Which of the following statements regarding audit findings is true?
A. A deficiency exists when the design or operation of a control does not allow management or employees to prevent, or detect and correct misstatements on a timely basis.
B. A significant deficiency is a deficiency in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.
C. A material weakness is a deficiency in internal control important enough to merit attention by those charged with governance.
D. All of the given statements are true.
Answer: A
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List at least five advantages of bootstrapping.
What will be an ideal response?
Which of the following is not a purpose for a direct quotation?
A) To duplicate exact wording before criticizing an idea B) To repeat identical phrasing because of its precise wording C) To add length to a researched document D) To provide objective background information
When evaluating the cash flows associated with a capital budgeting project, the shipping and installation costs associated with the purchase of an asset are included in the computation of the:
A. initial investment outlay, because these expenses are part of the project's depreciable basis. B. incremental operating cash flows, because shipping and installation costs represent expenses that must be written off annually over the life of the project. C. terminal cash flows, because these expenses are not paid until the end of the project's life. D. sunk costs, because these expenses do not affect any cash flows associated with purchasing the project. E. project's opportunity cost, because these costs increase the potential of the project.
The predictability of the project's revenue stream is essential in securing project financing. Which of the following is NOT a typical contract provisions that are intended to assure adequate cash flow?
A) quantity and quality of the project's output B) a pricing formula C) circumstances that permit changes in the contract D) fronting loan