Which financial statement assertion related to sales transactions did management violate when it issued the falsified financial statements?
What will be an ideal response?
The caller’s description of the fraud indicates that management recorded revenue and the related
accounts receivable for customers who had not placed an order for those goods or before the goods
had been shipped to customers. The recording of those entries would violate the “occurrence” financial
statement assertion for sales transactions. According to AU-C 315, "Understanding the Entity and Its
Environment," the occurrence assertion for classes of transactions addresses whether “Transactions
and events that have been recorded have occurred and pertain to the entity.” Because customers had
not placed orders or the company had not shipped goods to customers, there was no type of formal
arrangement and there was no exchange of goods for cash or other consideration. As a result, this
activity violates the occurrence assertion for sales transactions.
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On the first day of the fiscal year, Lisbon Co issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interestpayable semiannually. Orange Inc purchased the bonds on the issue date for the issue price. The journal entry torecord the amortization of the premium (by the straight-line method) for the year by Lisbon Co includes a debit to
a. Interest Expense for $2,500 b. Premium on Bonds Payable for $2,500 c. Interest Expense for $5,000 d. Premium on Bonds Payable for $5,000
When the government restricts the exercise of a fundamental right, like speech, courts evaluate the restriction using rational basis analysis.
Answer the following statement true (T) or false (F)
When obligations under a contract are transferred, the delegating party is relieved of any further obligations under the contract
Indicate whether the statement is true or false
Source attractiveness leads to persuasion through a process of ________, whereby a receiver is motivated to seek some type of relationship with the source and thus adopts similar beliefs, attitudes, preferences, or behavior.
A. internalization B. repositioning C. identification D. compliance E. comprehension