ACCT Exam Flashcards

Terms Definitions
CM/NOI
Operating ratio
Net Income
Revenues minus expenses.
outbound logistics
activities distribute finished products or services to customers


ACCRUALS



žBusiness has earned revenue before receiving cash from customer…OR…


žBusiness has incurred expense before cash is paid
Liability
An amount owed by a business.
Input Controls
controls designed to provide reasonable assurance that data received for processing by the information-processing department have been authorized properly and converted into machine-sensitive form and that information has not been lost, suppressed, added, duplicated, or improperly changed
purchase order
an offer to buy goods
Independent Checks
internal control activities designed for the continuous internal verification of other controls
treasury
corporation's stock that it has issued and reacquired
Processes
set of actions, automated or manual, that transforms data into other data or information
Common Stock
Amounts invested by owners. Recorded at "par value" but supplemented with an account usually called "paid-in-capital."
closed loop verification
control procedure for crediting customer payment to wrong account
estimates
reflect a portion of expenses that occur over a number of accounting periods
14th Amendment
often called the State's Bill of Rights
owner's equity
The amount remaining after the value of all liabilities is subtracted from the value of all assets
Owners equity
the amount remaining after the value of all liabilities is subtracted from the value of all assets
annuity
an investment that pays a strea of equal payments over time
access based
this strategy focuses on serving a subset of customers based on geographic location or size
B. Examination of evidence
44. Which of the following procedures would be most effective in reducing attestation risk?A. Discussion with responsible individualsB. Examination of evidenceC. Inquiries of senior managementD. Analytical procedures
Inventory Turnover
Costs of goods sold / Average inventory (Begining inventory + Ending inventory/2)
External Document
a document, such as a vendor's invoice, that has been used by an outside party to the transaction being documented and that the client now has or can easily obtain
White Collar Crime
Fraud perpetrated by people who work in offices and steal with a pencil or a computer terminal. The contrast is violent street crime.
Cost of Goods Sold
The direct, factory-related cost of producing the products sold.
2 inherent risks of acquisition
1. non-cancelable purchase agreements (cust may forget) 2. capitalizing expenses 3. unrecorded liability (biggest risk)
D. Observation of client personnel
91. Which of the following techniques most likely would provide an auditor with the most assurance about the effectiveness of the operation of an internal control procedure?A. Confirmation with outside partiesB. Inquiry of client personnelC. Recomputation of account balance amountsD. Observation of client personnel
B. Cost of goods sold
48. To measure how effectively an entity employs its resources, an auditor calculates inventory turnover by dividing average inventory intoA. Net salesB. Cost of goods soldC. Operating incomeD. Gross sales
Current Files
all audit files applicable to the year under audit
Who was the Chairman of the Board at Enron?
Ken Lay
What is the legal term for land and buildings?
Real Property
open invoice method
This method provides a means to offer discounts b/c it facilitates aging each invoice to verify whether a discount should be gratned
B. Examine the contracts for possible risk exposure and the need to recognize losses
74. An auditor's inquiries of management disclosed that the entity recently invested in a series of energy derivatives to hedge against the risks associated with fluctuating oil prices. Under these circumstances, the auditor shouldA. Perform analytical procedures to determine if the derivatives are properly valuedB. Examine the contracts for possible risk exposure and the need to recognize lossesC. Confirm the marketability of the derivatives with a commodity specialistD. Document the derivatives in the auditor's communication with the audit committee
Peer Review
the review by CPAs of a CPA firm's compliance with its quality control system
How much does it cost to start a pharmaceutical company?
One Billion Dollars
From where do adjusting entries usually come?
Controller, after the trial balance has been prepared
C. Items listed in the inventory listing schedule to inventory tags and the auditor's recorded count sheets
47. To gain assurance that all inventory items in a client's inventory listing schedule are valid, an auditor most likely would traceA. Inventory tags noted during the auditor's observation to items listed in the inventory listing scheduleB. Inventory tags noted during the auditor's observation to items listed in receiving reports and vendors' invoicesC. Items listed in the inventory listing schedule to inventory tags and the auditor's recorded count sheetsD. Items listed in receiving reports and vendors' invoices to the inventory listing schedule
C. The entity and its environment, including internal control
15. The second standard of fieldwork requires the auditor to obtain an understanding of:A. Internal controlB. The internal audit functionC. The entity and its environment, including internal controlD. The control environment
Characteristics of Common Stock
1. It owns all the earnings growth of the company.
2. It has voting rights in corporate elections to the Board of Directors.
failing to catch errors in vendor invoices, paying for goods not received, failing to take purchase discounts, paying same invoice twice, recording and posting errors in AP, misappropriating cash, checks or EFTs
threats in approving and paying vendors
B. Results are consistent with the conclusions to be presented in the auditor's report
16. The audit work performed by each assistant should be reviewed to determine whether it was adequately performed and to evaluate whether theA. Auditor's system of quality control has been maintained at a high level.B. Results are consistent with the conclusions to be presented in the auditor's report.C. Audit procedures performed are approved in the professional standards.D. Audit has been performed by persons having adequate technical training and proficiency as auditors.
If dedicated debt service fund resources have been provided (paid to a DSF) during the current year for payment of principal and interest due early (no more than one month) in the following year, the expenditure and related liability may be recognized in
and the debt principal amount removed from the General Long-Term Liability accounts.
require receiving clerks to sign a receiving report
control procedure for making errors in counting
A. Magnitude of the portion of the financial statements examined by the other auditor
72. If the principal auditor decides to make reference to the other auditor's audit, the introductory paragraph must specifically indicate the: A. Magnitude of the portion of the financial statements examined by the other auditor.B. Name of the other auditor.C. Name of the consolidated subsidiary examined by the other auditor.D. Type of opinion expressed by the other auditor.
it is only as good as your assumptions for fixed costs, variable costs, and selling price. advantage is it gives you an idea of whether your operation can be profitable based on the current assumptions; it also allows you to analyze different cost structu
what are the advantages and disadvanatages of break even analysis?
The purchase of supplies on account should result in:
 
