Overview
As accountants, we are often tasked with auditing financial statements and verifying others’ work. Greenleaf Solutions has been a client of your company, Summit Financial Group, in performing their audit for several years now. They have given you their completed books and expect you to go through and identify any errors that may have occurred. As a manager, you tasked Jack, an associate, to gather the books and check through some of the information and then bring it to you for verification. However, after working with Jack for some time now, you’ve realized that he lacks several basic accounting skills. He was really only hired because he knew one of the partners (he nearly failed many of his accounting classes throughout college). Jack tells you that he automated some of the tasks such as sums and credits linked to debits. You need to go back through and check his work to verify that he formatted everything correctly. Below is a list of things to check for. Find his errors and answer the questions on the “Answers” sheet in the excel file to find out if you were right about his errors!
Instructions
Balance Sheet
Check accounts are in the correct place (i.e. assets in assets).
Verify cash amount with the Statement of Cash Flows (after it’s been checked)
Income statement
Check that the correct accounts are being subtracted or added to income
Statement of Cash Flows
Check that the adjustments are correctly being added or subtracted from net cash.
Great little challenge! I’ve always been rusty with statements of cash flows, but this provided some solid, basic practice. Brought a smile to my workbook. Thanks, @Christian!
I love the use of what I’m assuming is conditional formating to show when I got the right answer. That was very fun. I had put everything in the right spot, but because of my cut and pasting, my sum formulas got all messed up. I got there eventually though!
If anyone is having any trouble remembering how these financial statements are supposed to look, I’d recommend taking a look at resources like the following:
I got stuck on the “Increase in Inventory” part of the Statement of Cash Flows… I changed the value to 1,000 because the Income Statement said that the Beginning Inventory was 20,000 and the Ending Inventory was 19,000, so I thought that the -20,000 on the Statement of Cash Flows was an error… Is this an inconsistency or a lack of understand on my part?
I had a lot of fun with this challenge! I loved being able to see the smiley face when I got it right. This was great practice with understanding how financial statements connect. Your video did a great job explaining the financial statements as well. Thanks for putting this together!
I enjoyed this challenge! Definitely beneficial to see how financial statements can be made in excel, and also beneficial to practice auditing other’s excel sheets.
I arrived to the answer matching the answer solution, however I believe that the “interest expense” of $2000 is normally classified under cash from operations rather than financing. Challenge48_Data_TateTelfordSolution.xlsx (23.7 KB)
Great review of the financial statements, however I got a little stuck because I’m pretty sure interest expense is an operating cash flow rather than investing. Overall great challenge!
