Effect of Internal Audit's Work on the External Audit Provide examples of audit judgments made by the external auditor which would not typically be delegated to the internal auditor
Because the auditor has the ultimate responsibility to express an opinion on the financial statements, many of the audit judgments must be made by the external auditor and should not be delegated to the internal auditors.
Some of these judgments include assessments of:
• Inherent and control risks
• The materiality of misstatements
• The sufficiency of tests performed
• The evaluation of significant accounting estimates.
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The cumulative effect of the declaration and payment of a cash dividend on a company's financial statements is to
a. decrease total liabilities and stockholders' equity. b. increase total expenses and total liabilities c. increase total assets and stockholders' equity d. decrease total assets and stockholders' equity
The entry to record the issuance of common stock for fully paid stock subscriptions is
a. a memorandum entry. b. Common Stock Subscribed, Common Stock Additional Paid-In Capital. c. Common Stock Subscribed, Subscriptions Receivable. d. Common Stock Subscribed, Common Stock.
Which of the following transactions would be shown in the non-cash investing and financing activities section of the statement of cash flows?
A) sold equipment with book value of $15,000 in exchange for $15,000 cash B) retired company bonds before the maturity date by paying a negotiated amount C) issued 50,000 shares of stock at $2 per share D) purchased land by signing a 10-year note for $500,000
The text recommends that you keep the original copy of your will in a safe deposit box
Indicate whether the statement is true or false.