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11) In connection with the annual audit, which of the following is not a “subsequent events” procedure? A) Review available interim financial statements. B) Read available minutes of meetings of stockholders, directors, and committees and, for meetings where minutes are not available, inquire about matters dealt with at such meetings. C) Make inquiries with respect to the financial statements covered by the auditor’s previously issued report if new information has become available during the current examination that might affect that report. D) Discuss with officers the current status of items in the financial statements that were accounted for on the basis of tentative, preliminary, or inconclusive data. 12) An auditor performs interim work at various times throughout the year. The auditor’s subsequent events work should be extended to the date of: A) the auditor’s report. B) a post-dated footnote. C) the next scheduled interim visit. D) the final billing for audit services rendered. 13) Which event that occurred after the end of the fiscal year under audit but prior to issuance of the auditor’s report would not require disclosure in the financial statements? A) sale of a bond or capital stock issue B) loss of plant or inventories as a result of fire or flood C) a significant decline in the market price of the corporation’s stock D) settlement of litigation when the event giving rise to the claim took place after the balance sheet date 14) Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued? A) loss of a plant as a result of a flood B) sale of long-term debt or capital stock C) settlement of litigation in excess of the recorded liability D) major purchase of a business that is expected to double the sales volume 15) If the auditor determines that a subsequent event that affects the current period financial statements occurred after fieldwork was completed but before the audit report was issued, what date(s) may the auditor use on the report? A) The date of the original last day of fieldwork only. The date of the subsequent event only. The date on which the last day of fieldwork occurred along with the date of the subsequent event. Yes Yes No B) The date of the original last day of fieldwork only. The date of the subsequent event only. The date on which the last day of fieldwork occurred along with the date of the subsequent event. Yes No Yes C) The date of the original last day of fieldwork only. The date of the subsequent event only. The date on which the last day of fieldwork occurred along with the date of the subsequent event. No Yes No D) The date of the original last day of fieldwork only. The date of the subsequent event only. The date on which the last day of fieldwork occurred along with the date of the subsequent event. No No Yes 16) An auditor’s decision concerning whether or not to dual date an audit report is primarily based on the auditor’s decision to: A) extend appropriate audit procedures. B) assume responsibility for events after the date of the auditor’s report. C) assume responsibility for event from fiscal year end to the date of the audit report. D) roll the dice and hope for a successful outcome. 17) The auditor’s responsibility for “reviewing the subsequent events” of a public company that is about to issue new securities is normally limited to the period of time: A) beginning with the balance sheet date and ending with the date of the auditor’s report. B) beginning with the start of the fiscal year under audit and ending with the balance sheet date. C) beginning with the start of the fiscal year under audit and ending with the date of the auditor’s report. D) beginning with the balance sheet date and ending with the date the registration statement becomes effective. 18) Which of the following is not a reason why the auditor requests that the client provide a letter of representation? A) Professional auditing standards require the auditor to obtain a letter of representation. B) It impresses upon management its responsibility for the accuracy of the information in the financial statements. C) It provides written documentation of the oral responses already received to inquiries of management. D) It provides written documentation, which is a higher quality of evidence than management’s oral responses to inquiries. 19) Subsequent events affecting the realization of assets ordinarily will require adjustments of the financial statements under examination because such events typically represent the: A) culmination of conditions that existed at the balance sheet date. B) discovery of new conditions occurring in the subsequent events period. C) final estimates of losses relating to casualties occurring in the subsequent events period. D) preliminary estimate of losses relating to new events that occurred subsequent to the balance sheet date. 20) An auditor’s decision concerning whether or not to “dual date” the audit report is based upon the auditor’s willingness to: A) extend auditing procedures and assume responsibility for a greater period of time. B) accept responsibility for subsequent events. C) permit inclusion of a footnote captioned: event (unaudited) subsequent to the date of the auditor’s report. D) assume responsibility for events subsequent to the issuance of the auditor’s report. 21) After an auditor has issued an audit report on a nonpublic entity, there is no obligation to make any further audit tests or inquiries with respect to the audited financial statements covered by that report unless: A) material adverse events occur after the date of the auditor’s report. B) final determination or resolution was made of a contingency which had been disclosed in the financial statements. C) final determination or resolution was made on matters which had resulted in a qualification in the auditor’s report. D) new information comes to the auditor’s attention concerning an event that occurred prior to the date of the auditor’s report that may have affected the auditor’s report. 22) A client has a calendar year-end. Listed below are four events that occurred after December 31. Which one of these subsequent events might result in adjustment of the December 31 financial statements? A) sale of a major subsidiary B) adoption of accelerated depreciation methods C) write-off of a substantial portion of inventory as obsolete D) collection of 90% of the accounts receivable existing at December 31 23) The auditor’s responsibility with respect to events occurring between the balance sheet date and the end of the audit examination is best expressed by which of the following statements? A) The auditor is fully responsible for events occurring in the subsequent period and should extend all detailed procedures through the last day of fieldwork. B) The auditor is responsible for determining that a proper cutoff has been made and performing a general review of events occurring in the subsequent period. C) The auditor’s responsibility is to determine that a proper cutoff has been made and that transactions recorded on or before the balance sheet date actually occurred. D) The auditor has no responsibility for events occurring in the subsequent period unless these events affect transactions recorded on or before the balance sheet date.

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