AUD
An auditor is using statistical sampling in testing whether cash disbursements were properly authorized. The sample results indicate that the sample rate of deviation plus the allowance for sampling risk exceeds the tolerable rate. Under these circumstances, the auditor most likely would reduce the
A. Planned reliance on the prescribed control.
B. Assessed level of control risk.
C. Planned reliance on substantive tests.
D. Tolerable rate of deviations.
What is answer A.
What term is used to represent unavoidable past costs that cannot be changed no matter what action is taken?
A. Prime costs
B. Sunk costs
C. Opportunity costs
D. Incremental costs
What is answer B.
Which of the following financial instruments may be considered a derivative financial instrument? (Answer - A)
A. Option contract.
B. Municipal bond.
C. Bank certificate of deposit.
D. Money market fund.
What is answer A.
This celebrity studied accounting
A. Mick Jagger
B. Tiny Fey
C. James Franco
D. John Legend
What is answer A.
In searching for unrecorded liabilities, an auditor most likely would examine the:
A. Cutoff bank statement for deposits recorded in the books, but not by the bank.
B. Details of accounts receivable confirmations that are classified as "exceptions".
C. Files of purchase requisitions for items ordered just before the year end.
D. Receiving reports for items received before year end, but not yet recorded.
What is answer D.
Which of the following is not an information criteria under the Control Objective for Information and Related Technology (COBIT) framework?
A. Anonymity
B. Compliance
C. Effectiveness
D. Reliability
What is answer A.
Bay Co. incurred legal fees in defending its patent rights. These legal fees should be capitalized when the outcome of the litigation is Successful Unsuccessful.
A. Successful Litigation Only
B. Unsuccessful Litigation Only
C. Neither
D. Both
What is answer A.
This Public Accounting Firm tallies the votes at the Oscars
A. Deloitte
B. PwC
C. Grant Thornton
D. BDO
What is answer B.
According to rules issued under the Sarbanes-Oxley Act, which of the following non-audit services is an accounting firm permitted to provide for an issuer audit client without impairing the accounting firm's independence?
A. Providing an expert opinion in order to advocate the client's interest in litigation.
B. Providing an expert opinion in order to advocate the client's position in a regulatory investigation.
C. Providing factual accounts in testimony explaining positions taken during the performance of any services provided to the client.
D. Providing legal services to the client in a foreign jurisdiction
What is answer C.
To which of the following parties will a CPA be liable if the CPA fraudulently issues an unqualified opinion on a corporation's materially misstated financial statements?
A. Corporate Shareholders Only
B. Corporate Bondholders Only
C. Both
D. Neither
What is answer C.
True Co. did not record an accrual for a probable loss from a lawsuit in its financial statements. Which of the following explanations for True's not accruing the probable loss is in accordance with generally accepted accounting principles?
A. No reasonable estimate of the loss can be made.
B. Recognizing an amount in its financial statements would weaken the company's defense of the lawsuit.
C. Accrual was not required because an estimated amount of the loss was disclosed in the notes to the financial statements.
What is answer A.
Following Arthur Anderson’s collapse, what was “Anderson Worldwide” (i.e., consulting practice) rebranded to?
A. Accenture
B. Protiviti
C. McCormick & Schmick's
D. Cotton & Company
What is answer A.
Before accepting an audit engagement, a CPA should evaluate whether conditions exist that raise questions as to the integrity of management. Which of the following conditions most likely would raise such questions?
A. There are significant differences between the entity's forecasted financial statements and the financial statements to be audited.
B. The CPA will not be permitted to have access to sensitive information regarding the salaries of senior management.
C. There have been substantial inventory write-offs just before the year end in each of the past four years.
D. The CPA becomes aware of the existence of related party transactions while reading the draft financial statements
What is answer B.
Which of the following statements is correct regarding a shareholder’s right to inspect corporate books and records?
A. Is absolute.
B. Is conditioned upon the demanding shareholder owning at least $5,000 worth of stock.
C. Requires that the demand to inspect be for a proper purpose.
What is answer C.
(FAR) - Dodd Co.'s debt securities at December 31 included available-for-sale securities with a cost basis of $24,000 and a fair value of $30,000. Dodd's income tax rate was 20%. What amount of unrealized gain or loss should Dodd recognize in its income statement at December 31?
A. $6,000 loss.
B. $0
C. $4,800 gain.
D. $6,000 gain.
What is answer B.
What year did Arthur Anderson surrender its firm CPA license?
A. 2000
B. 2001
C. 2002
D. 2004
What is answer C.
Which of the following factors most likely would cause a CPA not to accept a new audit engagement?
A. Management reputation for failing to provide schedules to prior auditors on a timely basis.
B. The CPA's inability to review the predecessor auditor's working papers.
C. Management's unwillingness to make all financial records available to the CPA.
D. The CPA's lack of understanding of the entity's operations and industry.
What is answer C.
Prime Corp. is an accrual-basis, calendar-year C corporation. Its current-year reported book income before federal income taxes was $300,000, which included $17,000 corporate bond interest income. A $20,000 expense for term life insurance premiums on corporate officers was incurred. Prime was the policy owner and beneficiary. What was Prime's current-year taxable income as reconciled on Prime's Schedule M-1, Reconciliation of Income (Loss) per Books With Income per Return, of Form 1120, U.S. Corporation Income Tax Return?
A. $320,000
B. $300,000
C. $283,000
D. $280,000
What is answer A.
Ace Co. issued 1,000 shares of its $10 par value common stock for $15 per share in cash. How should this transaction be reported in Ace's statement of cash flows for the year of issuance?
A. $15,000 cash inflow from financing activities.
B. $10,000 cash inflow from financing activities and $5,000 adjustment to arrive at cash flows from operating activities.
C. $15,000 cash flow from investing activities.
D. $10,000 cash flow from investing activities and $5,000 adjustment to arrive at cash flows from operating activities.
What is answer A.
CPA licenses are issued by
A. American Institute of Certified Public Accountants (AICPA)
B. National Association of State Boards of Accountancy (NASBA)
C. Individual States (e.g., Virginia Board of Accounting
D. Financial Accounting Standards Board (FASB)
What is answer C.