1. COB 241
Sections 13, 14, 15

2. Check Figures for Exercise 5-2A

3. Check Figures for Exercise 5-3A
Cost of Goods Sold under FIFO: $17,640
Ending Inventory under FIFO: $12,960
Cost of Goods Sold under LIFO: $19,160
Ending Inventory under LIFO: $11,440
Cost of Goods Sold under weighted average: $18,360
Ending Inventory under weighted average: $12,240

4. Check Figures for Exercise 5-5A
Ending Inventory
FIFO: $2,260
LIFO: $1,280
Weighted Average: $1,682
The purchase journal entries will be the same for ALL THREE costing methods.

5. Check Figures for Exercise 5-5A (continued)

6. Check Figures for Exercise 5-5A (continued)
Gross Margin under FIFO: $8,270
Gross Margin under LIFO: $7,290
Difference: $ $7, = $980

7. Check Figures for Exercise 6-10A
Actual Cash Balance: $15,210

8. Check Figures for Exercise 6-11A
Actual Cash Balance: $79,039
Check Figures for Exercise 6-12A
Actual Cash Balance: $8,441

9. Unit 12
October 24, 2018

10. Private Company vs. Public Company
Shares of Ownership Issuance of shares is relatively unregulated Shares bought and sold privately Relatively private reporting, no legal audit requirement. (*)
Shares of Ownership
Issuance of shares is highly regulated
Shares traded on the open market
Subject to SEC and related federal regulations which require Public Reporting and annual audits.
* -- private companies with more than 500 shareholders and $10 million in assets must file with the SEC but do not have to make their reports public.

11. Public Company Reporting Requirements
SEC registration required before Initial Public Offering (IPO)
Annual Report 10-K must be filed with the SEC every year.
Some companies are subject to quarterly filings: Form 10-Q
All SEC filings are publicly available via the SEC’s EDGAR database.
Electronic Data Gathering, Analysis, and Retrieval database
Publish an Annual Report to Shareholders

12. Annual Report to Shareholders
Financial Statements (Income Statement, Balance Sheet, Cash Flows, and Owner’s Equity )
Footnotes (Disclosure Notes) to the Financial Statements
Management’s Discussion and Analysis (MD&A)
List of Board Members and Executive Management
Management’s Report on the Internal Control Tests
Financial Auditor’s Report on the Internal Control Tests
Report of the Independent Financial Auditors

13. Auditor Eligibility: Independence
Independent from the company in all respects
Independent in fact and appearance
No consulting or bookkeeping services, nor any other goods or services
No close friendships, no gifts, no favors, scrutiny of social relationships and interactions
Auditors’ families must have no material interest or dealings with the company
Auditor is selected by Audit Committee of the Board of Directors
Auditor selection is generally ratified by the shareholders by vote

14. Auditor’s Responsibility
Legal Responsibility to the public: specifically the shareholders (current and future)
Secondary Fiduciary responsibility to the company (to use professionalism)
Inspect and Test the Internal Control System for design and operational adequacy
Examine the financial statements prepared by management
Examine underlying records used to compile the financials
Determine whether the recording processes and financials follow GAAP
Express an opinion as to whether the financials materially reflect the financial position of the company and the results of operations for the period.
Maintain client confidentiality

15. Auditor’s Confidentiality
Not written in law, as is legal and clergy confidentiality
Auditor’s Code of Ethics
Prevents disclosure of findings to outside parties without permission of client company
Confidentiality principle does not prevent sworn testimony in a Court of Law
Requires reporting of suspicion of fraud to management, and the Board of Directors
Requires reporting of mis-reporting to management and the Board
If management and the Board do not handle and correct the situation, the auditor must withdraw from the engagement and not express an opinion at all.

16. Annual Report to Shareholders
Financial Statements (Income Statement, Balance Sheet, Cash Flows, and Owner’s Equity )
Footnotes (Disclosure Notes) to the Financial Statements
Management’s Discussion and Analysis (MD&A)
List of Board Members and Executive Management
Management’s Report on the Internal Control Tests
Financial Auditor’s Report on the Internal Control Tests
Report of the Independent Financial Auditors

17. Types of Opinions Unqualified Opinion
It is our opinion that the recordkeeping and financials adhere to GAAP and reflect, in all material respects, the financial position of the company and the results of operations.
Qualified Opinion
… with the exception of ----
Adverse Opinion
It is our opinion that the recordkeeping and financials do not adhere to GAAP and/or do not reflect the financial position of the company and/or the results of operations.
Disclaimer
We were unable to form an opinion

18. Financial Ratios

19. Announcements Exam next Monday
Mix of multiple choice and fill-in-the-blank
Bring your Casio calculator
Study the Examination Policies handout before arriving.
Additional Office Hours Thursday 8:30-10:30 am
Additional Office Hours Thursday 1:00-3:00 pm
Additional Office Hours Friday: 9:00-10:30 am
Professor’s Question cutoff: Friday at 12:00 noon