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Accounting

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1. A. What is the control environment? What are the elements that comprise the control environment?

B. What is meant by risk assessment process?

C. What is an information system?

D. What are control activities?

E. Give the different types of control activities.

F. Why is it necessary to monitor controls?

G. What are the inherent limitations of internal controls?

H. Enumerate, in chronological order, the steps followed in the study and evaluation of internal controls. Explain each step briefly.

I. What is a transaction walkthrough?

J. What are the different ways by which an understanding of controls is documented?

K. When is the control risk assessment High? Less than high?

L. How does a high control risk assessment affect the planned audit approach?

M. Give examples of responses to the assessed risk of material misstatement.

N. What is the relationship of a less than high control risk assessment to the nature, extent, and timing of substantive tests?

O. May substantive tests be eliminated?

P. How are audit matters related to internal control communicated to management and to those charged with governance?

2.  The beginning balance of Office Supplies was $2,300 Dunng the year, Betterton purchased office supplies for $3.000 and at December 31 the ofice supplies on hand totaled $1,000 (Assume that Betterton debits an asset account when supplies are purchased.) Date Accounts and Explanation Debit Credit (c) Dec 31

3.  Change all of the numbers in the data area of your worksheet so that it looks like this:

A B C

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Chapter 4: Applying Excel           Data     Selling price per unit $334   Manufacturing costs:     Variable per unit produced:     Direct materials $135   Direct labor $54   Variable manufacturing overhead $26   Fixed manufacturing overhead per year $119,600   Selling and administrative expenses:     Variable per unit sold $4   Fixed per year $58,000           Year 1 Year 2 Units in beginning inventory 0   Units produced during the year 2,600 2,300 Units sold during the year 2,400 2,400

(b) What is the net operating income (loss) in Year 2 under absorption costing?