a. debt to Supplies Expense & credit to Cash
b. Debit to Supplies Expense & credit to Accounts payable
c. debit to supples & credit to accounts payable
d. debit to supplies & credit to accounts
c. debit to supples credit to accounts payable
What is the meaning, purpose and use of: current liability
a liability that is due during the year or operating cycle
Debt Ratio
Total Liabilities
-----------------
Total Assets
controversial
subject to controversy; debatable:
Who created the FDA?
Theodore Roosevelt
5th Amendment
Includes the freedom against self-discrimination
preferred
stock with certain advantages over common
Revenue
an increase in owner's equity resulting from the operation of a business
SAB104
1. pervasive evidence of arrangement exists (contract) 2. delivery has occurred/service rendered 3. seller's price is fixed or determinable 4. collectibility is reasonably assured
D. Attributes
106. In performing tests of controls over authorization of cash disbursements, which of the following statistical sampling methods would be most appropriate?A. VariablesB. StratifiedC. RatioD. Attributes
persuasive authority
decisions of courts in other jurisdictions which are not binding on the court in question but which may be considered as persuasive
accounting equation
An equation showing the relationship among assets, liabilities, and owner's equity
Accounting System
A planned process for providing financial information that will be useful to management
Double Entry Accounting
1) every transaction maintains equality of account equation (A=L+E)2) For every transaction debits need to equal credits
journal vouchers
important part of the audit trail
B. 4.5%
112. An auditor desired to test credit approval on 10,000 sales invoices processed during the year. The auditor designed a statistical sample that would provide 1% risk of assessing control risk too low (99% confidence) that not more than 7% of the sales invoices lacked approval. The auditor estimated from previous experience that about 2.5% of the sales invoices lacked approval. A sample of 200 invoices was examined and 7 of them were lacking approval. The auditor then determined the achieved upper precision limit to be 8%. The allowance for sampling risk was:A. 5.5%B. 4.5%C. 3.5%D. 1.0%
Narrative
a written description of a client's internal controls, including the origin, processing, and disposition of documents and records, and the relevant control procedures
s corporation
corporation taxed the same as a partnership
Data destinations
component of data flow diagrams that represents an entity outside of the system who received data produced by the system
Direct labor and manufacturing costs
What are conversion costs?
variety based
this strategy focuses on producing or providing a subset of the industry's products or services
A. FASB Technical Bulletins
8. Several sources of GAAP consulted by an auditor are in conflict as to the application of an accounting principle. Which of the following should the auditor consider the most authoritative?A. FASB Technical BulletinsB. AICPA Accounting InterpretationsC. FASB Statements of Financial Accounting ConceptsD. AICPA Technical Practice Advice
The auditor concludes that the financial statements are not fairly presented, he is unable to form an opinion as to whether the financial statements are fairly presented, or he is not independent.
Adverse or Disclaimer
Roe v. Wade 1973
The implied constitutional right to privacy includes a woman's choice to contain an abortion.
What are structured as annuities?
House Payments and Car Payments
Who must review the check request form?
The department manager.
purchase order, receiving report, and vendor invoice (if received)
included in voucher package
B. explicitly represented in the opening paragraph of the auditor’s standard report
15. An auditor’s responsibility to express an opinion on the financial statements is A. explicitly represented in the opinion paragraph of the auditor’s standard reportB. explicitly represented in the opening paragraph of the auditor’s standard reportC. explicitly represented in the scope paragraph of the auditor’s standard reportD. implicitly represented in the auditor’s standard report
Inventory on the Balance Sheet



