Exam (elaborations)
Southern New Hampshire University ACC 645 4-2 Homework Already Solved.
- Course
- ACC 645 (ACC645)
- Institution
- Southern New Hampshire University
Southern New Hampshire University ACC 645 4-2 Homework Already Solved.
[Show more]
Content preview
Suppose that you are the auditor of a major retall client who has reported the following Income before taxes (1BT) for the first two‘quarters of the year: 15t quarter = $1,200,000 and 2nd quarter = $1500.000. You are In the process of establishing overall materiainy
forthe client. Based on pror years,the client has a 10 percent deciine In IBT from the 2nd quarter to the 3rd quarter. You also know
that T I the 4th quarter Increases by 25 percent over the 3rd quarter.
Required:
Determine the amount of overall materfality for the audit based on these preliminary amounts.
Note: Round your answer to the nearest thousand value.
|Amount of overall mateiaty s 25700Q
Explanation
“To determine overall matertaity based on the information provided the audhor would make the following caiculation for the fullyear Income before
tares:
Incose before
Quarters taes
10 51,200,000
2 1,500,000
3 1,350,000 = 1,500,000 x 2,90
“Q 1,687,500 = 1,350,000 x 1.25
Estinated incone before taxes $5,727,500
Using 5% a a benchmark, overall materalty based on the estimated Income before taxes would be $287.000 (rounded)
, Required Information
Errors versus Fraud
[ s ) Misstatements can be of two types. The first-an error-is deemed to be unintentional. The second type-fraud-is deemed
10 be an Intentional act.
] Audtors have the responsibilty to plan and perform an audt to obtain reasonable assurance about whether the financial
Book statements are free of material misstatement. Misstatements are classified as elther unintentional (efror) or Intentional
(fraud).
Roll your cursor over each action and, basedon the hint given, choose whether
it is an error of fraud.
Enmor Fraud
‘ Mistake in gathering Misappropriaton of
data, assels,
Unreasonable.
estimates from | Frauauient financial
misinterpretation of reporting
facts
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Topscorer. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $18.04. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75632 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now
