Several Sources of GAAP Consulted by an Auditor Are in Conflict

question 20

Multiple Choice

Several sources of GAAP consulted by an auditor are in conflict as to the application of an accounting principle.Which of the following should the auditor consider to be the most authoritative?

• A)CICA Handbook.
• B)CICA Exposure Drafts.
• C)Industry practice.
• D)Federal legislation.

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Definitions:

Redeemed

Refers to the buyback or repayment of a security such as a bond at its maturity date.

Premium

An amount paid in addition to the standard or nominal cost, often associated with insurance or the additional amount above the par value for securities.

IFRS Accounting

The practice of maintaining financial records and reporting financial results in accordance with the International Financial Reporting Standards.

U.S.GAAP

U.S.GAAP (United States Generally Accepted Accounting Principles) comprises a broad set of accounting standards developed by the Financial Accounting Standards Board (FASB) used for preparing financial statements in the U.S.