žReported as a current asset


žFinancial statement footnotes describe inventory costing method and whether valued at LCM


—Full-disclosure principle


Inventory is reported as a current asset and is often listed after receivables on the balance sheet. In addition to showing the inventory amount, a business must disclose the costing method used to value inventory (specific-identification, FIFO, LIFO, or average cost) and whether the inventory is valued using LCM.  
Corporate Charter
a legal document granted by the state in which a company is incorporated that recognizes a corporations as a separate entity; it includes the name of the corporation, the date of incorporation, capital stock the corporation is authorized to issue, and the types of business activities the corporation is authorized to conduct
What is a Patent?
The exclusive right to manufacture an item for a period of 20 years.
tolerable misstatement
how badly off an account can be and still not be a material misstatement
C. Review supporting documents for new large balances occurring after the interim date, and evaluate any significant changes in balances at year-end
2. An auditor confirmed accounts receivable as of an interim date, and all confirmations were returned and appeared reasonable. Which of the following additional procedures most likely should be performed at year-end?A. Send confirmations for all new customer balances incurred from the interim date to year-endB. Resend confirmations for any significant customer balances remaining at year-endC. Review supporting documents for new large balances occurring after the interim date, and evaluate any significant changes in balances at year-endD. Review cash collections subsequent to the interim date and year-end
b. an attitude of professional skepticism
5. “The auditor should not assume that management is dishonest, but the possibility of dishonesty must be considered.” This is an example ofa. unprofessional behavior.b. an attitude of professional skepticism.c. due diligence.d. a rule in the AICPA’s Code of Professional Conduct.
significant assertions for cash
1. existence 2. cutoff 3. valuation (foreign currency)
What does Moody's do?
It rate the credit worthiness of bond issuers.
loss is realized when the proceeds are less than the tax bassis in the property
loss on property dispostion
(st + lt debt)/(st + lt debt + s.hold equity)
debt ratio
C. Examining an analysis of inventory turnover
50. Which of the following procedures would an auditor most likely perform to obtain assurance that slow-moving and obsolete items included in inventories are properly identified?A. Testing shipping and receiving cutoff proceduresB. Confirming inventories at locations outside the entity's premisesC. Examining an analysis of inventory turnoverD. Tracing inventory observation test counts to perpetual listings
The heading of all financial statements should show 
“who (company) ,” what (document written) ,” and “when.”  
Buildings, equipment, and executive salaries
What is an example of committed fixed costs?
document receipt of goods from finished goods storeroom; acknowledges responsibility for custody of the goods transferred
control procedure for thefot of goods b shipping dock workers, who claim that the inventory shortages reflect errors in the inventory records
A. The availability of minutes of stockholders' and directors' meetings
63. To which of the following matters would materiality limits not apply in obtaining written management representations?A. The availability of minutes of stockholders' and directors' meetingsB. Losses from purchase commitments at prices in excess of market valueC. The disclosure of compensating balance arrangements involving related partiesD. Reductions of obsolete inventory to net realizable value
The cost principle states that:
a. assets should be initially recorded at cost and adjusted when market value changes.
 
