Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Question
Chapter 4, Problem 5CYBK
To determine
Concept introduction:
Audit:
The audit is an independent examination of the financial statements of an entity.
To identify: Whether the given statement is true or false.
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Students have asked these similar questions
For a liability to be recognised within the financial statements, it needs to be reasonably apparent that an obligation to an ____________exists.
Select one alternative:
legal obligation
external party
another party
counter party
In explaining the meaning of obligation in the definition of a liability, the Conceptual Framework states:
A. That an obligation is a duty or responsibility that an entity has no practical ability to avoid
B. Than an obligation can arise from a duty or responsibility conditional on a future action that the entity itself may take, if the entity has no practical ability to avoid taking that action
C. That an obligation can arise from an entity's customary practices, published policies or specific statements, if the entity has no practical ability to avoid those practices, policies or statements
D. All of the above
Under what circumstances is a contingent liability reflected in the accounting records as though an actual liability exists?
Chapter 4 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 4 - Prob. 1CYBKCh. 4 - Prob. 2CYBKCh. 4 - Prob. 3CYBKCh. 4 - Prob. 4CYBKCh. 4 - Prob. 5CYBKCh. 4 - Prob. 6CYBKCh. 4 - Prob. 7CYBKCh. 4 - Prob. 8CYBKCh. 4 - Prob. 9CYBKCh. 4 - Prob. 10CYBK
Ch. 4 - Prob. 11CYBKCh. 4 - Prob. 12CYBKCh. 4 - Prob. 1RQSCCh. 4 - Prob. 2RQSCCh. 4 - Prob. 3RQSCCh. 4 - Prob. 4RQSCCh. 4 - Prob. 5RQSCCh. 4 - Prob. 6RQSCCh. 4 - Refer to the Focus on Fraud feature “Moss Adams...Ch. 4 - Prob. 8RQSCCh. 4 - Prob. 9RQSCCh. 4 - Prob. 10RQSCCh. 4 - Prob. 11RQSCCh. 4 - Prob. 12RQSCCh. 4 - Prob. 13RQSCCh. 4 - Prob. 14RQSCCh. 4 - Prob. 15RQSCCh. 4 - Prob. 16RQSCCh. 4 - Prob. 17RQSCCh. 4 - Prob. 18RQSCCh. 4 - Prob. 19RQSCCh. 4 - Prob. 20RQSCCh. 4 - Prob. 21RQSCCh. 4 - Able Corporation decided to make a public offering...Ch. 4 - KPMG (LO 1, 2, 3) KPMG LLP served as the external...Ch. 4 - ToshIba, EY (LO 1, 2, 3) In 2015, the business...
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Similar questions
- In your words, what is the legal responsibility of the auditor?arrow_forwardDefine contingent liability. What is the criteria to determine whether or not to report the contingency on financial statements? What supporting documentation is required? Please provide a detailed example of a contingent liability.arrow_forwardDistinguish between the legal concepts of actually foreseen third-party users and reasonably foreseeable third-party users. How does each concept establish a basis for an auditor’s legal liability to third parties?arrow_forward
- Which of the following is an exception for application of IFRS 15? a. Insurance contracts. b. Financial audit contracts. c. Pharmaceutical contracts. O d. Service contracts.arrow_forwardThe following are grounds for liability to pay damages, except: a. Negligence b. Fraud c. Contravention of the tenor of the obligation d. Advancearrow_forwardsubject accounting :- QUESTION 1 With reference to statutory provisions and decided cases, define "consideration" and explain THREE (3) types of consideration. QUESTION 2 An agreement is voidable if there is misrepresentation or fraud which induces the innocent party to enter into the agreement. With reference to statutory provisions and decided cases, explain the above statement.arrow_forward
- Q1(a) What attributes should an item or transaction exhibit in order to be classified as a liability?(b) Define ‘Provisions’ as per AASB 137 with specific focus on the rules for measurement of Provisions.arrow_forwardPursuant to the conceptual framework, for an item to be characterised as a liability the definition of liabilities must be applicable to the transaction or event, and the recognition criteria should also be satisfied. Applying the definition of liabilities, there are three key components in the definition of ‘liability’, these being:1. There must be an expected future disposition of economic benefits to other entities.2. There must be a present obligation.3. A past transaction or other event must have created the obligation.Required:Take any two examples of liabilities and test if they meet all three requirements.arrow_forwardDistinguish a contigent liability from a provision.arrow_forward
- which of the following is true? a.When what is to be delivered is a generic thing, the creditor may ask a person other than the debtor to perform the obligation. b.Dolo incidente relates to the fraud committed at the time of the perfection of a contract. c.When negligence is imputed as a cause for the breach in an obligation, the same is presumed.arrow_forwardWhat is the auditors responsibility regarding the noncompliance with laws by a client?arrow_forwardDetermine when a liability can be classified as a noncurrent obligation.arrow_forward
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