Solved: FIN 512 Week 4 Quiz

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Question 1

  1. “What type of audit report indicates that the financial statements present fairly the financial position, results of operations and the cash flows for the accounting period?”
   A disclaimer of opinion.

   An unqualified report.

   A qualified report.

   An adverse opinion.

5 points  

Question 2

  1. Which of the following items would not be discussed in the management discussion and analysis?
   Commitments for capital expenditures.

   The internal and external sources of liquidity.

   The market value of all assets.

   A breakdown of sales increases into price and volume components.

5 points  

Question 3

  1. What is a Form 10-K?
   The annual report of a publicly held company which must be filed with the SEC.

   The quarterly report of a publicly held company which must be filed with the SEC.

   The bankruptcy report of a publicly held company which must be filed with the SEC.

   The form required to report a change of auditor.

5 points  

Question 4

  1. What was one of the major impacts of the Sarbanes-Oxley Act of 2002 on external auditors?
   External auditors are now required to establish and maintain an adequate internal control structure for their clients.

   External auditors are now required to audit the internal control assessment of a client firm.

   External auditors are now required to state their responsibility for the internal control structure of their clients.

   None of the above.

5 points  

Question 5

  1. Which of the following statements is true?
   GAAP-based financial statements are prepared according to the cash rather than the accrual basis of accounting.

   Accounting choices and estimates can have a significant impact on the outcome of financial statement numbers.

   The accrual method means that the expense is recognized after the cash is paid out.

   The purpose of the accrual method is to attempt to match assets with liabilities in appropriate accounting periods.

5 points  

Question 6

  1. What types of information cannot be found in the financial statements?
   “Reputation of the firm, morale of employees and prestige in the community.”

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