The Auditor Should Obtain Sufficient Appropriate Evidence for Material Amounts

question 18

Multiple Choice

The auditor should obtain sufficient appropriate evidence for material amounts and disclosures in the financial statements that are determined by laws and regulations that have a direct impact on the financial statements.Examples include

• A)SEC reporting requirements for private companies
• B)FASB reporting requirements for public companies
• C)industry specific financial reporting issues
• D)accounting for transactions under government contracts,including the amount of revenue to be accrued
• E)the accrual and recognition of sales tax expense
• F)both A and B
• G)both B and E
• H)Both C and D

Analyze the costs associated with employing individuals beyond their gross wages.

Comprehend the regulatory requirements for payroll, including Workers' Compensation and FICA.

Understand the reasons for and benefits of outsourcing payroll functions.

Identify payroll taxes that have an earnings cap and those that do not.

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Definitions:

Laffer Curve

An economic theory suggesting there exists an optimal tax rate that maximizes government revenue without discouraging people from working or investing.

Tax Rate

The percentage at which an individual or corporation is taxed.

Tax Receipts

The revenue collected by the government through all forms of taxes, such as income tax, corporate tax, and sales tax.

Fiscal and Monetary Policies

Government strategies used to influence economic conditions, with fiscal policy involving taxation and spending decisions and monetary policy concerning the control of the money supply and interest rates.