
A 16-19
Quiz
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Business
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University
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Practice Problem
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Easy
NL S
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51 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
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?
Sale of long-term debt or capital stock.
Loss of a plant as a result of a flood.
Major purchase of a business that is expected to double sales volume.
Settlement of litigation, in excess of the previously recorded liability.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following situations would require adjustment to or disclosure in the financial statements?
A merger discussion.
The application for a patent on a new production process.
Discussions with a customer that could lead to a 40 percent increase in the entity's sales if agreement is successful.
The bankruptcy of a customer who regularly purchased 30 percent of the company's output.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
An auditor issued an audit report that was dual dated for a subsequent event that occurred after the completion of fieldwork but before issuance of the auditor's report. The auditor's responsibility for events occurring subsequent to the completion of fieldwork was:
limited to the specific event referenced.
limited to include only events occurring before the date of the last subsequent event referenced.
extended to subsequent events occurring through the date of issuance of the report.
extended to include all events occurring since the completion of fieldwork.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Generally, loss contingencies that are judged to be remote:
should be disclosed in the footnotes.
should be recorded in the financial statements.
should not be disclosed in the footnotes.
should be recorded in the financial statements and the footnotes.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
A disclosure of a contingent liability in the footnotes is made rather than adjusting the financial statement accounts when:
the outcome of the event is judged to be probable and the loss can be reasonably estimated.
the loss can be reasonably estimated, but the outcome is unknown.
the outcome of the event is judged to be reasonably possible, but the loss cannot be reasonably estimated.
the outcome is unknown and the loss is reasonably estimable but the entity does not want to book the loss.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
When a question arises about an entity's continued existence, the auditor should consider factors tending to mitigate the significance of negative information concerning the entity's means for maintaining adequate cash flow. An example of such a factor is the:
possibility of purchasing certain assets rather than leasing them.
capability of extending the due dates of existing debt.
appropriateness of changing depreciation methods from double declining balance to straight line.
marketability of property and equipment that management plans to keep.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following auditing procedures most likely would assist an auditor in identifying conditions and events that may indicate substantial doubt about an entity's ability to continue as a going concern?
Inspecting title documents to verify whether any assets are pledged as collateral.
Confirming with third parties the details of arrangements to maintain financial support.
Reconciling the cash balance per books with the cut-off bank statement and the bank confirmation.
Comparing the entity's depreciation and asset capitalization policies to other entities in the industry.
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