It Is Management's Responsibility to Select the Accounting Policies That

question 4

Multiple Choice

It is management's responsibility to select the accounting policies that are used in the preparation of the financial statements.What is the auditor's responsibility with respect to these accounting policies?

• A)Approve the accounting policies that are used,so that an opinion can be stated on the fairness of the financial statements.
• B)Evaluate the appropriateness of the accounting policies that are used and of the associated estimates made.
• C)Tell management which accounting policies should be selected so that accurate estimates can be made for year-end adjustments.
• D)Recalculate the estimates that are used for the accounting policies (such as bad debt allowance and warranty expenses).

Understand the basic forecasting methods and their appropriate contexts of application.

Identify and calculate different forecasting accuracy measures such as root mean square error, mean absolute deviation, and mean absolute percentage error.

Distinguish between different types of time series patterns such as trend, seasonal, and cyclical effects.

Utilize historical data to make future sales forecasts using methods like moving average models and exponential smoothing.

---

Definitions:

Investment Banks

Financial institutions that assist individuals, corporations, and governments in raising capital by underwriting and acting as the agent in the issuance of securities.

Commercial Banks

Financial institutions that provide loans, accept deposits, and offer basic financial products like savings accounts to the public.

Financial Matters

Issues or activities related to the management, investment, and control of money and assets.

Venture Capital Fund

A fund that invests in high-growth companies in exchange for equity, or ownership stakes, typically in early-stage companies.