An Audit of Historical Financial Statements Most Commonly Includes the

question 138

Multiple Choice

An audit of historical financial statements most commonly includes the

• A) balance sheet, statement of retained earnings, and the statement of cash flows.
• B) income statement, the statement of cash flows, and the statement of net working capital.
• C) statement of cash flows, balance sheet, and the statement of retained earnings.
• D) balance sheet, income statement, statement of cash flows, and the statement of changes in stockholders' equity.

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Definitions:

Accrual

A bookkeeping approach that logs income and expenditures at the time they occur, irrespective of the timing of actual cash transactions.

Financial Statement

A formal record of the financial activities and position of a business, person, or other entity, presenting the financial results and health of the entity.

Onerous Contract

A contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

AASB 137

The Australian Accounting Standards Board standard that deals with the treatment of provisions, contingent liabilities, and contingent assets.