Question 1<\/p>\n
In “auditing” financial accounting data, the primary concern is with:<\/p>\n
Answer<\/p>\n
determining whether recorded information properly reflects the economic events that occurred during the accounting period<\/p>\n
determining if fraud has occurred..<\/p>\n
determining if taxable income has been calculated correctly.<\/p>\n
analyzing the financial information to be sure that it complies with government requirements.<\/p>\n
Question 2<\/p>\n
The Sarbanes-Oxley Act applies to which of the following companies?<\/p>\n
Answer<\/p>\n
All companies<\/p>\n
Privately held companies<\/p>\n
Public companies<\/p>\n
All public companies and privately held companies with assets greater than $500 million<\/p>\n
Question 3<\/p>\n
Which of the following isnotaSysTrustServices principle as defined by the AICPA?<\/p>\n
Answer<\/p>\n
Online privacy<\/p>\n
Availability<\/p>\n
Processing integrity<\/p>\n
Operational integrity<\/p>\n
Question 4<\/p>\n
Which of the following services provides the lowest level of assurance on a financial statement?<\/p>\n
Answer<\/p>\n
A review<\/p>\n
An audit<\/p>\n
Neither service provides assurance on financial statements.<\/p>\n
Each service provides the same level of assurance on financial statements.<\/p>\n
Question 5<\/p>\n
An accountant:<\/p>\n
Answer<\/p>\n
must possess expertise in the accumulation of audit evidence.<\/p>\n
must decide the number and types of items to test.<\/p>\n
must have an understanding of the principles and rules that provide the basis for preparing the accounting information.<\/p>\n
must be a CPA.<\/p>\n
Question 6<\/p>\n
Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called:<\/p>\n
Answer<\/p>\n
finance.<\/p>\n
auditing.<\/p>\n
accounting.<\/p>\n
economics.<\/p>\n
Question 7<\/p>\n
Any service that requires a CPA firm to issue a report about the reliability of an assertion that is made by another party is a(n):<\/p>\n
Answer<\/p>\n
accounting and bookkeeping service.<\/p>\n
attestation service.<\/p>\n
assurance service.<\/p>\n
tax service.<\/p>\n
Question 8<\/p>\n
The use of the Certified Public Accountant title is regulated by:<\/p>\n
Answer<\/p>\n
the federal government.<\/p>\n
state law through a licensing department or agency of each state.<\/p>\n
the American Institute of Certified Public Accountants through the licensing departments of the tax and auditing committees.<\/p>\n
the Securities and Exchange Commission.<\/p>\n
Question 9<\/p>\n
The most common way for users to obtain reliable information is to:<\/p>\n
Answer<\/p>\n
have an internal audit.<\/p>\n
have an independent audit.<\/p>\n
verify all information individually.<\/p>\n
verify the information with management.<\/p>\n
Question 10<\/p>\n
An examination of part of an organization’s procedures and methods for the purpose of evaluating efficiency and effectiveness is what type of audit?<\/p>\n
Answer<\/p>\n
Operational audit<\/p>\n
Compliance audit<\/p>\n
Financial statement audit<\/p>\n
Production audit<\/p>\n
Question 11<\/p>\n
One objective of an operational audit is to:<\/p>\n
Answer<\/p>\n
determine whether the financial statements fairly present the entity’s operations.<\/p>\n
determine if the auditee is in compliance with GAAP.<\/p>\n
make recommendations for improving performance.<\/p>\n
report on the entity’s relative success in attaining profit maximization.<\/p>\n
Question 12<\/p>\n
Which of the following is considered audit evidence?<\/p>\n
Answer<\/p>\n
Oral statements <\/p>\n
made by management Written<\/p>\n
Communications Auditor<\/p>\n
Observation<\/p>\n
Y N N<\/p>\n
Oral statements<\/p>\n
made by management Written<\/p>\n
Communications Auditor<\/p>\n
Observation<\/p>\n
N Y Y<\/p>\n
Oral statements<\/p>\n
made by management Written<\/p>\n
Communications Auditor<\/p>\n
Observation<\/p>\n
Y Y Y<\/p>\n
Oral statements<\/p>\n
made by management Written<\/p>\n
Communications Auditor<\/p>\n
Observation<\/p>\n
N N Y<\/p>\n
Question 13<\/p>\n
An audit to determine whether an entity is following specific procedures or rules set down by some higher authority is classified as a(n):<\/p>\n
Answer<\/p>\n
audit of financial statements.<\/p>\n
compliance audit.<\/p>\n
operational audit.<\/p>\n
production audit.<\/p>\n
Question 14<\/p>\n
A correct relationship among the auditor, the client, and the external users is:<\/p>\n
Answer<\/p>\n
management of a public company hires the independent auditor.<\/p>\n
the audit committee of a private company hires the independent auditor.<\/p>\n
the client provides capital to the external users.<\/p>\n
the external users can rely upon the auditor’s report to reduce information risk.<\/p>\n
Question 15<\/p>\n
Three common types of attestation services are:<\/p>\n
Answer<\/p>\n
audits of historical financial statements, reviews of historical financial statements, and audits of internal control over financial reporting.<\/p>\n
audits of historical financial information, verifications of historical financial information, and attestations regarding internal controls.<\/p>\n
reviews of historical financial information, verifications of future financial information, and attestations regarding internal controls.<\/p>\n
audits of historical financial information, reviews of controls related to investments, and verifications of historical financial information.<\/p>\n
Question 16<\/p>\n
