Step 1

The accounting reports of any entity should be prepared in such a form that it should not contain
any material misstatements and there should not be any ambiguity in the report preparation. In
the current report, we have a company Purchase Point Media Corporation and the report for the
first year of operations has been given. We will be checking the report thoroughly for any
mistakes or error as posted in the preparation of the report and will identify those mistakes.
Errors
Projected Statement of
Net Income
For the first twelve
months of operations
Safe Harbor Statement
under the private
securities litigation act of
1995
Project statement of net
income
Corporate house
Risk
Dear Sirs
Projected Statement
These figures do not
include start up and
development costs
Basic Assumptions
The revenue generation
concept

Generally accepted
accounting principles
Decides to remain

Yours very truly

Reasons
There is no term such as projected statement of net income as the
same is not in terms with the accounting term.
The financial statements for any entity are prepared in terms of
years and not months.
Two sentence fragments and a spelling error in the given statement

Not a conventional accounting term

The name being a corporate entity should be capitalized
The word risk here is in the singular form which is wrong as per the
statement and it should be in the plural form.
We never address the report as Sirs, it is always addressed as Sir
Again, projected statement is not the right term
Firstly, these figures is not the right term to use in the report and
secondly, the start and development costs have a part in the
financials of the company and cannot be excluded
The basic assumptions which have been taken in the report should
be additionally mentioned in the report
It has been mentioned that the revenue will be generated with the
patented displays being installed in the stores which is not the right
concept of accounting for revenue. The accounting for revenue asks
for accounting revenues as and when the stores are running on the
accrual basis.
The statements prepared with generally accepted accounting
principles is not the right term as there is no concept such as
generally accepted accounting principles.
The statement that the company decides to remain with 14,400
stores is vague and does not validate here. In the report, we never
state any negative statement which gives a bad view for the users
who are intended to read the report.
Yours very truly is a wrong statement to end the letter with and is a
wrong statement made here.

Corporate House

The company expects to

affix its display panel
For conservative purposes
Amortization of the
display panel
Advertiser is free to renew
or discontinue the service
The figure of $0.11 is
conservative based
The expense
Replacement due to
vandalism regardless of
the security
Management is currently
seeking insurance, which
will lessen the expense
It is estimated that
vandalism will effect 5%
of the display panels
Vandalism will occur in
two different fashions:
first by placing graffiti on
the display unit and
secondly by smashing the
unit in some way.
This would mean 144,000
would require a
replacement panel
The company will enter
into a five year contract
with each supermarket
chain to ensure longevity
for its advertisers
The company has allowed
for a 15% commission to
be paid to the advertiser in
the form of a discount or

The Corporate House 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.
Affix is a wrong word over here as display panels cannot be
affixed. Its a grammatical mistake
For Conservative purposes is a wrong choice of word for the report
and is a substance error.
Display panel is tangible asset and thus amortization cannot take
place. Its a substance error and depreciation is the right word.
Free to renew or discontinue is a wrong choice of word and shows a
grammatical error.
Its a substance error as figures cannot be conservative based
The expense is a grammatical error
This is a grammatical error as the sentence does not make any
sense.
The word lessen the expense is a grammatical error as expenses are
either decreased or reduced.
Effect is a grammatical error present in the statement and it will be
affect.
The word fashion is apparently wrong and secondly smashing the
unit in some way does not reveal the true nature of the vandalism.
Therefore its a substance error.

There is no unit mentioned against the figure and thus a substance

error present.
The word longevity does not serve the right purpose here.

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
With 1200 new shores
using the Companies
advertising system each
month and each store have
200 shopping carts in use
this results in 240000
installation each month
It is estimated that
advertising will be
changed on quarterly basis
8. Accounting and
Auditing The accounting
functions are as follows
Administering monthly
payroll, creditor invoices
and expense advances
This person will be paid
$6,000 per month
This junior clerk might be
a part time accountant
initially and later in the
second year will be hired
full time
Salary compensation for
this clerk will be $2,000
per month in the last
quarter
In addition, to the estimate
of salaries, the will be a
cost for the yearend audit
to meet the listing
requirements of regularity
bodies
Leasing top 10
Advertisement Agency
magazines in the United
States which specialize in
the food and grocery
industry and are

The sentence is incomplete as there is broken message in the

sentence. This is a grammatical error as well as substance error

The word changed is wrong and it should be charged and hence a

grammatical error
Which accounting functions are missing from the sentence and thus
substance error
Administering is the wrong word and shows grammatical error

The person is not mentioned and thus shows the substance error.
This is a substance error in the report as the junior clerk cannot be a
part time accountant as both are two different things entirely

Substance error as the sentence is not defined properly.

