Fundamentals Of Financial Accounting
6th Edition
ISBN: 9781259864230
Author: PHILLIPS, Fred, Libby, Robert, Patricia A.
Publisher: Mcgraw-hill Education,
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Chapter 1, Problem 10MC
To determine
To Identify: The statement which is not required by the Sarbanes-Oxley Act.
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Which of the following agencies issues independence rules for the auditors of public companies?a. Financial Accounting Standards Board (FASB).b. Government Accountability Office (GAO).c. Public Company Accounting Oversight Board (PCAOB)d. AICPA Accounting and Review Services Committee (ARSC)
True or False
Independent Auditor is responsible for preparing the financial statements, establishing and maintaining adequate internal control over financial reporting (ICFR), and evaluating the effectiveness of ICFR. *
Under Sarbanes–Oxley Section 301 public company audit committees are directly responsible for the appointment, compensation, and oversight of the work of any registered public accounting firm employed by their company. *
Auditors are required by the Security and Exchange Commission to report to the audit committee of the publicly-traded company all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management officials. *
CFO and the audit committee depend heavily on one another *
Included in the Environment disclosures are the risks and opportunities due to climate change, procurement practices with respect to local suppliers, and anti-corruption *
Certified Public Accountants (CPA) have imposed a rigorous code of conduct on themselves. A CPA engaged in the practice of public accounting can be a stockholder/shareholder of the company he is auditing.
Select one:
True
False
Chapter 1 Solutions
Fundamentals Of Financial Accounting
Ch. 1 - Define accounting.Ch. 1 - Prob. 2QCh. 1 - Briefly distinguish financial accounting from...Ch. 1 - The accounting process generates financial reports...Ch. 1 - Explain what the separate entity assumption means...Ch. 1 - List the three main types of business activities...Ch. 1 - What information should be included in the heading...Ch. 1 - What are the purposes of (a) the balance sheet,...Ch. 1 - Explain why the income statement, statement of...Ch. 1 - Briefly explain the difference between net income...
Ch. 1 - Describe the basic accounting equation that...Ch. 1 - Describe the equation that provides the structure...Ch. 1 - Describe the equation that provides the structure...Ch. 1 - Prob. 14QCh. 1 - Prob. 15QCh. 1 - Prob. 16QCh. 1 - Briefly define what an ethical dilemma is and...Ch. 1 - Prob. 18QCh. 1 - Prob. 1MCCh. 1 - Which of the following is true regarding the...Ch. 1 - Which of the following is false regarding the...Ch. 1 - Which of the following regarding retained earnings...Ch. 1 - Prob. 5MCCh. 1 - Which of the following statements regarding the...Ch. 1 - Prob. 7MCCh. 1 - Which of the following is true? a. FASB creates...Ch. 1 - Which of the following would not be a goal of...Ch. 1 - Prob. 10MCCh. 1 - Prob. 1MECh. 1 - Matching Definitions with Terms or Abbreviations...Ch. 1 - Matching Definitions with Terms Match each...Ch. 1 - Matching Financial Statement Items to Balance...Ch. 1 - Matching Financial Statement Items to Balance...Ch. 1 - Matching Financial Statement Items to Balance...Ch. 1 - Matching Financial Statement Items to Balance...Ch. 1 - Matching Financial Statement Items to the Basic...Ch. 1 - Matching Financial Statement Items to the Four...Ch. 1 - Reporting Amounts on the Statement of Cash Flows...Ch. 1 - Prob. 11MECh. 1 - Preparing a Statement of Retained Earnings Stone...Ch. 1 - Relationships among Financial Statements Items...Ch. 1 - Prob. 14MECh. 1 - Relationships among Financial Statements Items...Ch. 1 - Preparing an Income Statement, Statement of...Ch. 1 - Reporting Amounts on the Four Basic Financial...Ch. 1 - Reporting Amounts on the Four Basic Financial...Ch. 1 - Preparing a Balance Sheet DSW, Inc., is a designer...Ch. 1 - Completing a Balance Sheet and Inferring Net...Ch. 1 - Labeling and Classifying Business Transactions The...Ch. 1 - Preparing an Income Statement and Inferring...Ch. 1 - Preparing an Income Statement Home Realty,...Ch. 1 - Prob. 8ECh. 1 - Preparing an Income Statement and Balance Sheet...Ch. 1 - Analyzing and Interpreting an Income Statement...Ch. 1 - Prob. 11ECh. 1 - Matching Cash Flow Statement Items to Business...Ch. 1 - Preparing an Income Statement. Statement of...Ch. 1 - Interpreting the Financial Statements Refer to...Ch. 1 - Reporting Amounts on the Four Basic Financial...Ch. 1 - Evaluating Financial Statements Refer to CP1-3....Ch. 1 - Preparing an Income Statement, Statement of...Ch. 1 - Prob. 2PACh. 1 - Reporting Amounts on the Four Basic Financial...Ch. 1 - Evaluating Financial Statements Refer to PA1-3....Ch. 1 - Preparing an Income Statement and Balance Sheet...Ch. 1 - Interpreting the Financial Statements Refer to PB...Ch. 1 - Reporting Amounts on the Four Basic Financial...Ch. 1 - Evaluating Financial Statements Refer to PB1-3....Ch. 1 - Finding Financial Information Answer the following...Ch. 1 - Comparing Financial Information Refer to the...Ch. 1 - Prob. 5SDCCh. 1 - Prob. 6SDCCh. 1 - Prob. 1CC
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Similar questions
- Which of the following is NOT a major component of the Sarbanes-Oxley Act? Executive responsibility for accurate financial reporting. Accounting regulation. Mandating external financial audits for all companies. Formation of an audit committee.arrow_forwardFinancial statements of public companies are required to be audited by ______. an independent certified public accounting firm the Audit Committee of the Board of Directors the Chief Financial Officer all of the above none of the abovearrow_forwardHelp with these two problemsarrow_forward
