Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Chapter 14, Problem 4RQ
To determine
Suggest two reasons why the adjustments proposed by independent auditors more often than not call for reducing recorded earnings.
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Which of the following is not a characteristic of non-counterbalancing error?
Group of answer choices
a.If the net income of one year is understated due to non-counterbalancing error, the net income of subsequent year is also affected.
b.The statement of financial position of the year of non-counterbalancing error and succeeding statement of financial position are incorrect until the error is corrected.
c.If not detected, this is not automatically corrected in the next accounting period.
d.The income statement of the period in which the non-counterbalancing error is committed is misstated.
The results in using ratio analysis may be distorted if _?
a. There is inflation.
b. The data used are different in the way it was developed.
c. The financial statements are not audited.
d. All of the above.
Provide two inherent risk factors in the revenue cycle and identify the accounts that are likely to be overstated or understated and explain why.
Chapter 14 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 14 - If a corporation overstates its earnings, are its...Ch. 14 - Prob. 2RQCh. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 5RQCh. 14 - Prob. 6RQCh. 14 - Prob. 7RQCh. 14 - Prob. 8RQCh. 14 - List the major responsibilities of an accounts...Ch. 14 - Prob. 10RQ
Ch. 14 - Prob. 11RQCh. 14 - Prob. 12RQCh. 14 - Prob. 13RQCh. 14 - Prob. 14RQCh. 14 - Prob. 15RQCh. 14 - Prob. 16RQCh. 14 - Prob. 17RQCh. 14 - Whitehall Company records its liabilities in an...Ch. 14 - Prob. 19RQCh. 14 - Prob. 20RQCh. 14 - Prob. 21RQCh. 14 - Prob. 22RQCh. 14 - What is the purpose of the auditors review of cash...Ch. 14 - Prob. 24RQCh. 14 - Prob. 25RQCh. 14 - Prob. 26RQCh. 14 - Prob. 27QRACh. 14 - Prob. 28QRACh. 14 - Prob. 29QRACh. 14 - Prob. 30QRACh. 14 - Prob. 31QRACh. 14 - Prob. 32QRACh. 14 - Which of the following procedures is least likely...Ch. 14 - Prob. 33BOQCh. 14 - Which of the following is the best audit procedure...Ch. 14 - Prob. 33DOQCh. 14 - Prob. 33EOQCh. 14 - Prob. 33FOQCh. 14 - Prob. 33GOQCh. 14 - Prob. 33HOQCh. 14 - Ordinarily, the most significant assertion...Ch. 14 - Prob. 33JOQCh. 14 - Prob. 33KOQCh. 14 - Prob. 33LOQCh. 14 - Prob. 34OQCh. 14 - Prob. 35OQCh. 14 - Prob. 36OQCh. 14 - Prob. 37OQCh. 14 - Prob. 38PCh. 14 - Prob. 39PCh. 14 - Prob. 40PCh. 14 - Prob. 41PCh. 14 - Prob. 42PCh. 14 - Prob. 43ITC
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Similar questions
- Which of the following statements is false regarding planning analytical procedures in the revenue cycle? a. As revenue is typically regarded as a high-risk account, planning analytical procedures related to revenue are not required. b. The first step in planning analytical procedures includes developing an expectation of recorded amounts or ratios, and evaluating whether that expectation is precise enough to accomplish the relevant objective. c. Trend analysis would not be appropriate as a plan-fling analytical procedure in the revenue cycle. d. All of the above statements are false.arrow_forwardWhen it is impossible to determine whether a change is a change in estimate or a change in policy, the company should consider the change is considered a change in policy. is considered an error correction. is considered a change in estimate. can be considered either a change in policy or a change in estimate.arrow_forwardThere are recurring attempts by management to justify marginal or inappropriate accounting on the basis of materialityarrow_forward
- If the auditor concludes that there is a high likelihood of material misstatement in accounts receivable due to changing economic conditions, the auditor concludes that inherent risk for accounts receivab is low. Select one: OTrue O False earrow_forwardUnder what circumstances would an auditor choose to confirminformation such as the right of return or special sales terms in addition to the customerbalance?arrow_forwardSome accountants argue that the receiving department should be eliminated. Discuss the objective of eliminating the receiving function. What accounting/audit problems need to be resolved.arrow_forward
- As an auditor, why would we be concerned with a high level of transactions that exceed the Bendford expected value?arrow_forwardAn amount less than materiality that is set to reduce the likelihood that the aggregate amount of misstatements not exceed materiality for the financial statements as a whole is known as O qualitative materiality. specific materiality. O quantitative materiality. O performance materiality.arrow_forwardFinancial reports of the lowest level of quality refl ect:A . fi ctitious events.B . biased accounting choices.C . accounting that is non-compliant with GAAP.arrow_forward
- S1. Operational risk, as opposed to efficiency, is the risk of loss resulting from inadequate internal processes, people, and systems or from external events. S2. FS audit is concerned on to see that the credit control has been strictly followed while operational audit is concerned on to study the credit control system for suggesting better measures as necessary. Which of the following statements is/are false?arrow_forwardWhen evaluating audit findings, the auditor should consider any potential bias in management's judgement. Which if the these is not included in an auditor's concerns. 1. Management's bias in estimation calculations 2. Management's bias in accounting policies 3. Management's bias in detection risk 4. Management's bias in adjusting entry calculationsarrow_forwardIt is generally acceptable for analytical procedures to be the only audit procedure used to test revenue. Question 21 options: True Falsearrow_forward
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