Which piece of information is more appropriate for use in the financial statements? The accountant of Fauntleroy Ltd is preparing financial statements for the current year endbut is struggling to establish which information is more important. He has a shortlist ofquestions which need to be solved:(a) In preparing the description of a very complex transaction he has two options:(i)To use information from a close friend who holds shares in the company: theinformation prepared by his friend is somewhat biased but is very clear andconcise; orTo use the information prepared by an independent analyst: this information iscomplex to the average person(ii)

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Answered: The accountant of Fauntleroy Ltd is…

Contemporary Auditing

11th Edition

ISBN:9781337650380

Author:KNAPP

Publisher:KNAPP

Chapter6: Professional Roles

Section6.4: Tommy O’connell, Audit Senior

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QUESTION 1 The accountant of Fauntleroy Ltd is preparing financial statements for the current year end but is struggling to establish which information is more important. He has a shortlist of questions which need to be solved:(a) In preparing the description of a very complex transaction he has two options:(i) To use information from a close friend who holds shares in the company: the information prepared by his friend is somewhat biased but is very clear and concise; or(ii) To use the information prepared by an independent analyst: this information is complex to the average personWhich piece of information is more appropriate for use in the financial statements?(b) A transaction took place during the year which is capable of impacting the economic decisions of the users, both currently and potentially in the future. The exact details of the transactions are still not available but are likely to be finalized halfway through the next financial year.Should the information, in its…
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