Business Finance
Aberystwyth University Cash Receipts and Customer Orders Discussion

Aberystwyth University

Question Description

Can you help me understand this Accounting question?

1.

Sally Smith, CPA, was auditing Keep Safe, Inc. Smith sent positive accounts receivable confirmations to a number of Keep's government customers. She received a number of returned confirmations marked "We do not confirm balances because we are on a voucher system."

A. List alternative procedures that Smith might use to ensure the validity of these accounts.

B. Assuming all the procedures you list are viable options for the Keep audit, which procedures do you believe provides the highest-quality evidence and why?

2.

Visit the website of a catalog retailer similar to EarthWear Clothiers, and determine how it processes sales transactions, recognizes revenue, and reserves for returns. Note that you may have to examine the entity's annual report and 10-K.

Prepare a memo summarizing your findings.

Points will be deducted for poor grammar and misspelled words.

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Final Answer

Attached.

Running head: TWO DISCUSSION QUESTIONS

Two Discussion Questions
Name
Institution Affiliation

1

TWO DISCUSSION QUESTIONS

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Two Discussion Questions
Question 1
Some of the procedures that Sally may utilize in attempts to ensure the validity of the
accounts under assessment include evaluating the subsequent cash receipts, assessing customer
orders or delivery documents to track duplicate sales invoices, as well as evaluating other
customer documentation. With the first method, which includes analyzing cash receipts, Sally
can test the existence of cash using a two-pronged tactic. Firstly, she can ask the business for its
bank statement and reconciliations. These documents will help her to reconcile the bank cash
balance with cash balance chronicled in the firm’s accounts, mainly the company’s financial
statements. The second tactic she can employ is sending a request to the bank requesting for
t...

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Duke University

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