Correct Answer: D

Explanation: When there has been a change in accounting principles or in the method of their application, the auditor should refer to the change in an explanatory paragraph (following the opinion paragraph) which identifies the nature of the change and refers the reader to the note in the financial statements that discusses the change. The other paragraphs in the auditor's report are not affected.

Today's question: FAR

The installment method of recognizing revenue:

A) Should be used only in cases where there is no reasonable basis for estimating the collectibles of receivables

B) Is not a generally accepted accounting principle under any circumstances

C) Should be used for book purposes only if it is used for tax purposes

D) Is an acceptable alternative accounting principle for a firm which makes installment sales

Correct Answer: A

Explanation: According to APB #10 (par. 12), the installment method of accounting is not acceptable unless "collection of the sale price is not reasonably assured."

Today's question: AUD

One of a CPA firm's basic objectives is to provide professional services that conform with professional standards. Reasonable assurance of achieving this basic objective is provided through:

A) A system of quality control

B) A system of peer review

C) Continuing professional education

D) Compliance with generally accepted reporting standards