AuditingTilt - QuizbowlRF12 E1. Acceptingan engagement

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Quizbowl RF12 E1. Accepting an engagement to compile a financial projection for a publicly held company most likely  would be inappropriate if the projection were to be distributed to  a. A bank with which the entry is negotiating for a loan. b. A labor union with which the entity is negotiating a contract. c. The principal stockholder, to the exclusion of the other stockholders. d. All stockholders of record as of the report date. E2. Chan Reyes had the following transactions in the capital stock of Lee Corporation: 2006 June 2 Purchased 200 shares of P100 par value common stock at P120 per share. 2007 Mar 1 Received stock rights permitting him to purchase at par one new share of common stock  for every four shares held. On this date, the bid price for a share was P140; for a right,  P10. May 1 Exercised 60% of the rights received. June 1 Sold remaining rights at P9.80 each. Dec. 1 Received a cash dividend of P10 a share and a 20% stock dividend. 2008 Apr. 1  Sold the shares received as stock dividend on December 1, 2007 at P110 a share. Use the average cost method. How much is the cost of the investment after the sale on April 1, 2008? a.  P 21,967 c.  P 24,000 P 22,400 d.  P 26,360 E3. Comparative   financial   statements   include   the   prior   year’s   statements   that   were   audited   by   a  predecessor auditor whose report is not presented. If the predecessor’s report was unqualified, the  successor should  a. Express an opinion on the current years statements alone and make no reference to the  prior year’s statements. b. Indicate in the auditor’s report that the predecessor auditor expressed an unqualified  opinion. c. Obtain a letter of representations from the predecessor concerning any matters that  might affect the successor’s opinion. d. Request the predecessor auditor to reissue the prior year’s report. E4 When reporting on comparative financial statements, which of the following circumstances ordinarily  should   cause   the   following   circumstances   ordinarily   should   cause   the   auditor   to   change   the  previously issued opinion on the prior year’s financial statements?
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a. The prior year’s financial statements are restated following a pooling of interests in the current  years. b. A departure from generally accepted accounting principles caused an adverse opinion on the  prior year’s financial statements and those statements have been property restated. c.
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This note was uploaded on 01/21/2011 for the course ACC 452 taught by Professor Mr.cula during the Spring '10 term at Abraham Baldwin Agricultural College.

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AuditingTilt - QuizbowlRF12 E1. Acceptingan engagement

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