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SECTION III:

YRS, Incorporated Balance Sheet
Year Ended December 31, 2006

Cash 100
Accounts Receivable 200

Total Assets 300

Accounts Payable 150
Capital Stock 100

Total 250

YRS Incorporated Income Statement for the Period ending December 31, 2006
Net Sales 500
Cost of Goods sold 100

Gross Profit 400
SG&A 200

EBIT 200
Income Tax Expense 100

Net Income 100

Based upon the information presented above would the auditor issue a qualified opinion, why?

SECTION IV:
Write an audit program for accounts receivable. This program must include at least 10 steps.

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SECTION III
The information presented would be given a qualified opinion if the financial statements present the entity's financial position, results of operation and cash flow in conformity with GAAP except for the matter of qualification. A qualified opinion is issued in case a departure from GAAP is there. A qualified opinion is there if there is a limitation of scope.
However in the given example, the assets of the company are 300 but the liabilities are only 250. In other words the statements given to us do not present the complete financial ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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