You have been hired as the CFO of a new company and are determining the company's accounting needs. You have been asked to educate the accounting department about the limitations of the internal control system in preparation for an upcoming audit. Provide at least 3 limitations.
Explain the impact of the missing journal entry on the financial statements of the company? In the event of a journal entry being more of a reclassification of a particular expense that has been transferred from a single account, the repercussions of missing this entry would not be all that severe. This could very well be information that already exists in the journal, and simply forgetting to reinstate this in a later journal entry is quite careless but not particularly dangerous or harmful in the slightest.
However, in the event of a large financial action taking place, missing the journal entry could be potentially quite harmful.
For example, if the statements do not display a correctly stated balance, this misleading information could create great confusion within the company.
It could lead to a particular action being taken or a certain decision being made that did not have to happen. Likewise, if an amount of money that has been paid into the account is not displayed in the journal entry on the financial statements, this could equally cause problems.
If the company has not got records in the journal of this particular income, then they are going to question the establishment that has already paid them. This confusion could cause to unnecessary friction between companies that could easily have been avoided if the journals had been kept up to date, accurate and complete.
The repercussions around missing a journal entry on financial statements depend mostly on what is at stake as a result of the missed entry. However, in the event of a missed entry being discovered, it is important that the financial statements are retracted and republished once the error has been amended.You are an accountant at a CPA firm that is auditing the accounting records of YYZ Company.
You have been tasked along with the accounting department to identify the limitations of the internal control system. an adjusting entry was not recorded.
Identify any limitations of the current internal control system. Recommend internal control. Explain impact of missing prepaid insurance journal entry to financial statement [ 4 Answers ] During an audit, a missing journal entry was discovered for prepaid insurance for 3 months at per month.
It depends on the journal entry and what accounts it would have affected. If it was just a reclassification of say, from one expense account to another, no affect. Jan 22, · •Explain the impact of the missing journal entry on the financial statements of the company.
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This assignment addresses the impact of adjusting entries on financial statements and will help you to demonstrate your understanding of deferred revenue, deferred expense, accrued revenue, and accrued expense, as well as your understanding of the accounting entries that record these items in the accounting system%(2).
The problems created by missing a journal entry on the financial statements of a company really depends on what sort of journal entry was missed.