FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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S1: A client imposed scope limitation will generally result in a disclaimer of opinion S2: When there is a significant question about a company's ability to remain a going concern, the report issued is usually unqualified with an explanatory paragraph. S3: When the auditors are unable to comply with generally accepted auditing standards, they should issue an opinion that is unqualified, but include an additional explanatory paragraph in the report.
a. All statements are true
b. All statements are false
c. S1 and S2 are true
d. S1 is true
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- ASA570.10 requires the auditor to particularly evaluate the going concern problems and the related risk as part of the audit strategy and processes. What are the implications and the consequences for the audit if it is concluded that the going concern assumption is inappropriate and, as a result, the entity being audited is highly unlikely to continue in business in the foreseeable future? In your response and in your own words, discuss six (6) typical indicators of going concern problems and state the considerations and the additional procedures which should be included as part of the audit program.arrow_forwardV2. If a lawyer refuses to furnish corroborating information regarding litigation, claims, and assessments. the auditor should: disclose this fact in a footnote to the financial statements. seek to obtain the corroborating information from management. C) consider the refusal to be a scope limitation. D) honor the confidentiality of the client-lawyer relationship.arrow_forwardS1: When an Other Matter paragraph is included to draw users' attention to a matter relevant to their understanding of the audit of the financial statements, the paragraph is included immediately after the Opinion paragraph and any Emphasis of Matter paragraph. S2: The auditor shall express an adverse opinion when the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are material, but not pervasive, to the financial statements S1 is True, S2 is False S1 is False, S2 is True Both statements are True Both statements are Falsearrow_forward
- Which item regarding an Emphasis of Matter paragraph is true? a. The auditor will use the E of M to restrict distribution of the audit report. b. The auditor will use the E of M when the client has corrected an error in the previous financial statements. c. An E of M will be used when a material error exists in the current financial statements. d. The E of M paragraph is usually located immediately before the opinion paragraph. e. The E of M paragraph would be used to discuss a client's change in the method to estimate bad debts.arrow_forward4arrow_forward8. In which of the following situations would an auditor originally choose between expressing a qualified opinion or an adverse opinion? a. The auditor did not observe the entity's physical inventory and is unable to become satisfied about its balance by other auditing procedure b. Conditions that cause the auditor to have substantial doubt about the entity's ability to continue as a going concern are inadequately disclosed. c. Both a and b. с. d. Neither a nor b.arrow_forward
- Part 1 Prepare journal entries to the following. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) a. Issuance of the bonds on June 1, 2023 b. Payment of interest on December 1, 2023 c. Adjusting entry to accrue bond interest and discount amortization on January 31, 2024 d. Payment of interest on June 1, 2024 Assume JetCom Inventors Inc. has a January 31 year-end. View transaction list Journal entry worksheet 1 2 3 4 Record issued bond at discount. Note: Enter debits before credits. Date June 01, 2023 General Journal Debit Credit >arrow_forwards1: Client's representations, both written or oral, are not considered to be a persuasive type of evidence that the auditor obtains. s2: To substantiate the information provided by management about litigation, claims, and assessments, the auditor should ask the client to send letters of audit inquiries to its lawyers. a. BOTH STATEMENTS ARE TRUE b. BOTH STATEMENTS ARE FALSE c. ONLY S1 IS TRUE d. ONLY S2 IS TRUEarrow_forwardb) Which of the following statements regarding additional information that is included in a document containing audited financial statements is not true? Group of answer choices 1: Additional information can be subject to certain limited procedures by the auditor. 2: Additional information can be the subject of another information opinion. 3: Additional information can be the subject of an in-relation-to opinion. 4: Additional information can be subject to a limited review by the auditor.arrow_forward
- Which of the following is a key change to audit reports per SAS No. 134? O a. It alters the look forward period for evaluating going concern uncertainty. O b. It explicitly assigns responsibility for evaluating going concern to the auditors. Oc. Reporting language related to substantial doubt about an entity's ability to continue as a going concern was eliminated. O d. Reporting language related to substantial doubt about an entity's ability to continue as a going concern was enhanced.arrow_forwardPlease help mearrow_forward3. Does a qualified opinion on management’s assessment of internal controls over the financial reporting system necessitate a qualified opinion on the financial statements? Please explain within 150 words. (To answer this question, please make sure you understand the terms “unqualified opinion” and “qualified opinion” in auditing.arrow_forward
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