ACCY 131 PG-1a Solutions

ACCY 131 PG-1a Solutions - GroupProblemSet#1(PG1...

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Group Problem Set #1 (PG 1) Short Problems (10 pts total – Question 3 34 is worth 2pts.; all others are worth 1pt.): 2 2 What is the difference between generally accepted accounting principles (GAAP) and AICPA generally accepted auditing standards (GAAS)? Give an example of a generally accepted accounting principle and an example of a generally accepted auditing standards falling under the subhead of general standards. ANS: Generally accepted accounting principles are accounting principles which have substantial authoritative support, such as approval by the Governmental Accounting Standards Board or the Financial Accounting Standards Board, or its predecessor, the Accounting Principles Board. These standards provide the criteria for financial reporting, including the nature and content of financial statements. Generally accepted auditing standards (GAAS) refer to the 10 broad standards and the Statement on Auditing Standards (SASs) set forth by the Auditing Standards Board of the AICPA. Generally accepted auditing standards vary depending upon whether the audit is of a public or nonpublic company. Auditing standards for public companies are established by the Public Company Accounting Oversight Board. Examples of generally accepted accounting principles are the matching principle, the realization principle, and the going concern assumption. There are a number of others, but no official list exists. Examples of generally accepted auditing standards (within the general standards subgroup) would include: 1. The auditor must have adequate technical training and proficiency to perform the audit. 2. The auditor must maintain an independence in mental attitude in all matters relating to the audit. 3. The auditor must exercise due professional care in the performance of the audit and the preparation of the report. 2 11 State the principle assertions made by the auditors in the opinion paragraph of the AICPA auditors’ standard report. ANS: In the opinion paragraph of the auditor's standard report the auditors make representations as to the following: 1. The fairness of the financial statements, in all material respects.
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