Bundle: Auditing: A Risk Based-approach, 11th + Mindtap Accounting, 1 Term (6 Months) Printed Access Card
11th Edition
ISBN: 9781337734455
Author: Karla M Johnstone-zehms, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Question
Chapter 7, Problem 3CYBK
To determine
Introduction:Materiality is the impact of a wrong statement or an omission of information for the user of the information. Probably, the users have changed their actions, had they been informed correctly about the information.
To choose:The true statement out of the given options.
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Something is deemed to be 'material' if its omission, non-disclosure or misstatement is likely to affect economic decisions or other evaluations made by users entitled to rely on the financial statements.
Select one alternative:
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Materiality arises when a misstatement in the financial statements could affect a decision of areasonable user of the statements.Explain the levels of materiality used for determining the type of opinion.
When an event impacts a financial statement element, it should be recognized in the accounting records even if reliability of the amount is questionable.
True
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Chapter 7 Solutions
Bundle: Auditing: A Risk Based-approach, 11th + Mindtap Accounting, 1 Term (6 Months) Printed Access Card
Ch. 7 - Prob. 1CYBKCh. 7 - Prob. 2CYBKCh. 7 - Prob. 3CYBKCh. 7 - Prob. 4CYBKCh. 7 - Prob. 5CYBKCh. 7 - Prob. 6CYBKCh. 7 - Prob. 7CYBKCh. 7 - Prob. 8CYBKCh. 7 - Prob. 9CYBKCh. 7 - Prob. 10CYBK
Ch. 7 - Prob. 11CYBKCh. 7 - Prob. 12CYBKCh. 7 - Prob. 1RQSCCh. 7 - Prob. 2RQSCCh. 7 - Prob. 3RQSCCh. 7 - Prob. 4RQSCCh. 7 - Prob. 7RQSCCh. 7 - Prob. 8RQSCCh. 7 - How does inherent risk relate to internal...Ch. 7 - Prob. 10RQSCCh. 7 - Prob. 11RQSCCh. 7 - Prob. 12RQSCCh. 7 - Prob. 13RQSCCh. 7 - Prob. 14RQSCCh. 7 - Prob. 15RQSCCh. 7 - Prob. 17RQSCCh. 7 - Prob. 18RQSCCh. 7 - Prob. 19RQSCCh. 7 - Prob. 22RQSCCh. 7 - Prob. 23RQSCCh. 7 - Prob. 24RQSCCh. 7 - Prob. 25RQSCCh. 7 - Prob. 26RQSCCh. 7 - Prob. 27RQSCCh. 7 - Prob. 29FF
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- 2. A client has departed from GAAP for what you, the auditor, considers to be justifiable. The financial statements would have been misleading if the client had not departed from GAAP. Circumstance: Type of Opinion:arrow_forwardWhich of the following situations will not result in modification of the auditor's report because of a scope limitation? * O Inadequacy in the accounting records. O Restriction imposed by the client. Inability to obtain sufficient appropriate evidential matter. Reliance placed on the report of another auditor.arrow_forwardWhich of the following is false? a. GAAP and IFRS have the same absolute standard regarding the reporting of error corrections in previously issued financial statements. b. The accounting for changes in estimates is similar between GAAP and IFRS. c. Under IFRS, the impracticability exception applies both to changes in accounting principles and to the correction of errors. d. GAAP has detailed guidance on the accounting and reporting of indirect effects; IFRS does not.arrow_forward
- If an estimate of a contingent loss made in good faith turns out to be incorrect, the financial statements in which the estimation was reported should be restated. True Falsearrow_forwardWhich of the following would be considered a breach of the qualitative characteristic of faithful representation? Disclosing information that could influence a decision. O Omitting the recognition of transactions of insignificant dollar amounts. None of these would be considered a breach of the qualitative characteristic of faithful representation. O Applying judgement in determining the existence of a liability. Incorporating estimations in the measurement of assets. Question 7 Which of the following is an application of the principle of materiality? The aggregation of different classes of property, plant and equipment into a single line item. None of these are an example of applying the principle of materiality. O The inclusion of a declaration by the directors in a financial report. The inclusion of an auditor's report in the financial report. The preparation of financial statements at least annually.arrow_forwardWhat are the disclosure requirements for a correction of an accounting error?arrow_forward
- How does a qualified opinion by an auditor differ from an unqualified opinion or an adverse opinion?arrow_forwardwhich of the following regarding errors is correct Select one: a. intentional misstatement of the financial statements, b. misappropriation of assets is an kind of errors c. a mistake in recording the date of a sale invoice is an example of the errors d. it is more difficult for the auditor to detect because it is not intentionalarrow_forwardFrom the options given below which of the following is not the reason of inherent limitation of audit? a. Limitation in accounting system O b. Use of human judgment O c. Poor planning O d. Human errorsarrow_forward
- Which of the following statements about contingent liabilities is incorrect? Group of answer choices A)A disclosure note is required when the loss is reasonably possible and the amount cannot be reasonably estimated. B)A disclosure note is required when the loss is probable and the amount can be reasonably estimated. C)A disclosure note is required when the loss is reasonably possible and the amount can be reasonably estimated. D)A disclosure note is required when the loss is remote and the amount can be accurately estimated. E)All of the above statements are correct.arrow_forwardThe audit procedure used for a substantive test determines whether an auditor identifies a factual or judgmental misstatement. True Falsearrow_forwardWhen there is a lack of consistent application of GAAP due to a new accounting pronouncement, no explanatory paragraph is required Select one: True Falsearrow_forward
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