In the Course of the Audit of Financial Statements for the Purpose

question 83

Multiple Choice

In the course of the audit of financial statements for the purpose of expressing an opinion thereon,the auditors will normally prepare a schedule of unadjusted differences for which the auditors did not propose adjustments when they were identified.What is the primary purpose served by this schedule?

• A)To point out to the responsible client officials the errors made by various company personnel.
• B)To summarize the adjustments that must be made before the company can prepare and submit its federal tax return.
• C)To identify the potential financial statement effects of misstatement or disputed items that were considered immaterial when discovered.
• D)To summarize the misstatements made by the company so that corrections can be made after the audited financial statements are released.

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Definitions:

Carrying Value

The book value of an asset or liability on a company's balance sheet, calculated as its original cost minus any depreciation, amortization, or impairment costs.

Stock Dividend

A dividend payment made in the form of additional shares rather than cash.

Par Value

The face value of a bond or the stated value of a stock; does not necessarily reflect market value.

Capital Lease

A lease agreement that is recorded as an asset on the lessee's balance sheet because it effectively transfers the risks and benefits of ownership from the lessor to the lessee.