Which of the following finance options is given to businesses by their suppliers? O Commercial Paper O Trade Credit O Unsecured loan O Corporate bonds What is the value of an independent audit? O t is an independent opinion about the accuracy of financial statements. O t creates an income statement and balance sheet. O t guarantees the company has not committed fraud. O It is not necessary if the company uses GAAP.

Which of the following finance options is given to businesses by their suppliers? O Commercial Paper O Trade Credit O Unsecured loan O Corporate bonds What is the value of an independent audit? O t is an independent opinion about the accuracy of financial statements. O t creates an income statement and balance sheet. O t guarantees the company has not committed fraud. O It is not necessary if the company uses GAAP.

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

Chapter4: Professional Legal Liability

Section: Chapter Questions

Problem 12CYBK

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What is the law that protects investors from fraudulent financial accounting activity? FASB SACS SOX CPAS
Information risk is a. The cost a company incurs to issue and service equity and debt. b. The risk of the client not being able to pay off a bank loan. c. The company's cost of capital. d. The risk that the information in financial statements is materially misstated.
1. You are the auditor of a company and you came upon the inspection of a transaction concerning its receivables. The company did not transfer all the significant risks and rewards of its certain accounts receivable to a bank and the bank agreed to give a cash advance to the company less any finance charges and not yet releasing an amount for a contingency on sales return transactions. Which of the following receivable financing most likely occurred? A. Factoring with recourse B. Discounting with recourse C. Assignment with notification D. Discounting without recourse E. Factoring without recourse 2. An auditor decided to render sales cut-off as part of auditing an audit client’s accounts receivable. Entries in the Sales Journal from December 16, 2016 to the subsequent period January 15, 2017 were vouched to the supporting documents. Which of the following is correct regarding the January entries? A. January sales journal entries vouched back to the…
When creditors who relied on an entity’s audited financial statements suffer monetary lossesafter a customer (the auditors’ client) goes bankrupt, what must the plaintiff creditors in alawsuit for damages show in a court that follows the doctrine in Credit Alliance?a. The auditors knew and specifically acknowledged identification of the creditors.b. The auditors could reasonably foresee them as beneficiaries of the audit because entitiessuch as this client use financial statements to obtain credit from vendors.c. The plaintiffs were foreseen users of the audited financial statements because they werevendors of long standing.d. All of the above
Bankers who are processing loan applications from companies seeking large loans willprobably ask for financial statements audited by an independent CPA becausea. Financial statements are too complex for the bankers to analyze themselves.b. They are too far away from company headquarters to perform accounting and auditingthemselves.
Jaycom Enterprises has invested its excess cash in the bonds of several different companies and desires to maximize income over the short run. Jaycom is unsure about the appropriate investment policy and thus what reporting practice to follow. What classification procedure and subsequent classification could Jaycom follow in order to meet its objective? How will Jaycom justify its choice to the Jaycom auditors?
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Which of the following is not true of a registration statement? A . It helps the SEC make judgments about the worth of securities. B. It contains financial statements certified by independent public accountants. C. It provides information about the management of the company. D. It is different for different types of companies that offer securities for sale.
Which statement is incorrect? a. Information and transaction costs related to financial market transactions would be higher if there is no participation of financial intermediaries. b. The common trait of savings banks, commercial banks, credit unions and savings and loan associations is that all of them accept deposits from SSUs and provide credit to DSUs through loans and purchases of securities. c. Finance companies act as a factor by purchasing a firm's receivables at a discount and subsequently processing and collecting the balances of these accounts. d. A lending company operating in the Philippines cannot charge more than 12% annual interest on the loans it grants to borrowers. e. none of the above
Which of the following questions best describes why an independent auditor is asked to give an opinion on the fairness of financial statement presentation?a. It is difficult to prepare financial statements that fairly present the company's financial position, operations and cash flows without the expertise of an independent auditorb. It is the responsibility of management to seek independent expert assistance in assessing the financial information presented in its financial statementsc. Opinions from independent parties are needed because companies may not have objectivity towards their own financial statementsd. It is customary that all company shareholders receive independent reports of management's accountability for business events that occur
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