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

Transition between equity method and fair value method when applicable.

Evaluate and audit the appropriateness of using the equity method for investment accounting.

Understand the differences in equity method accounting under International Accounting Standards and FASB ASC.

Understand the primary objective of the fair value method of accounting for an investment.