65. The finance manager of ABC Co. approves the financial statements that has an overstated net income since they believe this will develop a good managerial image of the company. Which qualitative characteristic is violated? * O Relevance O Neutrality Reliability Completeness

65. The finance manager of ABC Co. approves the financial statements that has an overstated net income since they believe this will develop a good managerial image of the company. Which qualitative characteristic is violated? * O Relevance O Neutrality Reliability Completeness

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter3: Internal Control Over Financial Reporting: Responsibilities Of Management And The External Auditor

Section: Chapter Questions

Problem 33CYBK

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Identify the following as true or false: Financial accounting reports are not released to external users. Managerial accounting reports are not used by employees inside the organization. Managerial accounting reports include only monetary information. Financial accounting reports are monetary in nature. If a result of a companys operations is nonmonetary in nature, it must be converted to monetary units for managerial reporting. Tax authorities and government regulatory agencies are external users of financial information.
Which of the following statements most likely describes a situation that would motivate amanager to issue low-quality fi nancial reports?A . Th e manager’s compensation is tied to stock price performance.B . Th e manager has increased the market share of products signifi cantly.C . Th e manager has brought the company’s profi tability to a level higher thancompetitors.
118-Since accounting information is used for decision making. As a result of financial manipulations, it is expected that the result might be unrealistic. Therefore, it is far necessary for the accounts department to show fair financial results which is only possible if a. Reputed audit firm is selected for audit b. A fair accountant is hired on this position c. A strong compliance with accounting standards d. None of the options
What is one of the ways that accounting is used to direct and control the manager of a corporation? a.Threatening to tell shareholders a mangers income if a manager makes a ‘poor financial’ decision. b.Linking of a mangers performance to a bonus that depends on accounting profit. c.Making decisions based on the accounting information regardless of managerial input. d.Using income smoothing to assure a manager that they can invest in a low risk investment.
Which of the following statement about management accounting information is incorrect? a. The benefits of providing the information should outweigh the costs. b. It is influenced by organisational structure and size. c. It is only prepared on an ad-hoc basis. d. It is used by senior managers.
Which of the following statements is false? Managerial accounting does not need to conform to GAAP Financial accounting must conform to GAAP. Managerial accounting sometimes relies on past information. There is no overlap between financial and managerial accounting.
17/Which of the following statement is correct? while comparing between management accounting and financial accounting. a. None of the options b. Management accounting is based on double entry system c. Financial accounting is for internal users and follows restrictive rules and regulations. d. Managerial accounting is for external users (managers) who plan, control, and make decisions.
Which statement is incorrect?a. Both financial accounting and managerial accounting adhere to objectivity and cost concepts.b. Cost accounting is a tool of both financial accounting and managerial accounting.c. Although financial and managerial accounting differs in many ways, they are similar in that both rely on the same underlying financial data.d. Managerial accounting places greater emphasis on the future than financial accounting, which is primarily concerned with the paste. None of the above
80 For which of the following matters should an auditor obtain written management representations? Group of answer choices Management’s compliance with contractual agreements that may affect the financial statements. Management’s knowledge of future plans that may affect the price of the entity’s stock. Management’s cost-benefit justifications for not correcting internal control weaknesses. Management’s acknowledgment of its responsibility for employee’s violations of laws.
Which of the following statements regarding flaws suffered by financial measures is not correct?A)They are hard to quantify.B)They do little to motivate employees to improve accounting profits.C)They are not effective in getting managers' attention.D)They are useful in identifying operational problems.E)None of the above.
13. If the financial statements provided by a company includes all information, depicted without any bias and are free from errors, which qualitative characteristics is assumed to be possessed by the financial statements? a. Relevance b. Faithful representation c. Comparability d. Understandability
20. The following are characteristics that may signal important information to the auditor about management's philosophy and operating style EXCEPT Group of answer choices Management's attitudes and actions toward financial reporting Management's attitudes toward information processing and accounting functions and personnel None of the choices Management's approach to taking and monitoring business risks Management’s take on the economic factors affecting business model