Question

what is the audit risks of using bank overdraft to purchase products for the business? please...

what is the audit risks of using bank overdraft to purchase products for the business? please provide the explanation.

does it meant that the business will have cash flow issues?
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Audit Risk of using Bank Overdraft to purchase products for business are:

  • The Bank OD can be used to withdraw cash by unnecessary purchases from the vendors & then receiving kickbacks by way of collusion.
  • Usage of Bank OD Limit for purchase of Fixed assets rather than working capital requirement.
  • Unauthorised usage by employees by collusion with the vendors.
  • Unnecessary spending may occur.

The above mentioned will be the risk of using Bank OD for the business & will definitely will cash flow issues in future due to Over spending.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Bank Confirmations Bank confirmations are critical to the cash audit. What information does the auditor obtain...
Bank Confirmations Bank confirmations are critical to the cash audit. What information does the auditor obtain by sending bank confirmations? Explain the different types of bank confirmations and what assertions each type addresses. How do you determine which is the best bank confirmation type to use?
A business begins with $1,000,000 from its owners. It places $100,000 into a bank account which...
A business begins with $1,000,000 from its owners. It places $100,000 into a bank account which it wishes to maintain as a cash reserve. It needs to purchase $1,000,000 of equipment and materials. How much does it need to borrow? Answer is $900,000.00. Please explain thoroughly why the answer is $900K.
Please describe an external business transaction (e.g. are selling products to a customer, purchasing supplies from...
Please describe an external business transaction (e.g. are selling products to a customer, purchasing supplies from a vendor, paying salaries to an employee, and borrowing money from a bank). What are the different types of accounts a company uses? Elaborate with examples.
Can you please provide 3 scholarly articles for the following: There is a common phrase in...
Can you please provide 3 scholarly articles for the following: There is a common phrase in business: "Cash is king." "Cash flow is the life-blood of a company. Without it, a company will fail" (Hicks, 2012). Yet, companies often have to take risks that could potentially jeopardize their cash flow (e.g., new projects, growth, capital budgeting, etc.). Assume you are the CFO of a struggling company. While you do have a positive cash flow, it is minimal at best. If...
Using Apple and Bank of America, determine the free cash flow from 2015 and 2016. What...
Using Apple and Bank of America, determine the free cash flow from 2015 and 2016. What inference can you draw from the companies’ free cash flow?
A client of Mr. Richards wants to purchase a large commercial building. The building costs $20...
A client of Mr. Richards wants to purchase a large commercial building. The building costs $20 million and he will make a down payment of 15% and finance the rest with a local bank. The bank terms are 10-year bullet loan with 30-year amortization at 4.5% interest. The building earns annual rent of $2,500,000 and it pays annual taxes of $1,000,000 per year. What will be the annual cash flow from the building? What will be the ROI on the...
Conduct research to find one for-profit business, i.e., Company A, that is headquartered in one country...
Conduct research to find one for-profit business, i.e., Company A, that is headquartered in one country and sources products or services from a company in another country, i.e. Company B, that are used in Company’s A final products or services offered for sale. Company B represents the supply chain for Company A. (An example of this is Apple – Company A – which sources manufacturing of some of its products from Foxconn – Company B. The end-of-chapter discussion case on...
PLEASE EXPLAIN THE FOLLOWING Understand the audit risk formula and model Understand the relationships between inherent...
PLEASE EXPLAIN THE FOLLOWING Understand the audit risk formula and model Understand the relationships between inherent risk and control risk and risk of material misstatement Understand the relationships between audit risk, Risk of Material Misstatement and detection risk (is it proportional/direct or inverse) If one goes up foes the other go up or down? Understand the impact of changes in inherent risk, control risk, detection risk to substantive testing. If detection or control risks go up or down does an...
You are a manager in Yiblam & Co, a firm of Chartered Certified Accountants, and you...
You are a manager in Yiblam & Co, a firm of Chartered Certified Accountants, and you have taken on the responsibility for providing support and guidance to new members of the firm. Yiblam & Co has recently recruited a new audit junior, Ezekial Davies, who has come across several issues in his first few months at the firm which he would like your guidance on. Ezekiel's comments and questions are shown below: a) I know that auditors are required to...
1.What is the responsibility of a bank that is offering and promoting these derivative products to...
1.What is the responsibility of a bank that is offering and promoting these derivative products to its customers? Does it have some duty to protect their interests? Who do you think was at fault in this case? 1.If you were a consultant advising firms on their use of foreign currency derivative products, what lessons would you draw from this case, and how would you communicate that to your clients?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT