Why is an entity permitted by financial reporting standards to change an accounting policy? O The change is authorized by the management of the entity. O The change would results in the financial statements providing more.reliable and relevant information about financial position, financial performance and cash flows. O The change is made by a CPA. O The change would allow the entity to present a better financial results.

Why is an entity permitted by financial reporting standards to change an accounting policy? O The change is authorized by the management of the entity. O The change would results in the financial statements providing more.reliable and relevant information about financial position, financial performance and cash flows. O The change is made by a CPA. O The change would allow the entity to present a better financial results.

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter17: Other Services Provided By Audit Firms

Section: Chapter Questions

Problem 24MCQ

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Why is an entity permitted to change an accounting policy? A. The change would allow the entity to present a more favorable profit picture.B. The change would result in the financial statements providing more reliable and relevant information about financial position, financial performance and cash flowsC. The change is made by the internal auditorD. The change is made by the CPA
Why is an entity permitted to change an accounting policy? a. The change would allow the entity to present a more favorable profit picture. b. The change would result in the financial statements providing more reliable and relevant information about financial position, financial performance and cash flows c. The change is made by the internal auditor d. The change is made by the CPA (Certified Public Accountant)
Which of the following statements is correct? I. To enable users of financial statements to form a view about the effects of related party relationships on an entity, it is appropriate to disclose the related party relationship when control exists, irrespective of whether there have been transactions between the related parties. II. If there have been transactions between related parties, an entity shall disclose the nature of the related party relationship as well as information about the transactions and outstanding balances necessary for an understanding of the potential effect of the relationship on the financial statements. III. Disclosures that related party transactions were made on terms equivalent to those that prevail in arm’s length transactions are encouraged by GAAP. IV. Government-controlled entities are within the scope of IFRSs, i.e. those that are profit-oriented are no longer exempted from disclosing transactions with other state-controlled entities.
For entities reporting financial statements on the basis of IFRS, what sources of guidance should such entities consider with regard to the selection and application of accounting policies? Be sure to cite specific authoritative literature to justify your answer. Don't
For each class of financial assets and liabilities, the entity shall disclose the fair value of that class of financial assets and liabilities in a manner that allows comparison with the corresponding carrying amount on the balance sheet. Why do you think that these disclosures contribute to improving the quality of information for users of financial statements? Comment critically
Under IFRS, changes in accounting policies are a. permitted if the change will result in a more reliable and more relevant presentation of the financial statements. b. permitted if the entity encounters new transactions, events, or conditions that are substantively different from existing or previous transactions. c. required on material transactions, if the entity had previously accounted for similar, though immaterial, transactions under an unacceptable accounting method. d. required if an alternate accounting policy gives rise to a material change in assets, liabilities, or the current- year net income.
The objective of general-purpose financial reporting is? to provide users with financial information that implies total freedom from error to provide companies with the option to select information that favors one set of interested parties over another O to provide financial information about the reporting entity that is useful to present and potential equity investors, lender and other creditors in making decisions in their capacity as capital providers to provide a metric for financial information used to determine when the boundary between two or more entities should disregarded and the entities considered to be a licensing arrangement
5. According to PFRS 9, on initial recognition, the entity has the option of designating financial assets to be measured at FvrL
Which of the following parties is responsible for the fairness of the representations made in financial statements? * O AICPA. Independent auditor. O Audit committee. O Client's management.
Who is responsible for the preparation and the fair presentation of an entity's financial statements in accordance with the PFRSS? * Any accountant Certified Public Accountant O Auditor O Management
1. Explain the purpose of operational accountability and the purpose of fiscal accountability. Which category of financial statements is most useful in reporting on each of these accountability concepts? 2. Under GASB guidance, when should an item be recognized on the face of the financial statements? Under what conditions would the GASB indicate that a note disclosure should accompany an item that has been recognized on the financial statements?
Characteristics of internal accounting information includeall of the following except:a. It is audited by a CPA.b. It must be timely.c. It is oriented toward the future.d. It measures effi ciency and effectiveness.