Grammatical error of comas and the sentence being incomplete.

The sentence does not make any sense and there is no proper
direction

distributed to the top AdAgencies monthly

For simplicity, this cost
will be spread evenly over
the four quarter
Advertising in magazines
and periodicals is a major
cost but this form of
advertising will alert
advertisers and their
agents to the services
being offered by the
company
Entertainment and
promotion mainly covers
the cost of wining and
dining advertisement
agents and other media
personnel and on occasion
seminar-style meetings.
Since money must be
spend in this area to create
a willingness to use the
companys display panels,
it is estimated that
$10,000 a month will be
allotted.
This results in $30,000 a
quarter.
Insurance coverage will
have to be obtained for
general liability, office
contents, directors
liability insurance and
gross profit protection.
The chances of this ever
happening is extremely
remote.
Management fee
comprises the following
individuals

There is no basis of simplicity and thus lacks substance

The sentence is not complete and shows grammatical errors of

major costs, will alert advertisers from the point of report writing

The word wining and dining is not appropriate over here and shows
substance error

Since money must be spend is a wrong sentence and does not

serves the purpose of the message. Hence, a substance error

The sentence is incomplete and poses a substance threat to the

report
There is no concept of gross profit protection when it comes to
insurance coverage.

The sentence does not serve the purpose and is incomplete in its
meaning and thus substance error
The sentence is wrong as fee cannot comprise of individuals

Omission error in the

annual remuneration of
Vice President
Marketing as 9,000
instead of 90,000
Office and sundry
expenses 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 required in the
office
Initally, the cost of starting
two offices; one in the
eastern part of the United
States and the other in the
western part, which will
require a greater outlay
than in subsequent
months.
There the following has
been budgeted by quarter
Public relations are a high
priority for management.
Public relations firms will
be hired to search for new
institutional investors and
to prepare the required
information to be
circulated monthly to
current and potential
shareholders.
The offices will not have
to be large in space since
limited personnel will be
required to mange the

There is a substance error of omission mistake as the figure is

incomplete.

The sentence contains grammatical errors in the form photocopying

paper and others lesser dollar value where it does not serves the
message properly.

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

The sentence is wrong and has a grammatical error

The sentence has substance error in the form of high priority for the
management as the sentence does not serve the right purpose

There is a grammatical error of spelling mistake for mange which

would be manage.

operations.
The building does not
have to be class A rating
and can be located outside
of the busier section of the
city.
The accountants and
assistance accountants
salaries have been covered
under Accounting and
Auditing noted fewer than
8 above.
There are employees other
than the aforementioned:
being two receptionists,
two girl Fridays and two
account representatives to
sell the advertising
Other employees will be
hired either on a part time
basis or else as demand
requires
$ symbol under table
Salaries and Benefits
Said cost is estimated at
$10,000
Therefore, it is anticipated
travel costs will be
$10,000 a month for the
first quarter, increasing by
100% for each the second
and third quarters.
In the last quarter it is
anticipated travel locally
in the United States will
amount to $35,000 per
month with the added cost
each month of trips to
Europe.
Step 2

Class A rating is wrong choice of word in the sentence and such

word does not hold place in the reports

The word assistance is wrong and should be assistant and the

sentence covered under accounting and auditing is wrong reference.

Two girl Fridays does not reflect any personnel required for work
and there is no concept of sell the advertising. This shows both
grammatical and substance error

Or else as demand requires is wrong statement and does not serve

the purpose right

The $ symbol is missing under the table salaries and benefits and is
a minor substance error
The cost is not defined in the estimated costs and there is no linkage
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

Travel locally is incomplete and leaves the sentence incomplete as

it does not serve the sentence right. Its a grammatical error

Table 1
As given separately in the excel sheet
Step 3
Table 2
As given separately in the excel sheet