The Purpose of Audits of Financial Statements Is to Issue

question 155

Multiple Choice

The purpose of audits of financial statements is to issue an opinion on the fairness of the financial statements and to evaluate all of the following assertions (explicit or implicit) by management EXCEPT:

• A) Existence or occurrence assertions address whether available information addresses actual transactions, assets, and liabilities
• B) completeness assertions address whether all material financial information is included in financial statements
• C) Rights and obligations assertions address whether the entity has legal rights to the assets and obligations to the liabilities disclosed on the financial statements
• D) Presentation and disclosure assertions address whether the elements of the financial statements are properly organized, classified and disclosed

Differentiate between financial and managerial accounting.

Distinguish between line and staff departments.

Understand the concept of decision-making in managerial accounting.

Understand the concepts and calculations related to materials inventory.

---

Definitions:

Income Elasticity

A measure of how much the demand for a good or service changes relative to a change in consumers' income.

Housing Property

Real estate that includes residential homes such as single-family houses, apartments, and condos, used for living purposes.

Recession

A period of temporary economic decline during which trade and industrial activity are reduced, usually identified by a fall in GDP in two successive quarters.

Demand Elasticity

A measure of how sensitive the quantity demanded of a good is to a change in its price.