b. activities of an entity are to be kept separate and distinct from its owner.
 
c. assets should be recorded at cost.
 
d.
C. assets should be recorded at cost.
Pros: most accurate
Cons: have to enter all data into excel
What are the pros and cons of regression analysis?
A. Is unable to obtain audited financial statements supporting the entity's investment in a foreign subsidiary
5. A limitation on the scope of an audit sufficient to preclude an unqualified opinion will usually result when management:A. Is unable to obtain audited financial statements supporting the entity's investment in a foreign subsidiaryB. Refuses to disclose in the notes to the financial statement related party transactions authorized by the board of directorsC. Does not sign an engagement letter specifying the responsibilities of both the entity and the auditorD. Fails to correct a significant deficiency communicated to the audit committee after the prior year's audit
What is the periodic inventory system?
A system where the business does a physical inventory at the end of a set period
a. Prohibiting a client's new CPA firm from reviewing the audit working papers after the client has requested the CPA to do so
28. Which of the following acts by a CPA would not necessarily be considered an act discreditable to the profession under Rule 501 of the AICPA Code of Professional Conduct?a. Prohibiting a client's new CPA firm from reviewing the audit working papers after the client has requested the CPA to do so.b. Engaging in discriminatory employment practices.c. Robbing a convenience store.d. Knowingly signing a false tax return.
Why do companies use straight line depreciation on the income statement?
It makes it easier for the company to report steadily increasing income for future years.
Until the process changes or until the product design changes.
Know how long you can rely on a driver - cost relationship?
What did WWII prevent?
Inflation
State of Incorporation of Walmart?
Delaware
D. Unqualified
9. An explanatory paragraph following the opinion paragraph of an auditor's report describes an uncertainty as follows:“As discussed in Note X to the financial statements the Company is a defendant in a lawsuit alleging infringement of certain patent rights and claiming damages. Discovery proceedings are in progress. The ultimate outcome of the litigation cannot presently be determined. Accordingly, no provision for any liability that may result upon adjudication has been made in the accompanying financial statements.”What type of opinion should the auditor express under these circumstances?A. AdverseB. Qualified due to a scope limitationC. Qualified due to a GAAP violationD. Unqualified
depositions
oral questions submitted by the opposing attorney to a party or witness answered under oath
account balance
the amount in an account
SEC
Security Executive Commissions --- has the legal authority to set accounting standards (but delegates job to FASB).
internal
is purchase requisition internal or external
Should include the word Independent:
Report Title
Do Convertible Bonds give an advantage to the bond holder?
Yes
original investment/expected value of anuity = return of caital percentage
annuity exclusion ratio
AIS
comprised of the human and capital resources within an organization that are responsible for collecting and processing transactions and preparing financial information
Income Statement
Revenues - Expenses = Net Income
Expenses
measure of costs expired or consumed during a period
tax base
the maximum amount of earnings on which a tax is calculated
Balance sheet
reports assets and claims to those assets at a specific point in time.
General Journal
A means of recording the transactions of a firm chronologically in terms of debits and credits.
accruals, deferrals, reevaluations, estimates, corrections
Five categories of adjusting entries
B. Perform the planned auditing procedures closer to the balance sheet date
104. Holding other planning considerations equal, a decrease in the amount of misstatements in a class of transactions that an auditor could tolerate most likely would cause the auditor toA. Apply the planned substantive tests prior to the balance sheet dateB. Perform the planned auditing procedures closer to the balance sheet dateC. Increase the assessed level of control risk for relevant financial statement assertionsD. Decrease the extent of auditing procedures to be applied to the class of transactions
Adjustments for deferrals 
Prepaid Expense or deferred 



