In Testing Acquisitions the Auditor Needs to Understand the Appropriate

question 32

Multiple Choice

In testing acquisitions the auditor needs to understand the appropriate accounting guidance related to acquisition accounting. Which of the following is not an accounting consideration for the auditor as regards to acquisition cost?

• A) inclusion of material transportation and installation costs
• B) recording of trade-in costs
• C) allocating costs when building and equipment are purchased at one price
• D) verifying that purchased equipment amounts correspond to the budgeted amount

Understand the concept and application of the direct method in preparing the statement of cash flows.

Calculate the effects of changes in account receivables, account payables, and inventories on cash flow.

Adjust reported income statement figures to a cash basis for the statement of cash flows.

Determine the beginning and ending balances of accounts based on cash flows and income statement figures.

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Definitions:

Disruptive Politics

Political actions or policies that significantly change the status quo, often leading to shifts in power structures or social norms.

Avoid Favoritism

The practice of deliberately not giving preferential treatment to particular individuals or groups over others, ensuring fairness and equality.

Organizational Resources

Assets, including human, financial, physical, and informational, that an organization possesses and can utilize to execute its strategies and achieve its objectives.

Opportunity Power

The ability to influence people or situations through the creation or control of opportunities.