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NEW QUESTION 22
An organization was forced to stop production unexpectedly, as raw materials could not be delivered due to a military conflict in the region. Which of the following plans have most likely failed to support the organization?
- A. Contingency plans.
- B. Backup plans.
- C. Just-in-time delivery plans.
- D. Standing plans.
NEW QUESTION 23
Which of the following conflict resolution methods should be applied when the intention of the parties is to solve the problem by clarifying differences and attaining everyone’s objectives?
- A. Competing.
- B. Accommodating.
- C. Collaborating.
- D. Compromising.
NEW QUESTION 24
Which of the following is not a major component of an audit of e-commerce activities?
- A. Make certain that goals and objectives can be achieved.
- B. Review the interface issues.
- C. Evaluate the business continuity and disaster recovery plans.
- D. Assess the internal control structure.
Auditing e-commerce activities should provide reasonable assurance – not ensure or make certain -that goals and objectives can be achieved. An auditor cannot be absolutely certain that goals and objectives will be achieved. The following are other major components of an audit of e-commerce activities:
Assess the internal control structure, including the tone set by senior management, Determine whether the risks are acceptable.
Understand the information flow.
Review the interface issues such as hardware to hardware, software to software, and hardware to software), and
Evaluate the business continuity and disaster recovery plans.
NEW QUESTION 25
An entity has the following contingencies at a balance sheet date:
I. An obligation for clean-up costs relating to environmental damage may, but probably will not, require an outflow of resources.
II. An obligation for decommissioning costs of a nuclear reactor may, but probably will not, require an outflow o1 resources.
III. The entity is jointly and severally liable for an obligation arising from a lawsuit: the likelihood of an outflow of resources is remote.
Which of the above items must be disclosed in the notes to the financial statements?
- A. I, II, and III.
- B. II and III only.
- C. I and II only.
- D. I and III only.
Recognition of provisions is appropriate when the entity has a legal or constructive present obligation resulting from a past event (called an obligating event), it is probable that an outflow of economic benefits will be necessary to settle the obligation, and its amount can be reliably estimated. Thus, none of the circumstances in the question meet the criteria for a provision. Hence, each is treated as a contingent liability, which requires disclosure unless the possibility of the outflow of resources is remote.
NEW QUESTION 26
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