Step 1 Step 1
The accounting reports of any
The accounting reports of any entity should be prepared in such entity should be prepared in such a form that it should not containa form that it should not contain any material misstatements and there should not be an
any material misstatements and there should not be any ambiguity in the report preparation. Iny ambiguity in the report preparation. In the current report, we have a company Purchase Point Media Corporation and the report for the the current report, we have a company Purchase Point Media Corporation and the report for the first year of operations has been given. e will be chec!ing the report thoroughly for any
first year of operations has been given. e will be chec!ing the report thoroughly for any mista!es or error as posted in the preparation of the
mista!es or error as posted in the preparation of the report and will identify those mista!es.report and will identify those mista!es. "
"rrrroorrss ##eeaassoonnss Pro$ected Statement of
Pro$ected Statement of %et Income
%et Income
There is no term such as pro$ected statement of net income as the There is no term such as pro$ected statement of net income as the same is not in terms with the accounting term.
same is not in terms with the accounting term. &or the first twelve
&or the first twelve months of operations months of operations
The financial statements for any entity are prepared
The financial statements for any entity are prepared in terms ofin terms of years and not months.
years and not months. Safe 'arbor Statement
Safe 'arbor Statement under the private
under the private
securities litigation act of securities litigation act of 1(()
1(()
Tw
Two sentence fragments and a o sentence fragments and a spelling error in the given statementspelling error in the given statement
Pro$ect statement of net Pro$ect statement of net income
income
%ot a conventional accounting term %ot a conventional accounting term C
Coorrppoorraatte he hoouussee TThhe ne naamme be beeiinng a g a ccoorrppoorraatte ee ennttiitty y sshhoouulld bd be ce caappiittaallii**eedd #
#iiss!! TThhe e wwoorrd d rriiss! ! hheerre e iis s iin n tthhe e ssiinngguullaar r ffoorrm m wwhhiicch h iis s wwrroonng g aas s ppeer r tthhee statement and it should be in the
statement and it should be in the plural form.plural form. +
+eeaar r SSiirrss e e nneevveer r aaddddrreesss s tthhe e rreeppoorrt t aas s SSiirrss, , iit t iis s aallwwaayys s aaddddrreesssseed d aas s SSiir r Pr
Pro$o$ecectted ed StStatatememenentt ggaiain, n, prpro$o$ecectted ed sstatattememenent t iis s nonot t tthe he ririghght t tterermm These figures do not
These figures do not include start up and include start up and development costs development costs
&irstly
&irstly, these figures is not the right term to use in the , these figures is not the right term to use in the report andreport and secondly, the start and development costs have a part in the secondly, the start and development costs have a part in the financials of the company and cannot be e-cluded
financials of the company and cannot be e-cluded a
assic ic sssusummptptiiononss ThThe be basasiic ac assssumumptptiionons s whwhiich ch hahave ve bebeen en tata!e!en in in tn the he rerepoport rt sshohoululdd be additionally mentioned in the report
be additionally mentioned in the report The revenue generation
The revenue generation concept
concept
It has been mentioned that the revenue will be generated with the It has been mentioned that the revenue will be generated with the patented displays being installed in the stores which is not the right patented displays being installed in the stores which is not the right concept of accounting for revenue. The accounting for revenue as!s concept of accounting for revenue. The accounting for revenue as!s for accounting revenues as and when the stores are running on the for accounting revenues as and when the stores are running on the accrual basis. accrual basis. /enerally accepted /enerally accepted accounting principles accounting principles
The statements prepared with generally accepted accounting The statements prepared with generally accepted accounting principles is not the right term as there is no concept such as principles is not the right term as there is no concept such as
generally accepted accounting principles. generally accepted accounting principles. +
+eecciidedes ts to ro rememaaiinn TThhe se sttaatteemmeent nt tthhaat tt thhe ce coommpapany ny ddeecicidedes s tto ro reemmaaiin wn wiitth 1h 10,0,00 stores is vague and does not validate here. In the report, we never stores is vague and does not validate here. In the report, we never state any negative statement which gives a
state any negative statement which gives a bad view for the usersbad view for the users who are intended to read the report.
who are intended to read the report. 2
2ooururs s vveerry y ttrrululyy 2o2ouurrs s vveery ry ttrrululy y iis s a a wwrronong g ssttaattememeennt t tto o eennd d tthhe e lleetttteer r wwiitth h aannd d iis s aa wrong statement made here.
Corporate 'ouse The Corporate 'ouse cannot be a signatory to the letter instead the Companies name should be at the bottom and the name of the person signing the report on behalf of the company should be
addressed above. The company e-pects to
affi- its display panel
ffi- is a wrong word over here as display panels cannot be affi-ed. It3s a grammatical mista!e
&or conservative purposes &or Conservative purposes is a wrong choice of word for the report and is a substance error.
morti*ation of the display panel
+isplay panel is tangible asset and thus amorti*ation cannot ta!e place. It3s a substance error and depreciation is the right word. dvertiser is free to renew
or discontinue the service
&ree to renew or discontinue is a wrong choice of word and shows a grammatical error.
The figure of 4.11 is conservative based
It3s a substance error as figures cannot be conservative based The e-pense The e-pense is a grammatical error
#eplacement due to vandalism regardless of the security
This is a grammatical error as the sentence does not ma!e any sense.
Management is currently see!ing insurance, which will lessen the e-pense
The word lessen the e-pense is a grammatical error as e-penses are either decreased or reduced.
It is estimated that
vandalism will effect )5 of the display panels
"ffect is a grammatical error present in the statement and it will be affect.
6andalism will occur in two different fashions7 first by placing graffiti on the display unit and
secondly by smashing the unit in some way.
