Multiple Choice Questions The following questions deal with revi

Multiple Choice Questions
The following questions deal with review of subsequent events.
Choose the best response.
a. Subsequent events for reporting purposes are defined as events that occur subsequent to the
(1) Balance sheet date.
(2) Date of the auditor's report.
(3) Balance sheet date but before the date of the auditor's report.
(4) Date of the auditor's report and concern contingencies that are not reflected in the financial statements.
b.
An example of an event occurring in the period of the auditor's field work subsequent to the end of the year being audited that normally will not require disclosure in the financial statements or auditor's report is
(1) Serious damage to the company's plant from a widespread flood.
(2) Issuance of a widely advertised capital stock issue with restrictive covenants.
(3) Settlement of a large liability for considerably less than the amount recorded.
(4) Decreased sales volume resulting from a general business recession.
c. Ruffin has audited the financial statements of Weaver Corporation for the year ended December 31, 2011. The auditor completed the audit work on February 22, 2012 and dated the audit report as of that date. The report was delivered to management for inclusion in its financial statements submitted by Weaver Corporation to its banker on February 27, 2012. Ruffin archived all its working papers for the audit on March 1, 2012. Under the circumstances, Ruffin is responsible for reviewing subsequent events occurring through
(1) December 31, 2011.
(2) February 22, 2012.
(3) February 27, 2012.
(4) March 1, 2012.

Audit Report
The audit report is issued by a certified public accountant who is appointed by the shareholders to provide assurance upon the truth and fairness of the financial statements prepared by the managers of the company. Audit report contains the...
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...

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