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e-lub [12.9K]
4 years ago
10

Following are examples of control deficiencies that may represent significant deficiencies or material weaknesses. For each cont

rol deficiency, indicate whether it is a significant deficiency or material weakness. Justify your decision.
a.
The entity uses a standard sales contract for most transactions. Individual sales transactions are not material to the entity. Sales personnel are allowed to modify sales contract terms. The entity’s accounting function reviews significant or unusual modifications to the sales contract terms but does not review changes in the standard shipping terms. The changes in the standard shipping terms could require a delay in the timing of revenue recognition. Management reviews gross margins on a monthly basis and investigates any significant or unusual relationships. In addition, management reviews the reasonableness of inventory levels at the end of each accounting period. The entity has experienced limited situations in which revenue has been inappropriately recorded in advance of shipment, but amounts have not been material.

b.
The entity has a standard sales contract, but sales personnel frequently modify the terms of the contract. The nature of the modifications can affect the timing and amount of revenue recognized. Individual sales transactions are frequently material to the entity, and the gross margin can vary significantly for each transaction. The entity does not have procedures in place for the accounting function to regularly review modifications to sales contract terms. Although management reviews gross margins on a monthly basis, the significant differences in gross margins on individual transactions make it difficult for management to identify potential misstatements. Improper revenue recognition has occurred, and the amounts have been material.

c.
The entity has a standard sales contract, but sales personnel frequently modify the terms of the contract. Sales personnel frequently grant unauthorized and unrecorded sales discounts to customers without the knowledge of the accounting department. These amounts are deducted by customers in paying their invoices and are recorded as outstanding balances on the accounts receivable–aging. Although these amounts are individually insignificant, when added up they are material and have occurred regularly over the past few years.
Business
2 answers:
KengaRu [80]4 years ago
8 0

Answer:

The Control deficiencies identified in each option is as follows

A) Significant Deficiency

B) Material Weakness

C) Material Weakness

Explanation:

A material weakness is a one or more deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

A significant deficiency is an error in internal control over financial reporting, that is less severe than a material weakness yet important enough to merit attention by those responsible for oversight of the company's financial reporting.

A) For Individual sales transactions where Sales personnel are allowed to modify sales contract terms and entity’s accounting function reviews significant or unusual modifications to the sales contract terms and In addition, management reviews the reasonableness of inventory levels at the end of each accounting period, significant deficiency applies.

B) For standard sales contract where nature of the modifications can affect the timing and amount of revenue recognized, material weakness applies.

C) Material weakness also applies here

Serhud [2]4 years ago
5 0

Answer:

a. Significant deficiency.

b. Material weakness.

c. Material weakness.

Explanation:

a. Individual sales transactions are not material and the compensating detective controls operating monthly and at the end of each financial reporting period should be able to decrease the possibility of a material misstatement going undetected.

b. Individual sales transactions are frequently material, and gross margin can vary significantly with each transaction.

c. The frequency of occurrence allows unmeaningful amounts to return and be a part of material in the aggregate.

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The purchasing agent of the Clampett Company ordered materials of lower quality in an effort to economize on price and in respon
gizmo_the_mogwai [7]

Answer:

The correct answer is: Materials Price Variance: Production Manager

Materials Quantity Variance: Purchasing Agent

Explanation:

The production manager had to buy the materials that are commonly used, as this is an item of great importance in the process of converting the materials, since otherwise there is a risk of becoming waste due to their quality. In the case of the variation presented, each manager or person in charge of the area must supervise that the measurements are well calculated, and that the aspects related to the direct process must be effectively ensured for the good of the operation.

7 0
4 years ago
GANTT refers to the Generalized Activity Network Tracking Technique which was developed to better understand how variability in
Bingel [31]

Answer:

False.

Explanation:

GANTT refers to a chart that was developed by Henry L. Gantt, who was an american engineer and a social scientist, and is thus named after him. This chart is used to describe and illustrate various scheduled activities and the duration that each activity might take to complete. There is no full form for this word "GANTT". Therefore, the statement is false.

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4 years ago
Many women are still hampered by a ______ or an invisible barrier that limits their ability to progress to more senior positions
alina1380 [7]

Many women are still hampered by a glass ceiling or an invisible barrier that limits their ability to progress to more senior positions.

A glass ceiling is a metaphor for an imperceptible barrier that prohibits a particular population from progressing over a particular level in a hierarchy (usually attributed to women).

Feminists originally used the metaphor to describe obstacles high-achieving women face in their jobs.

In the US, the phrase is occasionally used to describe barriers that prevent minority women as well as minority males from moving up the social ladder. Due to their interaction with two historically oppressed groups—women and people of color—minority women in white-majority nations frequently experience the most difficulties in "breaking the glass ceiling."

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6 0
1 year ago
Carr Company is considering two capital investment proposals. Estimates regarding each project are provided below:
STatiana [176]

Answer:

15.0%.

Explanation:

The formula to compute the annual rate of return is shown below:

= Annual net income ÷ average investment

where,  

Annual net income is $30,000

And, the average investment would be

= (Initial investment + salvage value) ÷ 2

= ($400,000 + $0) ÷ 2

= $400,000 ÷ 2

= $200,000

Now put these values to the above formula  

So, the rate would equal to

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3 0
3 years ago
In expanding into foreign markets, a company can strive to gain competitive advantage (or offset domestic disadvantages) by
il63 [147K]

Here's the options that completes the question:

A. building a state-of-the-art facility to fully capture scale economies via an export strategy.

B. using export, licensing, or franchising strategies so as to minimize risk and capital investment.

C. locating buyer-related activities in all countries where it sells its product.

D. dispersing its activities among various countries in a manner that lowers costs or else helps achieve greater product differentiation and transferring competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets.

E. avoiding the use of strategies that entail coordinating its domestic strategic moves with its strategic moves in the various foreign markets that it enters.

Answer:

D. dispersing its activities among various countries in a manner that lowers costs or else helps achieve greater product differentiation and transferring competitively valuable competencies and capabilities from its domestic operations to its operations in foreign markets

Explanation:

A key condition that makes a firm achieve competitive advantage or a favourable business position is it's costs and product design.

If a firm can lower it's cost in a foreign market while also maintaining quality just as it is has done in it's domestic market then it stands a better chance of success.

For example, if a firm in the clothing line industry decides to expand its operations to a foreign market eg Africa.

A key factor in determining its success is its ability to lower its cost in the foreign market as compared to competitors, while also achieving the same quality standards of products.

7 0
4 years ago
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