Auditing and Assurance Services (16th Edition)
16th Edition
ISBN: 9780134065823
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
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Textbook Question
Chapter 8, Problem 27.1MCQ
Which one of the following statements is correct concerning the concept of materiality?
- (1) Materiality is determined by reference to guidelines established by the AICPA.
- (2) Materiality depends only on the dollar amount of an item relative to other items in the financial statements.
- (3) Materiality depends on the nature of an item rather than the dollar amount.
- (4) Materiality is a matter of professional judgment.
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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.
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?
Which is NOT a criteria for recognition of financial information in the IFRS Conceptual Framework?
A) The item is measurable without a high degree of uncertainty
B) The amount must be measured at historical cost.
C) The item provides relevant information about the element
D) The item provides a faithful representation of the element.
Chapter 8 Solutions
Auditing and Assurance Services (16th Edition)
Ch. 8 - Prob. 1RQCh. 8 - Prob. 2RQCh. 8 - Prob. 3RQCh. 8 - Prob. 4RQCh. 8 - Prob. 5RQCh. 8 - Prob. 6RQCh. 8 - Prob. 7RQCh. 8 - Prob. 8RQCh. 8 - Prob. 9RQCh. 8 - Prob. 10RQ
Ch. 8 - Prob. 11RQCh. 8 - Prob. 12RQCh. 8 - Prob. 13RQCh. 8 - Prob. 14RQCh. 8 - Prob. 15RQCh. 8 - Your client, Harper Company, has a contractual...Ch. 8 - Prob. 17RQCh. 8 - Prob. 18RQCh. 8 - Prob. 19RQCh. 8 - Prob. 20RQCh. 8 - Prob. 21RQCh. 8 - Prob. 22RQCh. 8 - Prob. 23RQCh. 8 - Prob. 24RQCh. 8 - Prob. 25.1MCQCh. 8 - Prob. 25.2MCQCh. 8 - Prob. 25.3MCQCh. 8 - Prob. 26.1MCQCh. 8 - Prob. 26.2MCQCh. 8 - Prob. 26.3MCQCh. 8 - Which one of the following statements is correct...Ch. 8 - Prob. 27.2MCQCh. 8 - Prob. 27.3MCQCh. 8 - Prob. 28.1MCQCh. 8 - Prob. 28.2MCQCh. 8 - Prob. 28.3MCQCh. 8 - Prob. 29DQPCh. 8 - Prob. 30DQPCh. 8 - Prob. 31DQPCh. 8 - Your comparison of the gross margin percent for...Ch. 8 - Prob. 33DQPCh. 8 - Prob. 34DQPCh. 8 - Prob. 35DQPCh. 8 - Prob. 36DQPCh. 8 - Prob. 37DQPCh. 8 - Following are statements of earnings and financial...
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- The main steps required in the preparation of a restated statement of financial position (in accordance with the requirements of IAS29) do not include: The restatement of non-monetary items carried at historical cost The restatement of monetary items The restatement of each component of equity The restatement of non-monetary items carried at a valuationarrow_forwardWhich one of the following recognises the idea that assets and income should not be overstated while liabilities and expenses should not be understated :A. Matching principle,B. Accrual concept,C. Principle of prudence.D. Consistency concept.arrow_forwardOn the basis of accountants’ heuristics and biases, how are accounting judgements regarding internally generated intangible influenced?arrow_forward
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- Fair Value Accounting and Valuation in 3 Steps: Asset or Liability Identification: The first step involves identifying the specific assets or liabilities that will be measured at fair value. This could include financial instruments, tangible assets, intangible assets, or other items on the balance sheet. Market-Based Valuation Techniques: Fair value is determined using market-based valuation techniques. This may involve assessing current market prices, recent transactions, or employing valuation models such as discounted cash flows, comparable sales, or option pricing models. Consistent Application and Disclosure: Fair value accounting requires consistent application of valuation methods across reporting periods. Additionally, transparency and disclosure are crucial, with companies providing detailed information about the inputs, assumptions, and methods used in fair value measurements.arrow_forwardThe issues that the FASB and IASB must address in developing a conceptual framework include all of the following except: a. should the characteristic of relevance be traded-off in favor of information that is verifiable? b. should a single measurement method such as historical cost be used? c. what are the key elements of asset and liability definitions? d. should the role of financial reporting focus solely on internal decision-making?arrow_forwardExplain the concept of fair value accounting and its application in financial reporting. Discuss the benefits and criticisms of fair value accounting, particularly in relation to the measurement of financial instruments.arrow_forward
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