Exam 19: The Audit of Accounting Estimates: Basic Material Relating to Accounting Estimates

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The tendency to exaggerate the inevitability of causal sequences is known as the availability heuristic.

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The difference between what was reported and what should have been reported,an auditor's traditional perspective of misstatement,is the basis of the concept of auditing risk.

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The actual monetary amount which results from resolution of the underlying transaction(s),event(s),or condition(s)addressed by the accounting estimate is known as ________.

(Multiple Choice)
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CIFiR's (SEC established Advisory Committee on Improvements to Financial Reporting)progress report proposes a framework for accounting judgments consisting of which two components?

(Multiple Choice)
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Accounting estimate nirvana is ________.

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An Accounting Estimate Problem or "Cockburn's problem" occurs when _______.

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Under the risk-based reasoning system for accounting estimates,there are three possible ranges or regions of probabilities of payoffs to consider.What are they and what do they each mean?

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The risk of misstatement arising from estimation uncertainty due to future events is known as accounting risk.

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Which of the following statements regarding calibration is FALSE?

(Multiple Choice)
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Under the RBR system of risk-based reasoning for accounting estimates,in the ________ region,the probability of payoff (one minus acceptable AccR)to (acceptable AccR).

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Generally accepted accounting principles are based on the going-concern concept.

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It is "reasonable" to assume the going-concern assumption for financial reporting when the degree of doubt is no higher than ________.

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A lack of neutrality by management in the preparation and presentation of information is known as estimation uncertainty.

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What are the three types of misstatements according to CAS 540?

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Risks associated with forecasting future outcomes or events in accounting estimates are increasingly recognized as the biggest source of error in accounting estimates.

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Which of the following statements concerning accounting risk (AccR)is FALSE?

(Multiple Choice)
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Which of the following statements regarding audit risk (AudR)and accounting risk (AccR)is FALSE?

(Multiple Choice)
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The risk-based reasoning (RBR)matrix is an attempt to summarize all the possibilities of accounting uncertainties that an auditor may encounter and classify them by reporting types.

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Calibration is achieved through repetition and feedback,which improves the quality of expert's estimates.

(True/False)
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What is a risk-based reasoning (RBR)matrix and what is it used for?

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