AUDITING & ASSURANCE SERVICES CONNECT AC
10th Edition
ISBN: 9781259292057
Author: MESSIER
Publisher: MCG
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Chapter 21, Problem 21.18MCQ
To determine
Concept Introduction:
Prospective financial statement means financial statement that is also known as projected financial statement based on some assumptions. Projected financial statement tells us about the future activities of the business. The projected financial statement is made on basis of past records. It is highly subjective in nature and its preparation requires the exercise of considerable judgment.
To choose:Objective of preparing prospective financial statement
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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?
4. All of the following points are true regarding the key principles of forecasting except:
Select one:
a.
Financial statement forecasts must rely on assumptions that have external validity
b.
Financial statement forecasts must be internally consistent
c.
Financial statement forecasts need not be comprehensive
d.
Forecasts should not manifest wishful thinking
Critically evaluate the pros and cons of the following statements:
Financial statements are useless because they are incomplete. Not all assets or liabilities are included.
Chapter 21 Solutions
AUDITING & ASSURANCE SERVICES CONNECT AC
Ch. 21 - Prob. 21.1RQCh. 21 - Prob. 21.2RQCh. 21 - Prob. 21.3RQCh. 21 - Prob. 21.4RQCh. 21 - Prob. 21.5RQCh. 21 - Prob. 21.6RQCh. 21 - Prob. 21.7RQCh. 21 - Prob. 21.8RQCh. 21 - Prob. 21.9RQCh. 21 - Prob. 21.10RQ
Ch. 21 - Prob. 21.11RQCh. 21 - Prob. 21.12RQCh. 21 - Prob. 21.13RQCh. 21 - Prob. 21.14RQCh. 21 - Prob. 21.15MCQCh. 21 - Prob. 21.16MCQCh. 21 - Prob. 21.17MCQCh. 21 - Prob. 21.18MCQCh. 21 - Prob. 21.19MCQCh. 21 - Prob. 21.20MCQCh. 21 - Prob. 21.21MCQCh. 21 - Prob. 21.22MCQCh. 21 - Prob. 21.23MCQCh. 21 - Prob. 21.24MCQCh. 21 - Prob. 21.25MCQCh. 21 - Prob. 21.26MCQCh. 21 - Prob. 21.27MCQCh. 21 - Prob. 21.28MCQCh. 21 - Prob. 21.29MCQCh. 21 - Prob. 21.30PCh. 21 - Prob. 21.31PCh. 21 - Prob. 21.32PCh. 21 - Prob. 21.33PCh. 21 - Prob. 21.34PCh. 21 - Prob. 21.35PCh. 21 - Prob. 21.36P
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- what factors might cause an analyst to recast or adjust to the summary financial statements?arrow_forwardWhat are the fundamental elements of an adequate financial planning process. What are the fundamental elements of an inadequate financial planning process.arrow_forwardA CPA’s report on prospective Financial Statements is required to include a sentence stating that the CPA has no responsibility to update the report after the report date for which engagement(s)? a. Examination of a Forecast Compilation of a Projection Compilation of a Forecast Yes Yes Yes b. Examination of a Forecast Compilation of a Projection Compilation of a Forecast Yes No Yes c. Examination of a Forecast Compilation of a Projection Compilation of a Forecast Yes Yes No d. Examination of a Forecast Compilation of a Projection Compilation of a Forecast No Yes Yes e. Examination of a Forecast Compilation of a Projection Compilation of a Forecast No No Yesarrow_forward
- Uncertainty is a significant problem in Financial Reporting but the current version of IAS 37 Provisions, Contingent Liabilities and Contingent Assets has made a poor job of addressing the problems". Discussarrow_forwardWhich 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_forwardWhat can be defined as sufficiently important to influence decisions made by reasonable users of financial statements?arrow_forward
- By use of practical examples, discuss the following types of information processing errors in behavioural finance: i) Forecasting errors ii) Overconfidence iii) Conservatismarrow_forwardWhat may be defined as sufficiently important to influence decisions made by reasonable users of financial statements?arrow_forwardHow is materiality (or immateriality) related to the proper presentation of financial statements? What factors and measures should be considered in assessing the materiality of a misstatement in the presentation of a financialstatement?arrow_forward
- Which of the following is not a common tool used in financial statement analysis? Group of answer choices a) Credit analysis b) Common-size statement analysis c) Ratio analysis d) Random walk analysisarrow_forwardUnder the Conceptual Framework for Financial Reporting which of the following statements is not a feature of financial information’s “comparability” characteristics? Comparability is uniformity A comparison requires at least two items Consistency, although related to comparability, is not the same Comparability is the goal; consistency helps to achieve that goalarrow_forwardWhat are some of the problems is using AFN equation to estimate AFN rather than the pro-forma financial statement method?arrow_forward
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