Order ID | 53563633773 |
Type | Essay |
Writer Level | Masters |
Style | APA |
Sources/References | 4 |
Perfect Number of Pages to Order | 5-10 Pages |
Generally Accepted Auditing Standards Review Paper
The following situations have caused you to become concerned about the quality of the upcoming external audit:
Because of the fact that the audit will not begin until February after the books have been closed, the external auditors will not be able to confirm the accounts receivable cutoff, physically examine the inventory, and examine other important procedures.
You have just been advised that the auditing firm has been acquired by a larger auditing firm, and the auditor that is coming to Bovary Company will be unfamiliar with Bovary Company.
One of the acquiring auditing firm’s principal partners is related to the chief executive officer (CEO) of Bovary Company.
Some areas of control that have been of concern to the auditing department will not be audited because of workload and timing constraints.
Some of the methodology used in the accounting department to compile the financial statements may not comply with generally accepted accounting principles (GAAP).
Generally accepted auditing standards (GAAS) provides three categories of standards and ten standards by which an audit should be performed. You are concerned that some of the aforementioned situations may be in violation of the GAAS standards, and you have decided to review the GAAS standards to detect any possible violations. Complete the following:
List each of these standards in their correct category.
Identify those standards that you believe may be compromised by the aforementioned situations.
Describe specific actions that you believe should be taken to comply with the GAAS standards.
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Limited Liability Company and Tax Treatment Analysis
In today’s business environment, it is very popular to structure a business entity as a Limited Liability Company (LLC). Sole proprietorships and partnerships may utilize this legal structure. An LLC may be taxed in different ways depending on the election made on the Form 8832 Entity Classification Election.
Using a minimum of 450 words, explain what an LLC is and some of the advantages of this business form.
Discuss how an LLC is taxed when there is a single member and when there are multiple members, and include the tax forms (and names of the forms) required when filing taxes for an LLC.
Be sure to include in your discussion 3 different ways in which an LLC may file its tax returns, depending on the elections made on form 8832 and the number of members.
Part 2
Davy Jones needs to file taxes for his business and provides the following information.
Using your Tax Guide, you determine you’re going to be required to prepare a 1040 Schedule C Profit or Loss form a Business and 1040 Schedule SE Self Employment Tax for Jones’ Sole Proprietorship.
Davy Jones’ Nautical Tours is owned and operated as a Sole proprietorship by David K. Jones (SSN 000-00-0000)
Principal Business or Professional Activity Code; 114110
Principal business; Charter fishing tours
Employer Identification Number 867530950
Business address
1008 North Harbor Drive
San Diego, CA 92103
Home address
8700 Lake Murray Blvd #2
San Diego, 92119
The cash accounting method is utilized
Jones did materially participate in the operation of the business
The business started January 1st, 2012
Wages consist of $25,000 paid to one employee and $15,000 to another
Depreciation expense; Jones owns a fishing boat, The Jolly Roger, which he purchased for $850,000. The depreciation on the income statement is book depreciation and will differ from what is actually used on Line 13 Depreciation of form 1040 Schedule C.
The boat is depreciated using the Modified Accelerated Cost Recovery System (MACRS), half year convention, is in its 4th year of service and the 10-year recovery period is used.
Utilize Publication 946 How to Depreciate Property to calculate the correct depreciation amount to enter on the 1040 Schedule C. Locate Table A1 in the Appendix to calculate the tax-deductible depreciation.
Interest expense is interest paid on the loan for the boat
Insurance payments were made to cover liability for guests and for the boat
Payroll taxes; Federal Insurance Contributions Act (FICA); Social Security and Medicare payments made on the behalf of employees
Federal Insurance Contributions Act (FUTA) made on behalf of employees
Travel was purely for business purposes
Parking fines are tickets Jones received for parking illegally
Lease expense was paid to Honda Motors for his mother’s car lease, who is not involved in the business in any way
Davy Jones’ Nautical Tours 2016 Income Statement
Revenue
$ 400,950.00
Wages
$ 40,000.00
FICA
$ 3,060.00
FUTA
$ 85.00
Depreciation
$ 85,000.00
Interest
$ 43,900.00
Advertising
$ 6,350.00
Supplies
$ 23,795.00
Legal fees
$ 6,940.00
Insurance
$ 26,700.00
Boat slip rental
$ 33,010.00
Travel
$ 6,250.00
Office expense
$ 7,940.00
Parking fines
$ 1,350.00
Lease expense
$ 3,650.00
Net Profit
$ 112,920.00
Assignment Guidelines
To prepare the Sole Proprietorship’s tax return, complete the following steps:
Ensure that you have Adobe Reader installed on your computer to open and use the downloadable IRS forms.
Go to the IRS Web site and download the fill-in tax forms that you will need to complete.
Complete all necessary downloaded fill-in forms on the computer and save.
Save the completed forms as PDFs and upload for grading.
You may not utilize Tax preparation software to complete this assignment! This constitutes cheating!
Save the completed forms as PDFs and upload for grading; double check your PDFs to ensure data was retained when they were uploaded to Submitted Assignments; blank forms will yield 0 points!
You will be required to fill out and submit the following forms:
1040 Schedule C – Profit or Loss from Business (Sole Proprietorship)
1040 Schedule SE – Self Employment Tax
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