Indicate Whether You Agree or Disagree with the Following Statements

question 43

Essay

Indicate whether you agree or disagree with the following statements and explain your reasoning.
a) Mona Harmon has just completed a risk assessment and has identified key risk factors at Bonavista Emergis. When asked by one of her staff members "What's next?", she replies: "Now that we have identified the risks, its time to perform some planning in order to obtain sufficient appropriate audit evidence."
b) Teresa Dziuba was assigned to the Heathcliff Energy audit. She was ensuring that when recognizing revenues, all transactions and events that should have been recorded have been recorded. She was testing the occurrence assertion.
c) Steve Slopak, the group partner was reviewing the work of Manny Fernandez on the Lake Shore Gold account. Manny asked Steve for an explanation on how audit risk would affect his work. Steve answered: "Audit risk affects the quantity and quality of evidence gathering."
d) Frank Tutino, CPA made the following true statement: "The appropriateness of audit evidence refers to its relevance and reliability." He then added:
"Reliable information is logically connected to an assertion"
"Relevant information reflects the true state of the information"

Comprehend the implications of sale-or-return contracts.

Identify the consequences of minors obtaining goods under common law.

Define title and its significance in the absence of possession.

Understand the rights related to insuring goods and risk exposure.

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Definitions:

Net Present Value Method

A financial analysis technique used to assess the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.

Future Cash Inflows

Expected cash receipts or revenues generated from business activities in future periods.

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment’s cost.

Internal Rate of Return

The metric used to estimate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows equal to zero.