- Match each of the following provisions of the Sarbanes-Oxley Act (SOX) with its description. Major Provisions of the Sarbanes-Oxley Act Descriptions 1. Oversight board 2. Corporate executive accountability 3. Auditor rotation 4. Nonaudit services 5. Internal control a. Executives must personally certify the company’s financial statements. b. Audit firm cannot provide a variety of other services to its client, such as investment advising. c. PCAOB establishes standards related to the preparation of audited financial reports. d. Lead audit partners are required to change every five years. e. Management must document the effectiveness of procedures that could affect financial reporting.arrow_forwardThe CAE for Sargon Products reports administratively to the CFO and functionally to the audit committee. The scope of the internal audit function assurance services includes financial, operational, and compliance engagements. Is the internal auditors’ objectivity regarding accounting-related matters impaired in each of the situations described below? Briefly explain your answer. a. The internal auditors are frequently asked to make accounting entries for complex transactions that the company’s accountants do not have the expertise to handle. b. A staff accountant reconciles the company’s monthly bank statements. An internal auditor reviews the bank reconciliations to make sure they are completed properly.arrow_forwardThroughout this book, emphasis has been placed on the concept of independence as the most significant single element underlying the development of the public accounting profession. The term “independent auditor” is sometimes used to distinguish the public accountant from an internal auditor. Nevertheless, The Institute of Internal Auditors points to the factor of independence as essential to an effective program of internal auditing. Distinguish between the meaning of independence as used by the American Institute of Certified Public Accountants in describing the function of the certified public accountant and the meaning of independence as used by The Institute of Internal Auditors to describe the work of the internal auditor.arrow_forward
- Which of the following groups is responsible for developing auditing standards for public firms in the U.S.? A. American Institution of Certified Public Accountant (AICPA)B. Public Company Accounting Oversight Board (PCAOB)C. Organizations for Economic Cooperation and Development (OECD)D. Center for Audit Quality (CAQ)arrow_forwardThe purpose of the Sarbanes-Oxley Act was to Question 7 options: require firms to be more rigorous in their accounting and reporting practices. eliminate accounting firms from having to hire accountants that are certified. define generally accepted accounting principles. force accounting firms to combine their consulting and auditing businesses. establish standards and testing procedures for becoming a CPA.arrow_forwardSection 301 of the Sarbanes-Oaxley requires that public companies have an audit committee. Independent auditors are increasingly involved with audit committees. Required: a. Describe what an audit committee is. b. Identify the reasons why audit committees have been formed and are currently in operation. c. Describe the functions of an audit committee.arrow_forward
- Distinguish between auditing standards and generally accepted accounting principles, and give two examples of each. Auditing standards: A. represent pronouncements by any of the organizations responsible for setting auditing standards. In the U.S. these standards are set by the PCAOB for public companies and broker dealers, and by the Auditing Standards Board of the AICPA for other entities. B. are ten general guidelines to aid auditors in fulfilling their professional responsibilities and maintain professional skepticism and exercise professional judgment. C. represent the combination of the six principles and four of the Statements on Auditing Standards (SASS) that are codified in the AU-C sections. D. outline specific rules for accounting for transactions occurring in a business enterprise for all private companies in the United States.arrow_forwardWhich of the following is not a provision of the Sarbanes-Oxley Act as to the responsibility of a company's top managers? Question 3 options: They must establish formal procedures to receive, retain, and address any information that may affect the company's accounting. They must certify that they are primarily responsible for the company's internal controls over financial reporting. They must certify that the company's financial statements are fairly presented. They may deny responsibility for certain financial reporting matters if they are not knowledgeable about the proper accounting procedures for those transactions.arrow_forwardWhat is meant by internal control based on the professional standards of a public accountant is:a. A process carried out by the Board of Directors and the Board of Commissioners which is designed to provide adequate assurance about the reliability of financial reporting, effectiveness and efficiency of operations and compliance with applicable laws.b. A process carried out by the Board of Commissioners, management and other personnel of the entity that is designed to provide reasonable assurance about the reliability of financial reporting, effectiveness and efficiency of operations and compliance with applicable laws.c. A process carried out by all members of the internal audit department of a company to detect errors in the processes run by the companyd. B and C are correcte. All wrongarrow_forward
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