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Author Question: Identify each of the following as relating to (a) the control environment, (b) risk assessment, or ... (Read 98 times)

nramada

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on: Jul 5, 2018
Identify each of the following as relating to (a) the control environment, (b) risk assessment, or (c) controlprocedures. 1 . Mandatory vacations 2 . Personnel policies 3 . Report of outside consultants on future market changes

Question 2

Team Shirts, Inc recognized 4,690 of insurance expense for the year. At the beginning of the year, the balance in Prepaid insurance was 775. At the end of the year, the balance was 400.
 
  How is the accounting information for these items reported on the statement of cash flows using the INDIRECT method?
  What will be an ideal response?


Fayaz00962

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Reply #1 on: Jul 5, 2018
Answer to Question 1

1 . (c) control procedures
2 . (a) the control environment
3 . (b) risk assessment

Answer to Question 2

The net decrease in Prepaid insurance of 375 is added to net income in the operating activities section of the statement. The 4,690 is not reported on the statement of cash flows separately because it has already been deducted in arriving at net income.


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