Question

In: Finance

Out of 10 customers- Customer A purchases the most products from a company but is not...

Out of 10 customers- Customer A purchases the most products from a company but is not the most profitable for the company (Customer B is the most profitable out of the 10 customers), what concerns might you have from an audit perspective?

Solutions

Expert Solution

Even if consumer A is not able to generate enough profit for the company, it is still having the most of the the product of the company purchased as sales.

As an auditor I would be highly sceptical towards such transaction and I would try to get into the authenticity of this transaction because business is highly meant for making profits and it should not continue the highest transaction with a person who is not generating the highest profit with the company, so I would be sceptical in my approach and I would try to find the relationship between the business and consumer A.

I would try to find that if customer A is a related party to the business or it is an independent party to the business, and I will also look for the past transaction and also any relationship as a managerial post or any promotion post held by customer A into company.

I would also look for the relationship chain of of the whole company to find out if any person is related to customer A and holding an important position in the company or not, to establish whether he is a related party or an independent party.

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

In most organisations customer satisfaction is one of the top priorities. As such attention to customers...
In most organisations customer satisfaction is one of the top priorities. As such attention to customers is necessary for success. Briefly describe the four dimensions of high performance that customers expect companies to deliver through effectively managing and running their business operations
Franks Hot Dogs is a customer of your company and purchases hotdog buns from you....
Franks Hot Dogs is a customer of your company and purchases hot dog buns from you. They have multiple restaurant locations that they want you to deliver the hot dog buns to, but they want all of the invoices to go to the corporate office and invoices to be consolidated on one statement. What is the best way to set up this customer?Select one:a. Set up each restaurant as a separate customer with the billing and shipping locations the same...
Due to high demand from customers and already sold-out products, the IKEA marketing and sales manager...
Due to high demand from customers and already sold-out products, the IKEA marketing and sales manager is being contacted by various customers who wish to buy a total of 50 thousand computer chairs over the next six weeks. Before saying yes to customers the sales manager needs to arrange their manufacturing. To do this they need to use the ERP system to collect relevant data from all departments, including the human resources department. What kind of data would they need...
Calculate the cash received from customers Calculate the purchases figure Calculate the cash paid for purchases
Using the following information, you will need to answer the questions below.Account20192020Inventory46,70042,100General Expenses8,200Cost of Sales116,200Advertising Expense6,500Accounts Receivable39,20042,500Wages Payable6,2007,800Insurance Expense8,000Depreciation Expenses15,900Prepaid Advertising9001,200Interest Income9,700Accounts Payable21,40018,700Doubtful Debts Expense5,200Interest Expense12,600Interest Receivable200600Tax Expense16,900Sales Income263,800Tax Payable5,2004,600Interest Payable2,8003,100Wages Expense51,300Prepaid Insurance900400Required:Answer the following questions (you must show your calculations for each answer):Calculate the cash received from customersCalculate the purchases figureCalculate the cash paid for purchasesCalculate the cash paid for expensesCalculate the cash received from interest incomeCalculate the cash paid for interest expenseCalculate the cash paid for tax expense
A soft drink company has recently received customer complaints about its one-liter-sized soft drink products. Customers...
A soft drink company has recently received customer complaints about its one-liter-sized soft drink products. Customers have been claiming that the one-liter-sized products contain less than one liter of soft drink. The company has decided to investigate the problem. According to the company records, when there is no malfunctioning in the beverage dispensing unit, the bottles contain 1.02 liters of beverage on average, with a standard deviation of 0.15 liters. A sample of 70 bottles has been taken to be...
1.On May 10, the company purchased goods from Fox Company for $75,000, terms 2/10, n/30. Purchases...
1.On May 10, the company purchased goods from Fox Company for $75,000, terms 2/10, n/30. Purchases and accounts payable are recorded at “net” of discount. The invoice was paid on May 18.2.On June 1, the company purchased equipment for $150,000 from Rao Company, paying $50,000 in cash and signing a note, due in one-year, plus 9% interest.3.On September 30, the company borrowed $270,000 cash and signed a $300,000, one-year zero-interest-bearing note due to Virginia State Bank.Instructions( a) Prepare the journal...
A simple random sample of 20 customers is taken from a customer information file and the...
A simple random sample of 20 customers is taken from a customer information file and the average age is 27. The sample standard deviation s is found to be 5.                                              (5 marks) Test the hypothesis that the population mean age is less than 29 using the critical value approach and a 0.10 level of significance. Test the hypothesis that the population mean age is different from 30 using the 0.05 level of significance.
A simple random sample of 20 customers is taken from a customer information file and the...
A simple random sample of 20 customers is taken from a customer information file and the average age is 27. The sample standard deviation s is found to be 1.5.                                                 (5 marks) Test the hypothesis that the population mean age is less than 29 using the critical value approach and a 0.10 level of significance. Test the hypothesis that the population mean age is different from 30 using the 0.05 level of significance. .
Most new products are accepted by the market, despite failing to match or maximize customer requirements.....
Most new products are accepted by the market, despite failing to match or maximize customer requirements.. True False New product development always tries to achieve all of the following goals EXCEPT: a. Maximize fit with customer requirements b. Minimize development cycle time c. Parallel development of tasks d. Control development costs With a penetration pricing strategy there is only minimum risk even if the initial price is less than the total cost. True False The best choice of organization structure...
Client Total Purchases in Prior Year Average Order Customer Rank By Purchases Company Name Average Annual...
Client Total Purchases in Prior Year Average Order Customer Rank By Purchases Company Name Average Annual Sales A                   2,379             1,190 A (use hlookup formula here) B                 72,560             6,596 E (use hlookup formula here) C                 10,366             5,183 M (use hlookup formula here) D                 77,745             7,068 E                 11,106             5,553 F                 83,295             7,572 G                 11,899             5,950 H                 89,243             8,113 I                 12,749             6,375 J                 95,618...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT