ACC450_MC_Solutions_Chpt11

ACC450_MC_Solutions_Chpt11 -...

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ACC450 CHAPTER 11 SOLUTIONS FOR MULTIPLE-CHOICE QUESTIONS 11.27 a.  Incorrect Interest income is related to the examination of notes receivable.  b. Correct Interest expense can be calculated from the notes payable information  and is examined in conjunction with that information  c. Incorrect Notes payable are not related to goodwill amortization.  d. Incorrect Notes payable are not directly related to royalty revenue.  11.28    a. Incorrect Management representations do not shift responsibility to auditors for the  financial statements.    b. Incorrect Management representations should not substitute for other evidence  sources.    c. Incorrect Management makes assertions directly in the financial statements and not  as part of the management representations.   d. Correct This responsibility is explicitly included in the management  representations. 11.29 NOTE TO INSTRUCTOR : Since this question asks students to identify which audit procedure  is not used to obtain evidence about contingencies, the response labeled “correct” is not used  to obtain evidence about contingencies and those labeled “incorrect” are used to obtain  evidence about contingencies. a. Correct Scanning expenses is unlikely to reveal any information about a  contingency. b. Incorrect Attorney letters can provide information about contingencies. c. Incorrect Minutes of board of directors’ meetings can provide information about  contingencies. d. Incorrect Sales contracts can provide information about right of return that may  need to be disclosed as a contingency.   11.30 a. Incorrect The issuance of stock occurred after December 31.  b. Incorrect The injury related to the lawsuit was sustained after December 31.  c. Correct Since an estimate had been made as of December 31, the event giving  rise to the lawsuit had occurred, and the settlement introduced new  information about the actual amount of the liability at December 31.  d. Incorrect  The storm occurred after December 31.  11.31 a. Incorrect The report date is the audit completion date, not the balance sheet date. 
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b. Correct The report date is the audit completion date and the dual date is the date  related to the specific event.  c. Incorrect The report date is the audit completion date, not the balance sheet date.  d. Incorrect The report date is the audit completion date, not the date of the  subsequent event.  
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This note was uploaded on 07/21/2011 for the course ACC 450 taught by Professor Null during the Spring '11 term at GWU.

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ACC450_MC_Solutions_Chpt11 -...

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