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- Which report would not be appropriate for a public accounting firm to provide on financial reporting controls?a. Unqualified—no material weaknesses found.b. Disclaimer of opinion—unable to perform all necessary procedures.c. Disclaimer of opinion—significant deficiencies exist.d. Adverse—material weaknesses exist.Which type of audit report specifies that financial statements do not present fairly the financial position, results of operations, and cash flows in conformity with accounting standards? A. Qualified report B. Adverse report C. Unqualified report D. Disclaimer of opinionSomething is deemed to be 'material' if its omission, non-disclosure or misstatement is likely to affect economic decisions or other evaluations made by users entitled to rely on the financial statements. Select one alternative: True False
- When it is difficult to distinguish a change in accounting policy from achange in an accounting estimate, the change is treated as A. Change in accounting estimate with appropriate disclosureB. Change in accounting policyC. Correction of an errorD. Initial adoption of an accounting policyWhen financial statements are affected by a material departure from generally accepted accounting principles, the auditors should: Withdraw from the engagement. Issue an unmodified opinion with a basis for modification paragraph. Issue an "except for" qualification or a disclaimer of opinion. Issue an "except for" qualification or an adverse opinion.Directions: Please select the appropriate answer on the statement below;B - If the statement is trueS - When the statement is false or part of the statement is false The objective of the first reporting standard is to ensure that comparisons of financial statements between periods do not have a material impact on changes in accounting standards or provide adequate disclosures if those changes have a material impact on the comparison of financial statements between periods.
- The use of the cumulative effect method to account for a change in accounting principle violates the accounting concept of a. Materiality b. Objectivity c. Consistency d. Conservatism{Auditing} 15. Find the nature of materiality if the client incorrectly selects and applies accounting policy which has negligible effect in the current period but has significant effect on the future period. a. Material by nature b. None of the options c. Materiality by the amount for financial statements as a whole d. Either materiality by amount or materiality by natureWhich of the following is not an advantage of accounting standards? Select one: a. All of the given answers are correct. b. It reduces the reliability of financial statements. c. It helps to attain uniformity in accounting. d. It provides guidance on the content and presentation of financial statements.
- 16. What is the purpose of information presented in notes to financial statements? a. To present management's responses to auditor comments b. To correct improper presentation in the financial statements c. To provide disclosures required by generally accepted accounting principles d. To provide recognition of amounts not included in the total of the financial statements 17. Proper application of accounting principles is most dependent upon a. Existence of specific guidelines b. Oversight of regulatory bodies c. External audit function d. Professional judgment of the accountant 18. Which of the following is not a correct variation of the basic accounting equation? a. Asset = Liabilities +Equity b. Asset - Liabilities = Equity c. Asset - Equity = Liabilities d. Asset + Liabilities = Equity 19. Entity A's total liabilities are P50M, while its total equity is P10. Entity A's total assets are a. P60M b. P50M c. P40M d. Any of these 20. What is the effect on an entity's financial…Which case below is not one of the examples of changes that affect consistency and require an explanatory paragraph, if material A. Changes in reporting entities B. Corrections of accounting principle errors C. Changes in accounting principles D. Scope limitationsMateriality arises when a misstatement in the financial statements could affect a decision of areasonable user of the statements.Explain the levels of materiality used for determining the type of opinion.