Auditors May Prepare Program Flowcharts to Verify the Correctness of Program

question 103

True/False

Auditors may prepare program flowcharts to verify the correctness of program logic.

Understand the impact of cash and accrual transactions on the financial statements.

Know the differentiation between the cash basis and accrual basis of accounting, including the implications for financial reporting.

Apply the expense recognition (matching) principle to determine when expenses should be recognized in the income statement.

Accurately prepare and interpret journal entries for various accounting transactions.

---

Definitions:

Mutual Mistake

A contract law term where all parties involved have a mistaken understanding about a crucial aspect of the agreement.

Basic Assumption

A fundamental belief or principle that is accepted as true without need for proof, underlying the basis of an argument or theory.

Material Effect

An impact significant enough to influence a decision, outcome, or valuation, often used in legal and financial contexts.

Rescind

means to revoke, cancel, or repeal a contract, decision, or agreement.