100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Previously searched by you
Previously searched by you
logo
SOLUTION MANUAL FOR Financial Accounting 11th Edition by Robert Libby $18.49
Add to cart
Quickly navigate to
Preview
  2.  
  3. FINC - Finance
  4.  
  5. FINC - Finance

Exam (elaborations)

SOLUTION MANUAL FOR Financial Accounting 11th Edition by Robert Libby
 0 purchase
  • Course
  • FINC - Finance
  • Institution
  • FINC - Finance

TABLE OF CONTENTS CHAPTER 1: Financial Statements and Business Decisions Focus Company: Le-Nature’s Inc. CHAPTER 2: Investing and Financing Decisions and the Accounting System Focus Company: Chipotle Mexican Grill CHAPTER 3: Operating Decisions and the Accounting System Focus Company: Chip...

[Show more]

Preview 4 out of 591  pages

Document information

  • January 22, 2025
  • 591
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

Subjects

Connected book

book image

Book Title:

Author(s):

  • Edition:
  • ISBN:
  • Edition:

More summaries for

All for this textbook (4)

Written for

  • FINC - Finance
  • FINC - Finance

Seller

avatar-seller
walternpeter036

Content preview

SOLUTION MANUAL FOR
Principles Of Auditing And Other Assurance Services

23rd Edition By Ray Whittington Kurt
ALL Chapters (1 - 21)

,  Table of Contents
Chapter 1: The Role of the Public Accountant in the AmericanEconomy

Chapter 2: Professional Standards

Chapter 3: Professional Ethics

Chapter 4: Legal Liability of CPAs

Chapter 5: Audit Evidence and Documentation

Chapter 6: Audit Planning, Understanding the Client, AssessingRisks, and Responding

Chapter 7: Internal Control

Chapter 8: Consideration of Internal Control in an InformationTechnology Environment

Chapter 9: Audit Sampling

Chapter 10: Cash and Financial Investments

Chapter 11: Accounts Receivable, Notes Receivable, andRevenue

Chapter 12: Inventories and Cost of Goods Sold

Chapter 13: Property, Plant, and Equipment: Depreciation andDepletion

Chapter 14: Accounts Payable and Other Liabilities

Chapter 15: Debt and Equity Capital

Chapter 16: Auditing Operations and Completing the Audit

Chapter 17: Auditors’ Reports

Chapter 18: Integrated Audits of Public Companies

Chapter 19: Additional Assurance Services: Historical FinancialInformation

Chapter 20: Additional Assurance Services: Other Information

Chapter 21: Internal, Operational, and Compliance Auditing

,CHAPTER 1



The Role of the
Public Accountant in the
American Economy


Review Questions

1-1 The ―crisis of credibility‖ largely arose from the number of companies that restated their previously
issued financial statements as a result of accounting irregularities and fraud. Especially responsible were
the very visible Enron and WorldCom fraud cases. Both companies filed for bankruptcy and constituted
the largest companies in American history to do so. The extent of the accounting irregularities and fraud
being investigated and disclosed brought into question the effectiveness of financial statement audits. In
addition, the criminal conviction of Arthur Andersen, LLP, one of the then Big 5 accounting firms, on
charges of destroying documents related to the Enron case brought into question the ethics standards of
the profession.

1-2 Assurance services are professional services that enhance the quality of information, or its context, for
decision-making. The two types are: (a) those that increase the reliability of information and (b) those
that involve putting information in a form or context that facilitates decision-making.

1-3 A financial statement audit is, by far, the most common type of attest engagement. The overall assertion,
made by management, most frequently is that the financial statements follow generally accepted
accounting principles.

1-4 A large corporation with securities listed on a stock exchange is required by the rules of the stock
exchange and by the rules of the Securities and Exchange Commission to provide an audit report with the
annual financial statements furnished to its stockholders. It also is required to engage the auditors to
provide an opinion on its internal control. Apart from legal requirements, however, a large listed
corporation recognizes that it must maintain investor confidence in the reliability of its financial
statements and internal control over financial reporting if it is to continue to be able to secure capital
from the public. The report by a firm of certified public accountants adds credibility to the financial
statements prepared by the corporation. When a small family-owned enterprise elects to have an audit,
the purpose usually is to use the auditors' report to support an application for a bank loan.

