The SEC and FASB are two organizations that are primarily responsible for establishing
generally accepted accounting principles. It is true that
a. they are both governmental agencies.
b. the SEC is a private organization of accountants.
c. the SEC of
1. Darman Company issued 700 shares of no-par common stock for $7,700. Which of the
following journal entries would be made if the stock has a stated value of $2 per share?
Paid-in Capital in Exc
MULTIPLE CHOICE QUESTIONS
Claims for which formal instruments of credit are issued as proof of the debt are
a. accounts receivable.
b. interest receivable.
c. notes receivable.
d. other receivables.
Interest is usually associated with
a. accounts re
Nicholson Company purchased equipment on January 1, 2013, for $80,000 with an
estimated salvage value of $20,000 and estimated useful life of 8 years. On January 1,
2015, Nicholson decided the equipment will last 12 years from the date of purchase. The
1. The cash balance per books for Feagen Company on September 30, 2015 is
$10,740.93. The following checks and receipts were recorded for the month of October,
MULTIPLE CHOICE QUESTIONS
The adjustments entered in the adjustments columns of a worksheet are
a. not journalized.
b. posted to the ledger but not journalized.
c. not journalized until after the financial statements are prepared.
d. journalized befor
Many business transactions affect more than one time period.
The time period assumption states that the economic life of a business entity can be
divided into artificial time periods.
The time period assumption is ofte
CHAPTER #2 HOMEWORK
1. Post the following transactions to T-accounts and determine each account's ending balance.
b. Accounts Receivable.
c. Cash .
LEARNING TEAM CHARTER TEAM
Course Title ACC/546 Auditing
Team Members/Contact Information
Time zone and
Mon - Sat 8am to 8pm; Sun
after 1 pm EST
Mon - Sat 8am to 5pm; Sun
after 1 pm CST
DETECTION RISK AND THE DESIGN OF SUBSTANTIVE
The following bullets summarize each preliminary audit strategy, the appropriate level
of planned detection risk, the planned audit procedures that provide significant
ASSESSING CONTROL RISK / TESTS OF CONTROLS
Assessing control risk is the process of evaluating the effectiveness of an entity's
internal controls in preventing or detecting material misstatements in the financial
UNDERSTANDING INTERNAL CONTROL
The antibribery and accounting standards provisions of the Act require the
maintenance of a satisfactory system of internal control.
The National Commission on Fraudulent Financial Reporting
MATERIALITY, RISK, AND PRELIMINARY AUDIT
Materiality is defined by the FASB as: The magnitude of an omission or
misstatement of accounting information that, in the light of surrounding
circumstances, makes it pr
ACCEPTING THE ENGAGEMENT AND PLANNING THE
The four phases of an audit and their typical time frames, expressed in relation to the
client's fiscal year-end, are (1) accepting the audit engagement, (2) planning the audit,
C HAPTER 6
Audit Evidence, Audit Objectives,
A udit Programs, and Audit Working
Top-down audit evidence focuses on obtaining evidence an understanding of the business and
industry, managements goals, how management uses its res
C HAPTER 5
Overview of the Audit Process
The overall objective of a financial statement audit is the expression of an opinion on whether the
client's financial statements are presented fairly, in all material respects, in conformity w
AUDITOR'S LEGAL LIABILITY
Auditors are often targeted in lawsuits out of proportion to their degree of
wrongdoing because they may be the only party left with sufficient financial
resources to indemnify the plaintiffs' losses
C HAPTER 3
P ROFESSIONAL E THICS
General ethics attempts to deal with two questions that can serve as guides to
behavior: (1) "What good do I seek?" and (2) "What is my obligation in this
circumstance?" General ethics attempts to deal
C HAPTER 2
FINANCIAL STATEMENT AUDITS AND
a. The ultimate objective of accounting is the communication of relevant and
reliable financial data that will be useful for decision making. Accounting
C HAPTER 1
A UDITING AND THE P UBLIC
A CCOUNTING P ROFESSION
Several common attributes of activities defined as auditing are (a) systematic
process, (b) objectively obtaining and evaluating evidence, (c) assertions about
The following entries would have been made during the year.
To record the endowment contribution (in a permanently restricted fund)
To record the initial contribution of equipment
To record the initial contribution of cash
Estimated bond proceeds
Estimated grant revenues
Estimated transfer from general fund
Appropriationsbond issue costs
To record the budget
1. Consumption Method
Under the consumption basis, the expenditures would represent the amount of
supplies consumed. By analyzing the inventory account, we can determine the
amount of supplies purchased:
Beginning balance + Purchases - Consumption
To record a state disability grant (At the time the award is announced the city had
fulfilled all eligibility requirements. There are no time-requirements; the funds can be
spent at any
To record estimated revenues
To record appropriations
Reserve for encumbrances
To record the order of supplies
Chapter 15 SEGMENT AND INTERIM FINANCIAL REPORTING
Answers to Questions 1 An operating segment is a component of an enterprise: (1) that engages in business activities from which it may earn revenues and incur expenses, either internal or external; (2) wh
Chapter 14 FOREIGN CURRENCY FINANCIAL STATEMENTS
Answers to Questions 1 A company's functional currency is the currency of the primary economic environment in which it operates. It is normally the currency in which it receives most of its payments from cu
Chapter 13 Accounting for Derivatives and Hedging Activities
Answers to Questions
Hedge accounting refers to accounting designed to record changes in the value of the hedged item and the hedging instrument in the same accounting period. This enhances tr
Chapter 12 Derivatives and Foreign Currency: Concepts and Common Transactions
Answers to Questions 1 Derivative is the name given to a broad range of financial securities. Their common characteristic is that the derivative contract's value to the investor