Financial accounting reports refer to the basic financial statements. They are prepared per period and they cannot be published until they had been audited by independent auditors. O True O False
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- The notes to financial statements should not be used to [A] present disclosures required by generally acceptedaccounting principles B] describe the accounting policies adopted by an enterprise [C] correct an improper financialstatement presentation [D] describe the basis for resolving uncertainties in the financial statements [E] none of thechoicesAccountants very often are required to make estimates, and very often those estimates prove incorrect. In what period(s) is the effect of a change in an accounting estimate reported?During a review of a nonissuer’s financial statements, accountants are required to make certaininquiries of management. Which of the following inquiries is not required by the SSARS?a. The basis for the preparation of financial statements.b. Internal control deficiencies.c. Significant transactions occurring near the end of the reporting period.d. Material subsequent events
- 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.Financial accounting information is characterized by all ofthe following except:a. It is historical in nature.b. It sometimes results from inexact and approximatemeasures.c. It is factual, so it does not require judgment to prepare.d. It is enhanced by management’s explanation.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 opinion
- Auditors commonly allocate materiality to balance sheet accounts rather than income statement accounts because most income statement misstatements have a effect on the balance sheet. Select one: a. equal b. undetermined C. increased d. reduced O O Owhich of the following application would an auditor apply to determine the probability of a corporation's account balance being in error? A) overinvolvement rations B) probability rules C) bayes theorem D) emprical formulaWhich one of the following statements is not correct regarding financial accounting and management accounting ? a . None of the given answers b. Financial accounting information emphasize supporting decisions that affect the future unlike management accounting information , which focus on the consequences of past activities of the organization . c. Financial accounting needs to follow specific set of rules called accounting standards unlike Management accounting d. Both financial accounting and management accounting involve the use of accounting information . e. Financial accounting reports need to be audited to verify their accuracy unlike management accounting reports which do not need to be audited .
- Statement 1: The date of the issuance of the financial statements shall be before the date of the auditors report. Statement 2: A subsequent event after the closing date, wherein it is related to a condition that existed before the closing date, is a subsequent event that would require an adjustment. Statement 3: If the management did not disclose a related party transaction in the notes to financial statements, it iS appropriate for the auditor to disclaim an opinion. A. Only one statement is correct B. Only two statements are correct C. All statements are correct D. All statements are incorrectWhich of the following statements, relating to the auditor's responsibilities regarding subsequent events, if any, is/are correct? (1) Auditors do not have a responsibility to perform procedures to identify subsequent events after the date of the auditor's report(2) Where a material adjusting subsequent event is identified after the financial statements are issued, but prior to approval by the shareholders, the auditor should includeja qualified opinion in their audit report if management refuses to adjust the financial statements for the event a. 1 only b. Neither 1 nor 2 c. 2 only d. Both 1 and 2The CPA firm auditing Mason Street Recording Studiosfound that total stockholders’ equity was understated andliabilities were overstated. Which of the following errorscould have been the cause?a. Making the adjustment entry for depreciation expensetwice.b. Failure to record interest accrued on a note payable.c. Failure to make the adjusting entry to record revenuethat had been earned but not yet billed to clients.d. Failure to record the earned portion of fees received inadvance.