Chapter 19 - Test Bank - Chapter 19 - Additional Assurance...

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Chapter 19 - Additional Assurance Services: Historical Financial Information Chapter 19 Additional Assurance Services: Historical Financial Information True / False Questions 1. An audit opinion on cash basis financial statements is an example of an opinion on financial statements that follow a special purpose financial reporting framework. True False 2. The balance sheet for an individual may be titled a Statement of Financial Condition . True False 3. The auditors should take exception to assets presented at their estimated current values in personal financial statements. True False 4. Personal financial statements may be compiled or reviewed, but they should not be audited. True False 5. A compilation of financial statement provides limited assurance regarding the financial statements. True False 6. Compiled financial statements may omit note disclosures. True False 7. The auditors must issue a compilation report if they prepare a client's financial statements and submit them to a client who intends to use them for external purposes. True False 19-1
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Chapter 19 - Additional Assurance Services: Historical Financial Information 8. The auditors should not accept an engagement to issue a compilation report on financial information presented in a prescribed form. True False 9. Letters to underwriters should not contain negative assurances. True False 10. When a U.S.-based organization prepares financial statements which are for use in another country, a U.S. report, modified to reflect the accounting principles of the other country, may be issued. True False Multiple Choice Questions 11. Which of the following is correct relating to compiled financial statements when third party reliance upon those statements is anticipated? A. A compilation report must be issued. B. Omission of note disclosures is unacceptable. C. A written engagement letter is required. D. Each page of the financial statements should have a restriction such as "Restricted for Management's Use Only". 19-2
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Chapter 19 - Additional Assurance Services: Historical Financial Information 12. Which communication option(s) may be used when an accountant submits compiled financial statements to be used only by management? A. Option A B. Option B C. Option C D. Option D 13. A compilation report is not required when compiled financial statements are expected to be used by: A. Management only. B. Management and third parties. C. Third parties only. D. A compilation report is required whenever financial statements are compiled. 14. It is the end of the client's first quarter and Bill Smith, CPA has been engaged to perform a compilation and to issue a compilation report on the financial statements. The client does not wish to present notes to the financial statements. The appropriate report includes: A. Qualified opinion ("subject to" the omission of the notes).
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This note was uploaded on 01/19/2012 for the course ACC 4302 taught by Professor Williams during the Spring '11 term at University of Houston - Downtown.

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Chapter 19 - Test Bank - Chapter 19 - Additional Assurance...

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