstatements affect income? 1. The purchase of a truck is recorded as an expense instead of an asset.
8.Internal Control Procedures: As an auditor, you have discovered the following problems with the accounting system control procedures of Jim’s Supply Store. For each of the following occurrences, tell which of the control procedures was lacking. Also, recommend how the company should change its procedures to avoid the problem in the future. A. Jim’s Supply Store’s losses due to bad debts have increased dramatically over the past year. In an effort to increase sales, the managers of certain stores have allowed large credit sales to occur without review or approval. B. An accountant hid his theft of $200 from the company’s bank account by charging the monthly reconciliation. He knew the manipulation would not be discovered. C. Mark Peterson works in the storeroom. He maintains the inventory records, counts the inventory, and has unlimited access to the storeroom. He occasionally steals items from inventory and hides the theft by including the value of the stolen goods in his inventory count. D. Receiving reports are sometimes filled out days after the shipment has arrived.
Part II: Application
Directions: Please complete the following problems from your textbook:
Analytical Assignment 5-23 “Wal-Mart” (p. 208)
Analytical Assignment 5-24 “Circle K” (p. 208)
Analytical Assignment 5-26 “Blowing the Whistle on Former Partners” (p. 209)
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