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1. Clients cash balance per book and cash balance per bank are often different and this difference is mostly driven by timing difference and/or errors. Please list at least 3 reconciliation items which may create timing difference.

2. Please identify and describe important internal controls over the credit sale (NOT cash sale) process.

3. Please identify and describe important internal controls over the credit sale (NOT cash sale) process.

4. How does the presence of perpetual records affect the audit? (Tip from the professor: Unless there are well-controlled perpetual records, auditing standards require the auditor to observe the physical count of inventory at year-end. If the client has well-kept perpetual inventory records, the observation can correspond to the client's periodic counts if taken during its fiscal year).

5. For manufacturing firms, their inventories should be valued based on the lower of cost or market price. Please explain how to decide the market price? If the cost is higher than the market price, what kind of accounting adjustment a firm should make?

6. Please identify and describe important internal controls over the credit purchase process.

7. What are the key supporting documents involved in a credit purchase transaction at a manufacturing firm? Which department issue which document? Who has the authority to sign the payment checks and mail them to suppliers?

8. Inventory consists of three sub-accounts. Please name all of them for a manufacturing firm.

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