Statement 1: The primary responsibility for the preparation and presentation of the financial statements of an entity is reposed in the management of the entity. Statement 2: An entity can rectify inappropriate accounting policies either by disclosure of the accounting policies used or by notes or explanatory information Both statements are true. Both statements are false. Only statement 1 is true. Only statement 2 is true.

Statement 1: The primary responsibility for the preparation and presentation of the financial statements of an entity is reposed in the management of the entity. Statement 2: An entity can rectify inappropriate accounting policies either by disclosure of the accounting policies used or by notes or explanatory information Both statements are true. Both statements are false. Only statement 1 is true. Only statement 2 is true.

Contemporary Auditing

11th Edition

ISBN:9781337650380

Author:KNAPP

Publisher:KNAPP

Chapter1: Comprehensive Cases

Section1.2: Lehman Brothers Holdings, Inc.

Problem 2Q

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S1: Control is the power to govern the financial and operating policies of anentity so as to obtain benefits from its activities. S2: Consolidated financialstatements shall be prepared using uniform accounting policies for liketransactions and other events in similar circumstances. A. Only S1 is correct.B. Only S2 is correct.C. Both statements are incorrect.D. Both statements are correct.
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When an event impacts a financial statement element, it should be recognized in the accounting records even if reliability of the amount is questionable. True False
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