Business Finance
Prince Sultan University Income Statement and Auditing Accounting Questions

Prince Sultan University

Question Description

I don’t understand this Accounting question and need help to study.

Question one 1 part a she need an interpret financial prospective

part b ) interpret the risk under auditor prospective

part c) audit objective whether its completeness or accuracy ...etc

and for the evidence you need to mention whether its documentation , confirmation ..etc

Question 2 )

part a ) Prepare common size income statement ,the part related to balance sheet no need to do common size for it

Part b) the risk related to auditor risk not any risk that is general

providing possible explanation for the unusual change its based on the common statement the we create it in part a ,

* based on auditors prospective of the risk not companies prospective <part B in question 1 and 2

Finally , PLEASE MAKE SURE NO PLAGIRISM

I attached the file

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Assignment 2 Question 1 In the planning phase of the audit of Riyanna Limited for the year ending 30 June 2019, the following ratios were calculated: Eight months period Year ended 30 June Year ended 30 June ended 29 February 2018 2017 2019 profit 35% 40% 40% Gross percentage Inventory turnover days Current ratio Quick asset ratio Times interest earned Debtors turnover days 120 105 78 1.5 0.78 0.91 132 2.3 1.6 1.67 86 2.6 1.7 2.1 68 Required: a. With reference to the data above, interpret each one of the ratios given. b. Explain the risks that may arise from the data above (each ratio) c. Identify the Audit objectives and the Evidence for each one of the items listed. [5 marks] Note: 1 page answer 1.5 spacing (for all 3 sections) Question 2 AlQathani Group of companies manufacture and sell make-shift swimming pools. The income statements for the last two financial years are shown below: Revenue Cost of sales Gross profit Operating expenses Administration Selling and distribution Interest payable on loan Investment income Profit/(loss) before tax December 31, 2019 7,482 (3,520) 3,962 December 31, 2018 6,364 (4,253) 2,111 (3,235) (981) (790) 145 (899) (1,320) (689) (105) – (3) Financial Statement Extract Cash and bank Loan 253 5 000 (950) 1 000 Required: a. Prepare and interpret a common size income statement based on the information given above. b. Identify the potential risk assessments and provide possible explanation for the unusual changes in the income statement and the financial statement extract. [5 marks] ...
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Assignment 2
Question 1
In the planning phase of the audit of Riyanna Limited for the year ending 30 June 2019, the
following ratios were calculated:
Eight months period Year ended 30 June Year ended 30 June
ended 29 February 2018
2017
2019
profit 35%
40%
40%

Gross
percentage
Inventory turnover
days
Current ratio
Quick asset ratio
Times interest earned
Debtors
turnover
days

120

105

78

1.5
0.78
0.91
132

2.3
1.6
1.67
86

2.6
1.7
2.1
68

Required:
a. With reference to the data above, interpret each one of the ratios given.
b. Explain the risks that may arise from the data above (each ratio)
c. Identify the Audit objectives and the Evidence for each one of the items listed.
[5 marks]
Note: 1 page answer 1.5 spacing (for all 3 sections)

a) In the year 2017 and 2018, gross profit percentage was 40% for both years. However,
this ratio decreased in year 2019 to 35%. This shows that gross profit decreased, which
implies that the profitability of the company decreased. In the year 2017, 2018, and
2019 inventory turnover days was 78 days, 105 days, and 120 days respectively. This
indicates that the period that the company takes to convert its inventory into sales
increased over the three years. The current ratio shows the ability of the company to
pay its current liabilities from its current assets. In the year 2017, 2018, and 2019
current ratio was 2.6, 2.3, and 1.5 respectively. Th...

FrankRose23 (2507)
New York University

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