EP AUDITING+ASSURANCE...-MYACCT.LAB
16th Edition
ISBN: 9780134148656
Author: ARENS
Publisher: PEARSON CO
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Textbook Question
Chapter 8, Problem 27.1MCQ
Which one of the following statements is correct concerning the concept of materiality?
- (1) Materiality is determined by reference to guidelines established by the AICPA.
- (2) Materiality depends only on the dollar amount of an item relative to other items in the financial statements.
- (3) Materiality depends on the nature of an item rather than the dollar amount.
- (4) Materiality is a matter of professional judgment.
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Comment on the statement that materiality is in the eye of the beholder. How does this statement relate to the discussion in this chapter of how to gauge materiality in assessing financial statement restatements? Is materiality inconsistent with the notion of representational faithfulness?
With respect to the concept of materiality, which of the following statements is correct?a. Materiality depends only on the dollar amount of an item relative to other items in the financial statements.b. Materiality depends on the nature of a transaction rather than the dollar amount of the transaction.c. Materiality is determined by reference to AICPA guidelines.d. Materiality is a matter of professional judgment.
Which is NOT a criteria for recognition of financial information in the IFRS Conceptual Framework?
A) The item is measurable without a high degree of uncertainty
B) The amount must be measured at historical cost.
C) The item provides relevant information about the element
D) The item provides a faithful representation of the element.
Chapter 8 Solutions
EP AUDITING+ASSURANCE...-MYACCT.LAB
Ch. 8 - Prob. 1RQCh. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - Prob. 4RQCh. 8 - Prob. 5RQCh. 8 - Prob. 6RQCh. 8 - Prob. 7RQCh. 8 - Prob. 8RQCh. 8 - Prob. 9RQCh. 8 - Prob. 10RQ
Ch. 8 - Prob. 11RQCh. 8 - Prob. 12RQCh. 8 - Prob. 13RQCh. 8 - Prob. 14RQCh. 8 - Prob. 15RQCh. 8 - Your client, Harper Company, has a contractual...Ch. 8 - Prob. 17RQCh. 8 - Prob. 18RQCh. 8 - Prob. 19RQCh. 8 - Prob. 20RQCh. 8 - Prob. 21RQCh. 8 - Prob. 22RQCh. 8 - Prob. 23RQCh. 8 - Prob. 24RQCh. 8 - Prob. 25.1MCQCh. 8 - Prob. 25.2MCQCh. 8 - Prob. 25.3MCQCh. 8 - Prob. 26.1MCQCh. 8 - Prob. 26.2MCQCh. 8 - Prob. 26.3MCQCh. 8 - Which one of the following statements is correct...Ch. 8 - Prob. 27.2MCQCh. 8 - Prob. 27.3MCQCh. 8 - Prob. 28.1MCQCh. 8 - Prob. 28.2MCQCh. 8 - Prob. 28.3MCQCh. 8 - Prob. 29DQPCh. 8 - Prob. 30DQPCh. 8 - Prob. 31DQPCh. 8 - Your comparison of the gross margin percent for...Ch. 8 - Prob. 33DQPCh. 8 - Prob. 34DQPCh. 8 - Prob. 35DQPCh. 8 - Prob. 36DQPCh. 8 - Prob. 37DQPCh. 8 - Following are statements of earnings and financial...
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- Materiality 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.arrow_forwardHow can a misstatement in one financial statement, whether intentional or not, affect a presentation in another financial statement?arrow_forwardWhich of the following would not overstate current-period net income?a. Capitalizing an expenditure that should be expensed.b. Failing to record a liability as an expense.c. Failing to record a check paying an item in Vouchers Payable.d. All of the above would overstate net income.arrow_forward
- What terms can be used to express an unmodified opinion on financial statements prepared in accordance with a fair presentation framework? a. Present fairly, in all material respects O b. Financial statements are materially misstated and pervasive O c. Subject to O d. With the foregoing explanationarrow_forwardWhen an event impacts a financial statement element, it should be recognized in the accounting records even if reliability of the amount is questionable. True Falsearrow_forwardThe statement of financial position Select one: a. Makes very limited use of judgments and estimates. b. Uses fair value for most assets and liabilities. C. All of the choices are correct regarding the statement of financial position. d. Omits many items that are of financial value.arrow_forward
- The main steps required in the preparation of a restated statement of financial position (in accordance with the requirements of IAS29) do not include: The restatement of non-monetary items carried at historical cost The restatement of monetary items The restatement of each component of equity The restatement of non-monetary items carried at a valuationarrow_forwardOn the basis of accountants’ heuristics and biases, how are accounting judgements regarding internally generated intangible influenced?arrow_forwardWhich one of the following recognises the idea that assets and income should not be overstated while liabilities and expenses should not be understated :A. Matching principle,B. Accrual concept,C. Principle of prudence.D. Consistency concept.arrow_forward
- Which of the following is not a criterion that must be met for an item to be classified as a liability? A certain cash payment will occur in the future. A sacrifice will require the entity’s assets or services. There is a probable future sacrifice. There is a present obligation that results from a past transaction.arrow_forwardWhich of the following is FALSE regarding the financial statements?arrow_forwardThe Framework issued by the IASB suggests that to show a true and fair view the information in financial statements should: A. Not be so drawn that it could mislead users B. Be an accurate and full record of transactions within each accounting period C. Be prepared on a consistent basis from year to year. D. Comply with Accounting Standards and possess suggested qualitative characteristicsarrow_forward
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