—Recorded as assets when purchased

Expensed is recorded when used
Significant Deficiency
one or more control deficiencies exist that, more than remotely, adversely affect a company's ability to initiate, authorize, record, process, or report external FS reliability
payroll taxes
Taxes based on the payroll of a business
What is the Pharmaceutical Industries' gross margin?
Very High exceeding 50%
earned income, unearned income, other/imputed income
3 categories of income sources
B. Affects management's financial statement assertions
77. In an audit of financial statements, an auditor's primary consideration regarding an internal control policy or procedure is whether the policy or procedureA. Reflects management's philosophy and operating styleB. Affects management's financial statement assertionsC. Provides adequate safeguards over access to assetsD. Enhances management's decision-making processes
Identifies the CPA firm or practitioner who preformed the audit.
Name of CPA Firm
Constitution - Article VI
Debts prior to union are recognized and assumed for repayment - law of land
Dual-Purpose Test
An audit procedure that can be used as both a test of controls and a substantive test
electronic transfer
___ is an instruction to your bank to transfer funds from your acct to another account
A. Unqualified opinion with an appropriate explanatory paragraph
61. An independent auditor has concluded that a substantial doubt remains about a client's ability to continue as a going concern, but the client's financial statements have properly disclosed all of its solvency problems. The auditor would probably issue a(an): A. Unqualified opinion with an appropriate explanatory paragraph.B. "Except for" qualified opinion.C. Standard unqualified opinion.D. Adverse opinion.
Internal Revenue Agent
auditors who work for the IRS and conduct examinations of taxpayers' returns
Resource available only in specific quantities
What is a stepped cost is.
to produce information for our decision makers
Primary objective of a accounting information system
b. Determine that the performance of all services is consistent with the firm's members' role as professionals
36. In determining the scope and nature of services to be performed in public practice, a CPA firm should:a. Require independence for all services performed.b. Determine that the performance of all services is consistent with the firm's members' role as professionals.c. Have in place internal control procedures.d. Only perform accounting related services.
How is interest computed?
Principal of the note
x Annual interest rate
x Time expressed in years
----------------------------
= Interest