The word fashion is apparently wrong and secondly smashing the unit in some way does not reveal the true nature of the vandalism. Therefore it3s a substance error.
This would mean 100, would re8uire a
replacement panel
There is no unit mentioned against the figure and thus a substance error present.
The company will enter into a five year contract with each supermar!et chain to ensure longevity for its advertisers
The word longevity does not serve the right purpose here.
The company has allowed for a 1)5 commission to be paid to the advertiser in
the form of a discount or
The sentence is not complete as it is half measured and not properly described. The some cases does not complete the sentence.
in some cases paid to their ad agency of record
ith 19 new shores using the Companies advertising system each month and each store have 9 shopping carts in use this results in 90 installation each month
The sentence is incomplete as there is bro!en message in the sentence. This is a grammatical error as well as substance error
It is estimated that advertising will be
changed on 8uarterly basis
The word changed is wrong and it should be charged and hence a grammatical error
:. ccounting and
uditing The accounting functions are as follows
hich accounting functions are missing from the sentence and thus substance error
dministering monthly payroll, creditor invoices
and e-pense advances
dministering is the wrong word and shows grammatical error
This person will be paid 4;, per month
The person is not mentioned and thus shows the substance error. This $unior cler! might be
a part time accountant initially and later in the second year will be hired full time
This is a substance error in the report as the $unior cler! cannot be a part time accountant as both are two different things entirely
Salary compensation for this cler! will be 49, per month in the last
8uarter
Substance error as the sentence is not defined properly.
In addition, to the estimate of salaries, the will be a cost for the yearend audit to meet the listing
re8uirements of regularity bodies
/rammatical error of comas and the sentence being incomplete.
<easing top 1
dvertisement gency maga*ines in the =nited States which speciali*e in the food and grocery industry and are
The sentence does not ma!e any sense and there is no proper direction
distributed to the top d> gencies monthly
&or simplicity, this cost will be spread evenly over the four 8uarter
There is no basis of simplicity and thus lac!s substance
dvertising in maga*ines and periodicals is a ma$or cost but this form of advertising will alert advertisers and their agents to the services being offered by the
company
The sentence is not complete and shows grammatical errors of ma$or costs, will alert advertisers from the point of report writing
"ntertainment and
promotion mainly covers the cost of ?wining and dining@ advertisement agents and other media personnel and on occasion
seminar>style meetings.
The word wining and dining is not appropriate over here and shows substance error
Since money must be spend in this area to create a willingness to use the company3s display panels, it is estimated that
41, a month will be allotted.
Since money must be spend is a wrong sentence and does not serves the purpose of the message. 'ence, a substance error
This results in 4A, a 8uarter.
The sentence is incomplete and poses a substance threat to the report
Insurance coverage will have to be obtained for general liability, office contents, director3s liability insurance and gross profit protection.
There is no concept of gross profit protection when it comes to insurance coverage.
The chances of this ever happening is e-tremely remote.
The sentence does not serve the purpose and is incomplete in its meaning and thus substance error
Management fee
comprises the following individuals
Bmission error in the annual remuneration of 6ice President
Mar!eting as (, instead of (,
There is a substance error of omission mista!e as the figure is incomplete.
Bffice and sundry e-penses comprise
photocopying paper, office supplies, envelopes,
binders, coffee, pens and pencils, computer tapes
and paper, postage, filing cabinets, adding machines and other items of lesser dollar value which are normally re8uired in the office
The sentence contains grammatical errors in the form photocopying paper and others lesser dollar value where it does not serves the
message properly.
Initally, the cost of starting two officesD one in the eastern part of the =nited States and the other in the western part, which will re8uire a greater outlay than in subse8uent months.
The sentence is incomplete as it starts off with a different meaning and ends on different meaning. Thus, there is substance error in the sentence
There the following has been budgeted by 8uarter
The sentence is wrong and has a grammatical error Public relations are a high
priority for management. Public relations firms will be hired to search for new institutional investors and to prepare the re8uired information to be circulated monthly to current and potential shareholders.
The sentence has substance error in the form of high priority for the management as the sentence does not serve the right purpose
The offices will not have to be large in space since limited personnel will be re8uired to mange the
There is a grammatical error of spelling mista!e for mange which would be manage.
operations.
The building does not have to be class rating and can be located outside of the busier section of the city.
Class rating is wrong choice of word in the sentence and such word does not hold place in the reports
The accountant3s and assistance accountant3s salaries have been covered under ccounting and uditing noted fewer than : above.
The word assistance is wrong and should be assistant and the
sentence covered under accounting and auditing is wrong reference.
There are employees other than the aforementioned7 being two receptionists,
two girl &ridays and two account representatives to sell the advertising
Two girl &ridays does not reflect any personnel re8uired for wor! and there is no concept of sell the advertising. This shows both grammatical and substance error
Bther employees will be hired either on a part time basis or else as demand
re8uires
Br else as demand re8uires is wrong statement and does not serve the purpose right
4 symbol under table Salaries and enefits
The 4 symbol is missing under the table salaries and benefits and is a minor substance error
Said cost is estimated at 41,
The cost is not defined in the estimated costs and there is no lin!age Therefore, it is anticipated
travel costs will be 41, a month for the first 8uarter, increasing by 15 for each the second and third 8uarters.
The sentence is incomplete as ?it is anticipated travel costs will be@ and there should be a coma in between and thus a grammatical error
In the last 8uarter it is anticipated travel locally in the =nited States will amount to 4A), per month with the added cost each month of trips to "urope.
Travel locally is incomplete and leaves the sentence incomplete as it does not serve the sentence right. It3s a grammatical error
Table 1
s given separately in the e-cel sheet Step A
Table 9
