There Are a Number of Things That a Practising Auditor

question 38

Multiple Choice

There are a number of things that a practising auditor can do to reduce liability in lawsuits. One of them is to

• A) lobby for changes in laws.
• B) carry adequate insurance.
• C) establish peer-review requirements.
• D) revise auditing standards to meet the changing needs of society.

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Definitions:

Fair Market Value

The price at which an asset would be bought or sold in an open market.

Tax Consequences

The financial effects of transactions on tax liabilities, including how investments, income, or deductions affect taxes owed.

Basis

The initial value of an asset for tax purposes, usually the purchase price, used to calculate gains or losses when the asset is sold.

Recognized Gain

The profit realized from the sale or exchange of an asset over its adjusted basis.