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In-Line Company Records Accounts Receivable from Customers Arising from Both

question 6

Essay

In-Line Company records accounts receivable from customers arising from both the sale of in-line skates and the provision of repair service.The CA firm of King & King is auditing the financial statements of In-Line Company.Lyon,the audit manager,is aware that the confirmation of customer accounts receivable is a substantive procedure normally used in the audit of accounts receivable.Selected balances from In-Line's financial statements are as follows: accounts receivable,$7,000;current assets,$322,000;total assets,$630,000;shareholders' equity,$570,000;net income,$190,000.
Required:
A)How can Lyon justify deciding not to confirm In-Line's accounts receivable?
B)Briefly describe two types of positive confirmation Lyon could send to In-Line's customers.
C)What alternative procedures can Lyon perform if In-Line's customers fail to respond to the confirmation requests?

Understand how conditioning and learning theories explain the development of phobias and other anxiety disorders.

Recognize disorders related to excessive behaviors, such as hoarding disorder and excoriation disorder.

Understand the concept of posttraumatic growth and how individuals can positively transform following traumatic experiences.

Be able to identify specific phobias and their likely impact on individuals' daily lives.

Definitions:

Direct Method

A way to prepare the cash flow statement where actual cash flow information from company’s operations segment is used.

Operating Expenses

Expenses incurred in the normal course of business operations, excluding costs of goods sold and depreciation.

Prepaid Expenses

Costs paid for in advance for goods or services to be received or used in the future, recorded as assets and subsequently expensed over the applicable period.

Indirect Method

A method used in cash flow statements to calculate net cash flow from operating activities by adjusting net income for non-cash transactions.