Explain what a credit analyst should do in preparation for an analysis of the financial statements
What will be an ideal response?
Before performing an analysis of the financial statement, the credit analyst must determineif the industry in which the company operates has any special accounting practices, suchas those in the insurance industry. If so, an analyst should become familiar with industrypractices. Moreover, the analyst must review the accounting policies to determinewhether management is employing liberal or conservative policies in applying generallyaccepted accounting principles (GAAP). An analyst should be aware of changes in GAAPpolicies by the company and the reason for any changes. Because historical data are analyzed,the analyst should recognize that companies adjust prior years' results to accommodatediscontinued operations and changes in accounting that can hide unfavorabletrends. This can be done by assessing the trends for the company's unadjusted andadjusted results.
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Which of the following factors should an auditor consider in evaluating the effect of fraud upon the planned audit procedures?
a. The type of fraud that may occur. b. The potential materiality of fraud. c. The likelihood of fraud occurring. d. All of the above.
________ refers to the unique psychological characteristics that distinguish a person or group
A) Personality B) Lifestyle C) Status D) Attitude E) Role
A(n) ________ is a collection of records that summarizes the effects of multiple transactions whereas a(n) ________ is a record of each day's transactions.
A. journal; ledger B. trial balance; journal C. ledger; journal D. trial balance; ledger
Which of the following types of tenancy will continue indefinitely unless one party or the other
takes action to terminate it? A) Tenancy at will B) Periodic tenancy C) Tenancy for years D) A and B only E) A and C only