Ordinarily, If You Are Auditing a Continuing Client, It Is

question 115

True/False

Ordinarily, if you are auditing a continuing client, it is unnecessary to test the accuracy objective or the classification objective for fixed assets acquired in prior years.

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Definitions:

Tax Rate Change

An adjustment to the rate at which earnings or transactions are taxed, imposed by governmental taxing authorities.

Deferred Tax Assets

The amounts of income taxes recoverable in future periods in respect of deductible temporary differences, carryforward of unused tax losses, and carryforward of unused tax credits.

Taxable Temporary Difference

The difference between the tax base of an asset or liability and its carrying amount in the financial statements that will result in taxable amounts in future periods.

Deferred Tax Asset

An accounting term that refers to a situation where a company has paid more taxes to the government than it has shown as an expense in its financial statements, leading to future tax savings.