Why we depreciate assets

Homework Questions 1

  1. Describe the process an outside auditor uses to analyze an organization’s transactions to ensure accuracy.
  2. Describe and discuss a reason for audit failure.
  3. Review the National Health Care Billing Audit Guidelines. Briefly (in 2 – 3 paragraphs) describe the Billing Audit Guidelines (qualifications of auditors, notification of audit, role of audit coordinators, etc).
  4. How does an internal audit vary from an external audit? Why are internal audits so important?
  1. Homework Question 2

1.Explain why we depreciate assets over their useful lives instead of just expensing them in the year they are acquired?

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2.In chapter 8 of our text we learned that a depreciation expense is a non-cash item and is added back to the operating activities of the cash flow statement using the in-direct presentation method. Briefly discuss why this activity takes place and its impact on operating activities. (Depreciation – Chapter 10)

3.What equation describes the periodic inventory system?

4.Briefly discuss and compare the four major alternative cost-flow assumptions for inventory.


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