Distinguish between errors and irregularities. Which are of greatest concern to auditors?
Errors are unintentional mistakes; while irregularities are intentional misrepresentations to perpetrate a fraud or mislead users of financial statements. Errors are a concern if they are numerous or sizable enough to cause the financial statements to be materially misstated. All processes that involve human actions are highly susceptible to human error. Computer processes are subject to program errors, faulty systems operating procedures and system malfunction. Errors are typically easier to uncover than misrepresentations, thus auditors typically are more concerned about detecting all irregularities. Also, under SAS No. 99 and Sarbanes-Oxley, auditors are specifically charged with fraud detection.
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Carol is self-employed and uses her automobile solely for her business. If she uses the actual expense method to compute expenses, she can include any interest paid on the loan taken out to purchase the car.
Answer the following statement true (T) or false (F)
An agent has implied authority to perform any act necessary to carry out the principal's business
Indicate whether the statement is true or false
Toombs Media Corp. recently completed a 3-for-1 stock split. Prior to the split, its stock sold for $170 per share. The firm's total market value was unchanged by the split. Other things held constant, what is the best estimate of the stock's post-split price?
A. $57.23 B. $65.73 C. $64.60 D. $63.47 E. $56.67
Preferred stock is less risky than common stock, but more risky than debt
Indicate whether the statement is true or false