The full disclosure principle dictates that: (a) financial statements should disclose all assets at their cost. (b) financial statements should disclose only those events that can be measured in dollars. (C) financial statements should disclose all events and circumstances that would matter to users of financial statements. (d) financial statements should not be relied on unless an auditor has expressed an unqualified opinion on them. NEED CORRECT EXPLANATION AND IN DETAIL

How can the accounting concept of materiality be applied to the recognition and disclosure of contingent liabilities? Explore the factors that accountants should consider when determining the appropriate level of detail to include in financial statements regarding potential future obligations.

Comment on the statement that materiality is in the eye of the beholder. How does this statement relate to the discussion in this chapter of how to gauge materiality in assessing financial statement restatements? Is materiality inconsistent with the notion of representational faithfulness?

How does the full disclosure principle influence the level of detail required in accounting

For each of the following brief scenarios, assume that you are reporting on a client’s financial statements. Select the type(s) of opinion (per below) possible for the scenario. In addition:   Unless stated otherwise, assume the matter involved is material. If the problem doesn’t tell you whether a misstatement pervasively misstates the financial statements or doesn’t list a characteristic that indicates pervasiveness, two reports may be possible (i.e., replies 6 to 9). Do not read more into the circumstances than what is presented. Do not consider an auditor discretionary circumstance for modification of the audit report unless the situation explicitly suggests that the auditor wishes to emphasize a particular matter.   * Note that this simulation has more parts than one would expect in a particular CPA exam simulation. We present it to provide examples of many types of reporting situations in one problem. Types of opinion may be used once, more than once, or not at all. 1. A…

How can a misstatement in one financial statement, whether intentional or not, affect a presentation in another financial statement?

With respect to the concept of materiality, which of the following statements is correct?a. Materiality depends only on the dollar amount of an item relative to other items in the financial statements.b. Materiality depends on the nature of a transaction rather than the dollar amount of the transaction.c. Materiality is determined by reference to AICPA guidelines.d. Materiality is a matter of professional judgment.

why would an auditor ensure that all revenue-related disclosures are made in the financial statements

Consider our requirement to provide ‘true’ accounting information Present arguments for and against whether hedge accounting is consistent with this overarching requirement for truth.

2. Statement 1: Contingent liabilities are not reported in the financial statements but may be disclosed in the notes to the financial statements if the likelihood of an unfavorable outcome is possible.     Statement 2: Contingent assets are not reported in the statement of financial position. a. Only statement 1 is correct b. Only statement 2 is correct c. Both statements are correct d. Both statements are incorrect.