Question : 21. The statement that “the financial statements were prepared in : 1242734

21. The statement that “the financial statements were prepared in accordance with generally accepted accounting principles” is found in the

a. Management letter

b. Management discussion and analysis

c. Footnotes to the balance sheet.

d.Auditor’s report.

22.According to the disclosure requirements outlined in Statement of Accounting Concepts No. 5, the following is an example of supplementary information that should be disclosed because it affects an area that is directly affected by existing FASB Standards

a.Management discussion and analysis.

b.Segment information.

c.Accounting policies.

d.A statement of cash flows.

23.Norris Company settled a lawsuit in February for an amount that was significantly different from the amount that was originally accrued as an estimate of potential loss.  The company’s yearend is December 31 and its financial statements are issued in March. This is an example of

a.A subsequent event that must be disclosed, but because it happened after the balance sheet date no adjustment is needed .

b.A subsequent event that provided evidence of a condition that did not exist at the balance sheet date.

c.A subsequent event that need not be disclosed because it did not occur before the company’s yearend.

d.A subsequent event that provided further evidence of conditions that existed on the balance sheet.

24.Footnote disclosure that summarizes information that does not meet the measurement and reporting requirements for presentation in a company’s financial statements, but is useful to informed readers, is required in order to meet the concept of

a.Understandability.

b.Reliability.

c.Representational faithfulness.

d.Cost/benefit.

25.The inclusion of MD&A (Management Discussion and Analysis) in annual reports is required by the

a.FASB.

b.AICPA.

c.SEC.

d.APB.

26.Which SEC reporting form is the normal registration statement for securities to be sold to the public?

a.Form 10.

b.Form 10-K.

c.Form 10-Q.

a.Proxy Statement.

27.The Sarbanes-Oxley (SOX) Act of 2002 created the PCAOB.  The PCAOB

a.Is primarily responsible for establishing generally accepted accounting principles.

b.Provides legal and expert services to CPA firms when they are involved in class-action law suits.

c.Oversees the conduct of acts that are intended to influence, coerce, manipulate, or mislead a CPA when he/she is preparing a company’s financial statements.

d.Oversees audits of companies whose securities are public traded.

28.A disclaimer of opinion is issued when

a.All informative disclosures have not been made in the financial statements.

b.Circumstances prevent the auditor from performing all audit procedures necessary to comply with generally accepted auditing standards.

c.The financial statements are not prepared in accordance with generally accepted accounting principles.

d.There is a potential going concern issue.

29.The discrete view of interim reporting

a.Holds that an interim period is a separate accounting period; thus, revenues and expenses should be treated as though they occurred only in one period.

b.Holds that revenues and expenses should be allocated to the various interim periods.

c.Holds that revenues and expenses should be reported as they occur.

d.Holds that an interim period is an integral part of the annual reporting period.

30.The Securities act of 1933

a.Regulates the trading of securities of publicly held companies.

b.Regulates the initial public sale and distribution of a corporation’s securities.

c.Addresses the personal duties of corporate officers.

d.Specifies information that is to be contained in a company’s annual report.

31.The Sarbanes-Oxley (SOX) Act of 2002 created the PCAOB.  The PCAOB

a.Is primarily responsible for establishing generally accepted accounting principles.

b.Provides legal and expert services to CPA firms when they are involved in class-action law suits.

c.Oversees the conduct of acts that are intended to influence, coerce, manipulate, or mislead a CPA when he/she is preparing a company’s financial statements.

d.Oversees audits of companies whose securities are public traded.