*If note is expressed in days, base year on 360 days*
how do auditors handle sales cutoff?
1. examine sales invoices and shipping docs shortly prior to and after year end 2. examine returns after yearend
C. Knowledge required to fulfill assigned responsibilities and to progress within the firm
Within the context of quality control, the primary purpose of continuing professional education and training activities is to enable a CPA firm to provide personnel within the firm with: A. Technical training that assures proficiency as an auditor.B. Professional education that is required in order to perform with due professional care.C. Knowledge required to fulfill assigned responsibilities and to progress within the firm.D. Knowledge required in order to perform a peer review.
Unqualified Audit Report with Explanatory Paragraph or Modified Wording
an unqualified report in which the FS are fairly presented, but the auditor believes it is important, or is required, to provide additional information
internal operations (cycle time is a measure of process efficiency)
Measures of cycle time would most likely appear in which part of the balanced scorecard?
d. Revoke the offending member's CPA certificate
30. If a CPA violates the AICPA Code of Professional Conduct, the AICPA Trial Board may do all of the following, except:a. Admonish the offending member.b. Suspend the offending member.c. Expel the offending member.d. Revoke the offending member's CPA certificate
If Taffy sold her house in the suburbs is sales tax due?
No because it is real property.
C. The nonpublic company report has an additional paragraph referring to the client's fraud prevention procedures
41. Which of the following is not a difference between the audit report of a nonpublic and public company?A. The nonpublic company report includes the word "Registered" in the title.B. The nonpublic company report refers to standards of the PCAOB.C. The nonpublic company report has an additional paragraph referring to the client's fraud prevention procedures.D. The nonpublic company report must include the city and state in which the report has been issued.
A. Is the client's creditor who sues the accountant for negligence
In a common law action against an accountant, lack of privity is a viable defense if the plaintiff: A. Is the client's creditor who sues the accountant for negligence.B. Can prove the presence of gross negligence that amounts to a reckless disregard for the truth.C. Is the accountant's client.D. Bases the action upon fraud.
Dividends
payments to stock holders
president
manages day to day operations
Assets =
Liabilities + Stockholders Equity
res judicata
the thing has been decided
Equities
Claims on resources or assets. Liabilities + Owners' Equity or Borrowed sums + Investments from owners.
EOQ formula
determines how much to order
Auditing
the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria
adjusting entries
Journal entries recorded to update general ledger accounts at the end of a fiscal period
What company lost their AAA bond rating two years ago?
GE
Auditor's Report Opinions
(1) Unqualified opinion ("fairly present"), (2) Unqualified opinion with explanatory paragraph, (3) Qualified opinion ("except for"), (4) Adverse opinion ("do not fairly present"), (5) Disclaimer (cannot form an opinion).
upper limit
when evaluating the sample results, auditors must consider the max deviation rate that might exist. = how badly could we have missed it? worst case scenario.
fourth
in the general ledger and reporting system, producing managerial reports is the generally the ____ activity
Sole proprietorship 



