Identify underlying business processes related to eight business functions for sales and cash collections for independent scenarios.

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Answer 1

Question

Chapter 14, Problem 25DQP

a.

To determine

Identify underlying business processes related to eight business functions for sales and cash collections for independent scenarios.

b.

To determine

Identify the documents or other source evidence to be used to test the occurrence transaction related objectives for sales.

c.

To determine

Identify the scenario for which sales returns and allowances business functions is not applicable.

d.

To determine

Identify the scenario for which write-off of uncollectible accounts and bad debt expense business function is not applicable.

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 14, Problem 25DQP

a.

To determine

Identify underlying business processes related to eight business functions for sales and cash collections for independent scenarios.

b.

To determine

Identify the documents or other source evidence to be used to test the occurrence transaction related objectives for sales.

c.

To determine

Identify the scenario for which sales returns and allowances business functions is not applicable.

d.

To determine

Identify the scenario for which write-off of uncollectible accounts and bad debt expense business function is not applicable.

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Answer 3

Question

Chapter 14, Problem 25DQP

a.

To determine

Identify underlying business processes related to eight business functions for sales and cash collections for independent scenarios.

b.

To determine

Identify the documents or other source evidence to be used to test the occurrence transaction related objectives for sales.

c.

To determine

Identify the scenario for which sales returns and allowances business functions is not applicable.

d.

To determine

Identify the scenario for which write-off of uncollectible accounts and bad debt expense business function is not applicable.

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Answer 4

Question

Chapter 14, Problem 25DQP

a.

To determine

Identify underlying business processes related to eight business functions for sales and cash collections for independent scenarios.

b.

To determine

Identify the documents or other source evidence to be used to test the occurrence transaction related objectives for sales.

c.

To determine

Identify the scenario for which sales returns and allowances business functions is not applicable.

d.

To determine

Identify the scenario for which write-off of uncollectible accounts and bad debt expense business function is not applicable.

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Answer 5

Chapter 14, Problem 25DQP

a.

To determine

Identify underlying business processes related to eight business functions for sales and cash collections for independent scenarios.

b.

To determine

Identify the documents or other source evidence to be used to test the occurrence transaction related objectives for sales.

c.

To determine

Identify the scenario for which sales returns and allowances business functions is not applicable.

d.

To determine

Identify the scenario for which write-off of uncollectible accounts and bad debt expense business function is not applicable.

Answer 6

Chapter 14, Problem 25DQP

a.

To determine

Identify underlying business processes related to eight business functions for sales and cash collections for independent scenarios.

Answer 7

Chapter 14, Problem 25DQP

a.

To determine

Identify underlying business processes related to eight business functions for sales and cash collections for independent scenarios.

Answer 8

b.

To determine

Identify the documents or other source evidence to be used to test the occurrence transaction related objectives for sales.

Answer 9

b.

To determine

Identify the documents or other source evidence to be used to test the occurrence transaction related objectives for sales.

Answer 10

c.

To determine

Identify the scenario for which sales returns and allowances business functions is not applicable.

Answer 11

c.

To determine

Identify the scenario for which sales returns and allowances business functions is not applicable.

Answer 12

d.

To determine

Identify the scenario for which write-off of uncollectible accounts and bad debt expense business function is not applicable.

Answer 13

d.

To determine

Identify the scenario for which write-off of uncollectible accounts and bad debt expense business function is not applicable.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 14 - Describe the following documents and records and...Ch. 14 - Prob. 2RQ Ch. 14 - Prob. 3RQ Ch. 14 - Prob. 4RQ Ch. 14 - Prob. 5RQ Ch. 14 - Prob. 6RQ Ch. 14 - Prob. 7RQ Ch. 14 - Prob. 8RQ Ch. 14 - Prob. 9RQ Ch. 14 - Prob. 10RQ

Identify underlying business processes related to eight business functions for sales and cash collections for independent scenarios.

Solution Summary: The author identifies the underlying business processes related to eight business functions for sales and cash collections for independent scenarios.

Identify underlying business processes related to eight business functions for sales and cash collections for independent scenarios.

Identify the documents or other source evidence to be used to test the occurrence transaction related objectives for sales.

Identify the scenario for which sales returns and allowances business functions is not applicable.

Identify the scenario for which write-off of uncollectible accounts and bad debt expense business function is not applicable.

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