Which of the following audit risk components may be assessed in qualitative terms?
A. Risk of material misstatement.
B. Detection risk.
C. Neither risk of material misstatement nor detection risk.
D. Both risk of material misstatement and detection risk.
Answer: D
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Which of the following is false regarding the valuation of goodwill?
a. U.S. accounting standards require that goodwill be specifically identified with an operating segment or a reporting unit. b. By definition, acquired parts of the business (or goodwill) must be sufficiently identifiable so that they can be managed as a unit or may be separately identified and sold as a unit. c. Goodwill is tested for impairment quarterly. d. Goodwill is the excess of the purchase price over the fair market value of the acquired company's tangible assets, identifiable intangible assets, and liabilities.
Grayson Bank agrees to lend the Trust Company $100,000 on January 1. Trust Company signs a $100,000, 12%, 9-month note. What entry will Trust Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?
A) Notes Payable 109,000Cash 109,000 B) Notes Payable 100,000Interest Payable 9,000Cash 109,000 C) Interest Expense 12,000Notes Payable 100,000Cash 112,000 D) Interest Payable 12,000Notes Payable 100,000Cash 112,000
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