Odell, an Officer of Professional Sportsgear Corporation, Uses Special Software

question 12

Multiple Choice

Odell, an officer of Professional Sportsgear Corporation, uses special software to help identify employees who might commit embezzlement and other wrongful acts.The software performs this function by

• A)scanning e-mail for certain words and phrases.
• B)looking for anomalies in the firm's financial records.
• C)recording phone calls for a third party's review.
• D)archiving all electronic communication as potential evidence.

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Definitions:

Conservatism Principle

an accounting principle that guides companies to report lower values for assets and revenues, higher values for liabilities and expenses when in doubt, ensuring that financial statements do not overstate the company’s financial position.

Impairment Loss

The amount by which the carrying amount of an asset exceeds its recoverable amount, leading to a decrease in the asset's value on the balance sheet.

Carrying Value

The book value of assets and liabilities recorded on the financial statements, often differing from market value.

Extraordinary Item

Events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence, requiring separate disclosure in financial statements for clarity.