Review Mods 1-5 Flashcards Preview

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Flashcards in Review Mods 1-5 Deck (11):
0

What affect does including items on consignment as sales have on the Accounts receivable turnover ratio?

Decreases the ratio, by equally increasing sales and receivables

1

Not including a sale in 20X2 sales, has what affect on accounts receivable turnover for 20X2?

Increases accounts receivable turnover ratio for 20X2

Because numerator and denominator decrease by the same
Amount

2

Higher interest rates on refinancing...

Decrease profits

3

A cash shortage may be concealed by transporting funds from one location to another or by converting negotiable assets to cash. Because of this which of the following is vital?

Simultaneous verification

4

The scope of an audit is not restricted when an attorney's response to an auditor as a result of a client's letter of audit inquiry limits response to...

Matters to which the attorney has given substantive attention
In the form of legal representation

5

If the entity's footnotes include a footnote on a related party transactions stating that the equivalent party transaction occurred on terms equivalent to those that would have prevailed in an arm's length transaction. This would cause an...

auditor to modify an unqualified opinion

6

2 audit procedures used to gather evidence on balance per bank

1 confirmation directly with bank

2 trace items on bank reconciliation to cutoff statement

7

What audit procedure should be performed to investigate a customer note collected by the bank?

Inspect bank credit memo

8

When an error for a check occurs, with the bank account being overcharged by the bank, what 2 audit procedures should be performed?

1 Inspect bank credit memo

2 trace items on the bank reconciliation to the cutoff statement

9

When financial statements of a company that follows GASB standards would be misleading due to unusual circumstances depart from those standards, the auditor should explain the circumstances in a separate paragraph and express an opinion that is...

Unmodified

10

An independent accountant's report is based on a review of interim financial information. If this report is presented in a registration statement, a prospectus should include a statements clarifying that the...

Accountant's review report is not part of the registration statement
Within the meaning of the Securities Act of 1933