Chat 1 Solutions (CH1)

Chat 1 Solutions (CH1) - Chat 1 (Chapter 1) Solutions 1-36...

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Chat 1 (Chapter 1) Solutions 1-36 SOLUTION: Feller Company (a) Farber should explain to Feller that an independent audit is an examination of the financial statements in accordance with generally accepted auditing standards. The objective of an audit is to Render an opinion on the fairness with which the financial statements present financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. The CPA, after an objective evidence-gathering audit, expresses an opinion on the fair presentation of financial statements. An independent expert is needed to lend credibility to the financial statements. It would not be meaningful for a company to report on itself without the attestation of an independent party because the company itself might not be objective. (b) Farber should inform Feller of the following ways in which an independent audit can be beneficial to (only five required): (1) Serve as a basis for the extension of credit. (2) Supply credit rating agencies with required information. (3) Serve as a basis for preparation of tax returns. (4) Establish amounts of losses from fire, theft, burglary, and so forth. (5) Determine amounts receivable or payable under various agreements. (6) Provide data for possible sale or merger. (7)
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Chat 1 Solutions (CH1) - Chat 1 (Chapter 1) Solutions 1-36...

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