Prior period errors are omissions from and misstatements in the financial statements for one or more periods arising from a failure or misuse of reliable information that I. Was not available when financial statements for those periods were authorized for issue. II. Could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements. a. I only. b. Пonly. c. Both I and II. d. Neither I nor II.

Prior period errors are omissions from and misstatements in the financial statements for one or more periods arising from a failure or misuse of reliable information that I. Was not available when financial statements for those periods were authorized for issue. II. Could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements. a. I only. b. Пonly. c. Both I and II. d. Neither I nor II.

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

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

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

Chapter17: Other Services Provided By Audit Firms

Section: Chapter Questions

Problem 20MCQ

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Corrections of errors that occurred on a previous periods financial statements are called ________. A. restrictions B. deficits C. prior period adjustments D. restatements
Prior period errors: a. Do not include mistake in the application of policy b. Do not affect presentation of financial statements c. Do not require further disclosure d. Are omissions and misstatements in the financial statements of prior periods
Which of the following is false? a. GAAP and IFRS have the same absolute standard regarding the reporting of error corrections in previously issued financial statements. b. The accounting for changes in estimates is similar between GAAP and IFRS. c. Under IFRS, the impracticability exception applies both to changes in accounting principles and to the correction of errors. d. GAAP has detailed guidance on the accounting and reporting of indirect effects; IFRS does not.
If the statement of financial position error is discovered in a subsequent accounting period, what action is to be done by the entity? A. Reclassify the item to its proper real account but do not restate the statement of financial position of the prior year affected by the error. B. Reclassify the item to its proper real account. C. Restate the statement of financial position of the prior year affected by the error. D. Reclassify the item to its proper real account and restate the statement of financial position of the prior year affected by the error
Which of the following is not a characteristic of non-counterbalancing error? Group of answer choices a.If the net income of one year is understated due to non-counterbalancing error, the net income of subsequent year is also affected. b.The statement of financial position of the year of non-counterbalancing error and succeeding statement of financial position are incorrect until the error is corrected. c.If not detected, this is not automatically corrected in the next accounting period. d.The income statement of the period in which the non-counterbalancing error is committed is misstated.
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.
Which of the following is not a characteristic of non-counterbalancing error? a. If not detected, this is not automatically corrected in the next accounting period. b. The income statement of the period in which the non-counterbalancing error is committed is misstated. c. The statement of financial position of the year of non-counterbalancing error and succeeding statement of financial position are incorrect until the error is corrected. d. If the net income of one year is understated due to non-counterbalancing error, the net income of subsequent year is also affected.
For which of the following events would an auditor issue a report that does not make any reference to consistency Select one: a. Management’s lack of reasonable justification for a change in accounting principle b. A change in the useful life used to calculate the provision for depreciation expense c. A change in the method of accounting for inventories d. A change from an accounting principle that is not generally accepted to one that is generally accepted
Misstatements in the financial statements can result from errors or fraud and may consist of any of the following: An inaccuracy in gathering or processing data from which financial statements are prepared. A difference between the amount, classification, or presentation of a reported financial statement element, account, or item and the way that it should have been reflected under GAAP. The omission of a financial statement element, account, or item. A financial statement disclosure that is not presented in conformity with GAAP. The omission of information required to be disclosed in conformity with GAAP. An incorrect accounting estimate due to oversight, misrepresentation of facts, or fraud. Management’s judgments concerning an accounting estimate or the selection or application of accounting policies that the auditor may consider unreasonable or inappropriate. What steps would you take if you discover 1 of the above issues in a routine audit? Would you take…
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 limitations
which of the following regarding errors is correct Select one: a. intentional misstatement of the financial statements, b. misappropriation of assets is an kind of errors c. a mistake in recording the date of a sale invoice is an example of the errors d. it is more difficult for the auditor to detect because it is not intentional
describe the fi nancial reporting treatment and analysis of non-recurring items (including discontinued operations, extraordinary items, unusual or infrequent items) and changes in accounting standards