, 1-5 A report by an independent public accountant concerning the fairness of a company's financial statements
is commonly required in the following situations:

(1) Application for a bank loan.
(2) Establishing credit for purchase of merchandise, equipment, or other assets.
(3) Reporting operating results, financial position, and cash flows to absentee owners (stockholders
or partners).
(4) Issuance of securities by a corporation.
(5) Annual financial statements by a corporation with securities listed on a stock exchange or traded
over the counter.
(6) Sale of an ongoing business.
(7) Termination of a partnership.

1-6 To add credibility to financial statements is to increase the likelihood that they have been prepared
following the appropriate criteria, usually generally accepted accounting principles. As such, an increase
in credibility results in financial statements that can be believed and relied upon by third parties.

1-7 Business risk is the risk that the investment will be impaired because a company invested in is unable to
meet its financial obligations due to economic conditions or poor management decisions. Information
risk is the risk that the information used to assess business risk is not accurate. Auditors can directly
reduce information risk, but have only limited effect on business risk.

1-8 At the beginning of the century, the principal objective of auditing was the prevention and detection of
fraud. Audit work centered on the balance sheet, because the income statement was regarded as highly
confidential and not for public disclosure. Today, the principal objective of auditing is to form an
opinion on the fairness of financial statements and their conformity with generally accepted accounting
principles. But the professional standards also require that an audit be designed to provide reasonable
assurance of detecting material misstatements, due to errors or fraud. Particular emphasis is placed on
the income statement which is of great importance to investors. Auditing today also has the objectives of
meeting the requirements of the Securities and Exchange Commission (SEC) and the Public Company
Accounting Oversight Board for public companies.

1-9 The statement is incorrect. The increasing integrated databases of today, along with available audit
procedures make audited entire populations a possibility in many situations.

1-10 An operational audit attempts to measure the effectiveness and efficiency of a specific unit of an
organization. It involves more subjective judgments than a compliance audit or an audit of financial
statements because the criteria of effectiveness and efficiency of departmental performance are not as
clearly established as are many laws and regulations or generally accepted accounting principles.
The report prepared after completion of an operational audit is usually directed to management
of the organization in which the audit work was done.

1-11 A compliance audit is an audit to determine whether financial reports or other assertions are in
compliance with established criteria. The necessary ingredients are verifiable data and the existence of
standards established by an authoritative body. An operational audit, on the other hand, is a review of a
department or other unit of a business or governmental organization to measure the effectiveness and
efficiency of operations. Internal auditors often perform operational audits as do auditors employed by
the Government Accountability Office (GAO) of the federal government.

1-12 Internal auditors must be independent of the department heads and other line executives whose work they
review. However, internal auditors are not independent in the same sense as a public accounting firm.

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller walternpeter036. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $18.49. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

64257 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 15 years now

Start selling

Recently viewed by you

Judgments ·

(0)

Jurisprudentie Goederenrecht

Package deal ·

(0)

Psychologie

Exam (elaborations) ·

(0)

NURS 548 Advanced Pathophysiology Final Exam Review

Package deal ·

(0)

Shadow Health Focused Exams Bundled exams for different patients Full solution bundle Danny Rivera,Nicole Diaz,Brian Foster,Tina Jones exams with complete solution

Exam (elaborations) ·

(0)

ABA 603 Week 5 Test- Questions and Answers/ National University College

Exam (elaborations) ·

(0)

WGU Web Development Applications - C777 Exam with 100% Correct Answers.Solved By Expert 2023

Summary ·

(3)

Fysiopathologie (3/5) - UPDATE - Bloed - Extra nota's & woordenlijst

Summary ·

(17)

Samenvatting Strafprocesrecht
$18.49
  • (0)
Add to cart
Added