Accounting Principles
This is the system of recording, summarizing, and analyzing financial transactions.
What is accounting
This financial statement shows a company's revenues and expenses.
What is the income statement
(or P&L)
This is the primary objective of an audit.
What is providing reasonable assurance
There is a misconception that auditors are responsible for detecting this as part of an audit engagement.
What is fraud
This type of account increases with a debit and represents what a company owns.
What is an asset
This financial statement shows how cash flows in and out of a business, categorized as operating, investing, and financing activities.
What is the statement of cash flows
What is the primary objective of a review.
What is limited assurance
Assurance is not just about the numbers. Auditors also evaluate the adequacy of these as part of an audit engagement.
What is internal controls
True/False: Matching principle ensures a company records expenses in the same period as the revenues they help generate.
True
This is the equation of the balance sheet.
Assets = Liabilities + Equity
This is the fundamental ethical principle that requires auditors to be free from conflicts of interest.
What is independence
Audits are considered a premium service in accounting. What is one reason they typically come with a higher cost compared to other assurance services.
Significant time
Experience
Increase credibility
Regulatory requirements