What are Assertions in Auditing? Assertions are claims that establish whether or not financial statements are true and fairly represented in the process of auditing. Importance of Assertions Assertions are an important aspect of auditing. Since financial statements cannot be held to a lie detector test to determine whether they are factual or not, other…
What is Evidence in an Audit? Evidence in an audit is information that is collected and required in the review of an entity’s financial transactions, balances, and internal controls to certify the financial statements as being fairly represented. Evidence is used by auditors and certified public accountants (CPAs) in determining whether an audit results in…
What is Audit Sampling? Audit sampling is an investigative tool in which less than 100% of the total items within the population of items are selected to be audited. It is an auditing technique that provides supporting evidence that allows auditors to issue audit opinions without having to audit every single item and transaction. Auditing…
What is Auditing? Auditing typically refers to financial statement audits or an objective examination and evaluation of a company’s financial statements – usually performed by an external third party. Audits can be performed by internal parties and a government entity, such as the Internal Revenue Service (IRS). Importance of Auditing Audit is an important term…
What is a Medium of Exchange? A medium of exchange is a transitional instrument used to settle the trade of products and services among market participants. It is a system used to enable the exchange of items. Currency is the most common medium of exchange accepted as a standard by all parties for settling economic transactions….
What are Monopolistic Markets? Monopolistic markets are markets where a certain product or service is offered by only one company. A monopolistic market structure has the features of a pure monopoly, where a single company fully controls the market and determines the supply and price of a product or service. Hence, a monopolistic market is…
What is a Minsky Moment? A Minsky Moment is a sudden collapse of the market following a long period of unsustainable speculative activity involving high debt amounts taken by investors. The term is frequently used to discuss past and/or probable future financial crises. It is named after an American economist, Hyman Minsky, who claimed that…
What is Matching Orders? Matching orders refers to the process of entering identical orders of buy and sell simultaneously to encourage trading in that particular security. When an investor wants to buy a certain quantity of security and another investor seeks to sell a similar quantity of that security at a similar price, the orders…
What is Merger Arbitrage? Merger arbitrage, otherwise known as risk arbitrage, is an investment strategy that aims to generate profits from successfully completed mergers and/or takeovers. It is a type of event-driven investing that aims to capitalize on differences between stock prices before and after mergers. Investors who employ merger arbitrage strategies are known as…
What is a Middle-Market Firm? A middle-market firm is one with a size that falls in the middle range of a market or industry. U.S. businesses can be divided into three categories – the big, middle-market, and small businesses. The middle-market firms are larger than the small businesses and smaller than the big businesses. They…