The methods used by a CPA firm to ensure that the firm meets is professional responsibilities to clients and others is:<\/p>\n
Answer<\/p>\n
continuing professional education.<\/p>\n
compliance with generally accepted reporting standards.<\/p>\n
quality control.<\/p>\n
peer review.<\/p>\n
Question 17<\/p>\n
Hansen Corporation’s stock is listed on a national stock exchange and registered with the Securities and Exchange Commission. Hansen’s management hires a CPA to perform an independent audit of Hansen’s financial statements. The primary objective of this audit is to provide assurance to the:<\/p>\n
Answer<\/p>\n
investors in Hansen Corporation’s stock.<\/p>\n
stock exchange.<\/p>\n
Securities and Exchange Commission.<\/p>\n
management of Hansen Corporation.<\/p>\n
Question 18<\/p>\n
Members of the Public Company Accounting Oversight Board are appointed and overseen by:<\/p>\n
Answer<\/p>\n
the U.S. Congress.<\/p>\n
the American Institute of Certified Public Accountants.<\/p>\n
the Auditing Standards Board<\/p>\n
the Securities and Exchang e Commission.<\/p>\n
Question 19<\/p>\n
The International Standards on Auditing (ISAs):<\/p>\n
Answer<\/p>\n
are issued by the AICPA.<\/p>\n
override a country’s regulations governing the audit of a company.<\/p>\n
has many of the same standards as the Auditing Standards Board (ASB).<\/p>\n
must be followed by companies whose stock is traded in the U.S.<\/p>\n
Question 20<\/p>\n
To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, the auditor must fulfill several performance responsibilities, including:<\/p>\n
Answer<\/p>\n
verifying that all audit work is performed by a CPA with a minimum of three years experience.<\/p>\n
obtaining sufficient, appropriate audit evidence.<\/p>\n
exercising professional judgment.<\/p>\n
providing an opinion on the financial statements.<\/p>\n
Question 21<\/p>\n
The legal right to perform audits is granted to a CPA firm by regulation of:<\/p>\n
Answer<\/p>\n
each state.<\/p>\n
the Financial Accounting Standards Board (FASB).<\/p>\n
the American Institute of Certified Public Accountants (AICPA).<\/p>\n
the Audit Standards Board.<\/p>\n
Question 22<\/p>\n
The purpose of establishing quality control policies and procedures to accept or continue a client relationship is to:<\/p>\n
Answer<\/p>\n
provide reasonable assurance that personnel are adequately trained to fulfill their responsibilities.<\/p>\n
monitor the risk factors concerning misstatements that arise from the misappropriation of assets.<\/p>\n
document objective criteria for the CPA firm’s peer review.<\/p>\n
minimize the likelihood of associating with a client whose management may lack integrity.<\/p>\n
Question 23<\/p>\n
The form that must be completed and filed with the Securities and Exchange Commission whenever a company experiences a significant event that is of interest to public investors is the:<\/p>\n
Answer<\/p>\n
Form S-1.<\/p>\n
Form 8-K.<\/p>\n
Form 10-K.<\/p>\n
Form 10-Q.<\/p>\n
Question 24<\/p>\n
Statements on Standards for Accounting and Review Services are issued by the:<\/p>\n
Answer<\/p>\n
Accounting and Review Services Committee.<\/p>\n
Professional Ethics Executive Committee.<\/p>\n
Securities and Exchange Commission.<\/p>\n
Financial Accounting Standards Board.<\/p>\n
Question 25<\/p>\n
For privately held companies who is responsible for establishing auditing standards?<\/p>\n
Answer<\/p>\n
Securities and Exchange Commission<\/p>\n
Public Company Accounting Oversight Board<\/p>\n
Auditing Standards Board<\/p>\n
National Association of Accounting<\/p>\n
Question 26<\/p>\n
Standards issued by the Public Company Accounting Oversight Board must be followed by CPAs who audit:<\/p>\n
Answer<\/p>\n
both private and public companies.<\/p>\n
public companies only.<\/p>\n
private companies, public companies, and nonprofit entities.<\/p>\n
private companies only.<\/p>\n
Question 27<\/p>\n
The organization that is responsible for providing oversight for auditors of public companies is called the ________.<\/p>\n
Answer<\/p>\n
Auditing Standards Board<\/p>\n
American Institute of Certified Public Accountants <\/p>\n
Public Oversight Board<\/p>\n
Public Company Accounting Oversight Board<\/p>\n
Question 28<\/p>\n
The “Principles Underlying an Audit in Accordance with Generally Accepted Auditing Principles” provides a framework to help auditors:<\/p>\n
Answer<\/p>\n
understand the ten GAAS standards.<\/p>\n
obtain complete assurance that the financial statements are free from any error.<\/p>\n
report on the financial statements.<\/p>\n
prevent fraud.<\/p>\n
Question 29<\/p>\n
Historically auditing standards have been organized into three categories, including:<\/p>\n
Answer<\/p>\n
Standards of field work.<\/p>\n
Purpose of an audit.<\/p>\n
Responsibilities of the auditor.<\/p>\n
Proper planning and supervision.<\/p>\n
Question 30<\/p>\n
When assessing the risk of material misstatements in the financial statements,<\/p>\n
Answer<\/p>\n
inadequate internal control procedures will mitigate client business risk.<\/p>\n
GAAS specifies in detail how much and what types of evidence the auditor needs to obtain.<\/p>\n
company management is responsible for determining materiality levels.<\/p>\n
the auditor must have an understanding of the client’s business and industry.<\/p>\n","protected":false},"excerpt":{"rendered":"
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