The SEC's Rules with Respect to Services Provided by Auditors

question 21

Essay

The SEC's rules with respect to services provided by auditors are predicated on three basic principles of auditor objectivity and independence. What are the three basic principles?

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Definitions:

Interest Payable

A liability account on a company's balance sheet representing the amount of interest expense that has been incurred but not yet paid.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate period for a more accurate financial report.

Salaries Payable

An accounting liability representing the amounts owed to employees for work performed but not yet paid.

Adjusting Entry

Journal entries made at the end of an accounting period to update account balances to their correct amounts before the preparation of financial statements.