If Earnings on Financial Statements for Internal Use Only Have

question 309

Multiple Choice

If earnings on financial statements for internal use only have been manipulated in the past, an internal auditor is likely to focus on which of the following?

• A) The proper accrual of payables at the end of the interim period.
• B) The timing of revenue recognition and the valuation of inventories.
• C) Whether accounting estimates are reasonable given past actual results.
• D) Whether there have been changes in accounting principles that materially affect the financial statements.

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Definitions:

Economic Profits

The net amount left when a business subtracts its full range of costs, explicit and implicit, from its entire revenue.

New Market

An emerging or previously unexplored segment of an industry where a business can expand or introduce its products or services.

Repeated Game

A strategic scenario in game theory where the same game is played several times, allowing players to revise their strategy based on past outcomes.

Nash Equilibrium

A concept in game theory where each player's strategy is optimal given the strategies of all other players in the game, leading to a situation from which no player has an incentive to deviate.