During an audit, an agent looks to the company’s financial statements to verify that the same...
During an audit, an agent looks to the company’s financial statements to verify that the same accounting practices were used in the tax return for a certain expense. Would the financial statements used by the agent be prepared using managerial or financial accounting?
Homework Answers
The financial accounting aims at providing information to parties outside the organization.
Managerial accounting is aimed at managers within the organization for policy and decision making process.
Here in this case, an agent is looking into the company’s financial statements to verify that the same accounting practices were used in the tax return for a certain expense. Since agent is an external party, financial statements need to be prepared using financial accounting only.
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A. Undeniably, profitability is the ultimate goal of
companies and readers of a company’s financial
statements are very much interested in the reported profit figure.
The profit figure is achieved by the
preparation of the statement of profit or loss and the statement of
financial position. If the foregoing is the case, why then bother
about the statement of cash flows?
B. Globally, accounting standards are developed based
on different methods. It is generally agreed that the
nature of accounting...
a. What is the main objective of the audit of an entity's financial statements? b. The audit represents the CPA firm's guarantee about the accuracy of the financial statements, right? Isn't the auditor's primary responsibility to detect all kinds of fraud at the client? Given the CPA firm is auditing financial statements, why would they need to understand anything about the client's business? What does the auditor do in an audit other than verify the mathematical accuracy of the numbers...
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