Audit Firm Rotation Has Been Introduced

question 41

Multiple Choice

Audit firm rotation has been introduced:

• A)in Europe by the European Parliament.
• B)in the United States by the Public Company Accounting Oversight Board.
• C)in Australia by the Corporations Act 2001.
• D)All of the given answers are correct.

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Definitions:

Accrual Basis

An accounting method where revenues are recorded when earned, and expenses are recorded when incurred, regardless of when cash is exchanged.

Net Income

The net income of a business once all costs and taxes are subtracted from its total earnings.

Cash Basis

The cash basis is an accounting method where revenues and expenses are recognized only when cash is received or paid, as opposed to when they are incurred.

Adjusting Entries

Journal entries made in accounting records at the end of an accounting period to update the balances of certain accounts.