žBusiness that has one owner


žOwner  is personally responsible for debts of business


žIncome earned by business is reported on owner’s personal tax return
not guilty
prosecutor has not convinced jury by reasonable doubt, defendant acquitted
terminal summary
The report that summarizes the cash and credit card sales of a point-of-sale terminal
Retained earnings
shows the amounts and causes of changes in retained earnings during the period
General Ledger
Notebook of file that contains all accounts of a firm
balance forward method
customers typically pay according to the amount shown on a monthly statement, rather than by individual invoices
d. all of the above
1. Interpretations of Rule 101 prohibit covered members from owning any stock or other direct investment in audit clients. Covered members includea. all partners in the office that is responsible for the attest engagement.b. the firm and its employee benefit plans.c. individuals on the attest engagement.d. all of the above.
Dividends and Expenses decrease
Stockholders equity therefore they have opposite rules of debit/credit
Inherent Risk
a measure of the auditor's assessment of the likelihood that there are material misstatements in a segment before considering the effectiveness of internal control
business ethics
The use of ethics in making business decisions
What inventory method is widely used by retailers?
The Periodic Method
income from flow thru entities (partnerships; s corps); alimony
"other" sources of incmoe
C. The significant deficiency has not been corrected
100. A previously communicated significant deficiency ordinarily should be communicated again ifA. The deficiency has a material effect on the auditor's assessment of control risk.B. The entity accepts that degree of risk because of cost-benefit considerations.C. The significant deficiency has not been corrected.D. There has been major turnover in upper-level management and the board of directors.
a. Agreed-upon procedures report
4. A summary of findings rather than assurance is most likely to be included in a(n):a. Agreed-upon procedures report.b. Compilation report.c. Examination report.d. Review report.
States that the audit is designed to obtain reasonable assurance about whether the statements are free of material misstatement.
Scope paragraph
Marbury v. Madison 1803
The judicial branch of government has the authority
to evaluate the actions of the other branches to determine whether those actions are consistent with the constitution.
Output Controls
the final check on the accuracy of the results of computerized processing and controls designed to ensure that only proper persons receive reports or have access to files produced by the system
to customer for paymentto a/r to record salefiled
copies of sales invoice
c. have the independent auditor report to an audit committee of outside members of the board of directors
4. To emphasize auditor independence from management, many corporationsa. appoint a partner of the CPA firm conducting the examination to the corporation’s audit committee.b. establish a policy of discouraging social contact between employees of the corporation and the staff of the independent auditor.c. have the independent auditor report to an audit committee of outside members of the board of directors.d. request that a representative of the independent auditor be on hand at the annual stockholders’ meeting.
International Standards on Auditing (ISAs)
statements issued by the International Auditing Practices Committee of the International Federation of Accountants to promote international acceptance of auditing standards
%change in NOI=%change sales*operating ratio
Formula to determine changes in net operating income.
1 vendor2 ap3 receiving4 requesting dpt5 purchasing
copies of internal purchase order (expenditure cycle)
C. Customers may not be inclined to report understatement errors in their accounts
25. The confirmation of customers' accounts receivable rarely provides reliable evidence about the completeness assertion becauseA. Many customers merely sign and return the confirmation without verifying its details.B. Recipients usually respond only if they disagree with the information on the request.C. Customers may not be inclined to report understatement errors in their accounts.D. Auditors typically select many accounts with low recorded balances to be confirmed
Expenditures maybe defined for governmental fund accounting as all decreases in ______
fund net assets for current operations, capital outlay, or debt service except those arising from transfers to other funds.
5 factors likely to affect the reliability of confirms
1. previous audit experience 2. intended recipient of the confirmation 3. type of info being confirmed 4. the auditor may confirm entire balances or individual transactions 5. type of confirmations being sent
D. The type of opinion expressed by the predecessor auditor
67. When reporting on comparative financial statements where the financial statements of the prior period have been examined by a predecessor auditor whose report is not presented, the successor auditor should indicate in the report: A. The reasons why the predecessor auditor's report is not presented.B. The identity of the predecessor auditor who examined the financial statements of the prior year.C. Whether the predecessor auditor's review of the current year's financial statements revealed any matter that might have a material effect on the successor auditor's opinion.D. The type of opinion expressed by the predecessor auditor.
Audit of Historical Financial Statements
a form of attestation service in which the auditor issues a written report stating whether the FS are in material conformity with GAAP
uses the information on the sales invoice to debit customer accounts and subsequently credits those accounts when payments are received
two main tasks of the accounts receivable function
d. The CPA has an immaterial joint, closely held business investment with the client
42. Independence of a CPA with respect to a client is not impaired if:a. The CPA has a loan to an officer of the client.b. The CPA has an immaterial direct interest in the client.c. The CPA is trustee for the client's pension plan.d. The CPA has an immaterial joint, closely held business investment with the client.
Why did the public pay less than 10% income tax?
The country was in a depression.
B. Disclosed in the notes to the financial statements of the current year
68. If an accounting change has no material effect on the financial statements in the current year, but the change is reasonably certain to have a material effect in later years, the change should be: A. Referred to in the auditor's report for the current year.B. Disclosed in the notes to the financial statements of the current year.C. Disclosed in the notes to the financial statements and referred to in the auditor's report for the current year.D. Treated as a subsequent event.
Cash of $100 was received at the time of service and was journalized & posted as a debit to Cash $100 credit to Accounts Receivable $100. Assuming the incorrect entry is not reversed:
 
a. debit service revenue & credit Accounts Receivable $100
b. deb
b. debit Accounts Receivable & credit Service Revenue $100
/ 179
Term:
Definition:
Definition:

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