In Evaluating Accounting Estimates the Auditor Would Not Concentrate on Key

question 31

Multiple Choice

In evaluating accounting estimates the auditor would not concentrate on key factors and assumptions that are

• A)within budgetary expectations.
• B)subjective and susceptible to misstatement and bias.
• C)inconsistent with current economic trends.
• D)sensitive to variations.

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Definitions:

Fair Market Price

The price that a willing buyer and a willing seller agree upon, assuming both parties have reasonable knowledge of the item's relevance and are under no pressure to buy or sell.

Loss On Redemption

The loss incurred when a debt obligation or security is redeemed before its maturity date at a value less than the original purchase price or par value.

Carrying Amount

The balance of the bonds payable account (face amount of the bonds) less any unamortized discount or plus any unamortized premium.

Unamortized Discount

The portion of a bond's face value that has not yet been expensed as interest over time to reflect the bond being issued below its par value.