Chapter 1 & 2
Chapter 4
Chapter 6 - Assertions
Chapter 7
Mix
100
The use of the Certified Public Accountant title is regulated by: A) the federal government. B) state law through a licensing department or agency of each state. C) the American Institute of Certified Public Accountants through the licensing departments of the tax and auditing committees. D) the Securities and Exchange Commission.
What is B) state law through a licensing department or agency of each state.
100
When CPAs are able to maintain their actual independence, it is referred to as independence in: A) conduct. B) appearance. C) fact. D) total.
What is C) fact.
100
What are the three categories of management assertions?
What are Transaction related, Balance, Presentation & Disclosure
100
The two characteristics of the appropriateness of evidence are: A) relevance and timeliness. B) relevance and accuracy. C) relevance and reliability. D) reliability and accuracy.
What is C) relevance and reliability.
100
Evidence is usually more persuasive for balance sheet accounts when it is obtained: A) as close to the balance sheet date as possible. B) only from transactions occurring on the balance sheet date. C) from various times throughout the client's year. D) from the time period when transactions in that account were most numerous during the fiscal period
What is A) as close to the balance sheet date as possible.
200
A correct relationship among the auditor, the client, and the external users is: A) management of a public company hires the independent auditor. B) the audit committee of a private company hires the independent auditor. C) the client provides capital to the external users. D) the external users can rely upon the auditor's report to reduce information risk.
What is D) the external users can rely upon the auditor's report to reduce information risk.
200
The provisions of the Sarbanes-Oxley Act of 2002 are most likely to allow which of the following non-audit services for audit clients? A) Appraisal or valuation services (e.g., pension, post-employment benefit liabilities) B) Financial information systems design and implementation C) Internal audit outsourcing D) Tax Services
What is D) Tax Services
200
Identify the assertion: Recorded sales transactions have occurred.
What is Occurrence?
200
Which of the following forms of evidence would be least persuasive in forming the auditor's opinion about marketable securities and other investments held by the company? A) Responses to auditor's questions by the president and controller regarding the investments account B) Correspondence with a stockbroker regarding the quantity of client's investments held in street name by the broker C) Minutes of the board of directors authorizing the purchase of stock as an investment D) The auditor's count of marketable securities
What is A) Responses to auditor's questions by the president and controller regarding the investments account
200
Auditors may decide to replace tests of details with analytical procedures when possible because the: A) analytical procedures are more reliable. B) analytical procedures are considerably less expensive. C) analytical procedures are more persuasive. D) tests of details are more difficult to interpret.
What is B) analytical procedures are considerably less expensive.
300
The AICPA has authority to establish standards and rules in all but which of the following areas? A) Auditing standards applicable to financial statements of private companies B) Compilation and review standards C) Professional conduct D) Auditing standards applicable to financial statements of public companies
What is D) Auditing standards applicable to financial statements of public companies
300
An example of an "indirect ownership interest in a client" would be ownership of a client's stock by a member's: A) dependent child. B) spouse. C) non-dependent grandfather. D) All of the above are examples of indirect ownership.
What is C) non-dependent grandfather.
300
Identify the Assertion: There are no liens or other restrictions on AR.
What are Rights & Obligations?
300
True or False? Physical examination is usually the least expensive type of audit evidence
What is False?
300
Indicate whether confirmation of accounts receivable and accounts payable, provided they each are significant accounts, is required or optional: Accounts Receivable and Accounts Payable
What is Required - AR; Optional - AP
400
Generally Accepted Auditing Standards (GAAS) and Statements on Auditing Standards (SAS) should be looked upon by practitioners as: A) ideals to work towards, but which are not achievable. B) maximum standards that denote excellent work. C) minimum standards of performance that must be achieved on each audit engagement. D) benchmarks to be used on all audits, reviews, and compilations.
What is C) minimum standards of performance that must be achieved on each audit engagement.
400
When determining whether independence is impaired because of an ownership interest in a client company, materiality will affect ownership: A) in all circumstances. B) only for direct ownership. C) only for indirect ownership. D) under no circumstances.
What is C) only for indirect ownership.
400
Identify the Assertion: Sales amounts have been recorded in the proper period
What is Cut off?
400
True/False: Cost of obtaining evidence may be a factor in deciding whether to obtain that evidence
What is True?
400
If the auditor has obtained a reasonable level of assurance about the fair presentation of the financial statements through understanding internal control, assessing control risk, testing controls, and analytical procedures, then the auditor: A) can issue an unmodified opinion. B) can significantly reduce other substantive tests. C) can write the engagement letter. D) needs to perform additional tests of controls so that the assurance level can be increased.
What is B) can significantly reduce other substantive tests.
500
Which of the following statements is most correct regarding the primary purpose of audit procedures? A) to detect all errors or fraudulent activities as well as illegal activities B) to comply with auditing standards promulgated by the PCAOB for publicly held clients C) to gather corroborative audit evidence about management's assertions regarding the client's financial statements D) to determine the amount of errors in the balance sheet accounts in order to adjust the accounts to actual
What is C) to gather corroborative audit evidence about management's assertions regarding the client's financial statements
500
The detail tie-in audit objective is related to the ________ assertion for account balances. A) classification B) valuation and allocation C) rights and obligations D) completeness
What is B) valuation and allocation
500
Given the choices below, which provides the auditor with the most reliable audit evidence? A) General ledger account balances B) Confirmation of accounts receivable balance received from a customer C) Internal memo explaining the issuance of a credit memo D) Copy of month-end adjusting entries
What is B) Confirmation of accounts receivable balance received from a customer
500
For audit evidence to be compelling to the auditor it must be sufficient and appropriate. Which statement below is not correct regarding the appropriateness of audit evidence? A) The more effective the internal control system, the more assurance it provides the auditor about the reliability of financial reporting by the client. B) An auditor's opinion, to be economically useful and profitable to the auditing firm needs to be formed within a reasonable time and based on evidence obtained that assures profits for the auditing firm. C) Evidence obtained from independent sources outside the entity is generally more reliable than evidence secured solely within the entity. D) The independent auditor's direct personal knowledge, obtained through inquiry, observation and inspection, is generally more persuasive than information obtained indirectly.
What is B) An auditor's opinion, to be economically useful and profitable to the auditing firm needs to be formed within a reasonable time and based on evidence obtained that assures profits for the auditing firm.
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