2024 – Question 1 When there is a justified departure from GAAP which is considered material the auditor should issue a n

 Question 1
 
  When there is a justified departure from GAAP which is considered material, the auditor should issue a(n):
   
 Question 2
 
  Under AICPA auditing standards, the primary auditor issuing the opinion on the financial statements is called the:
   
 Question 3
 
  The auditor’s responsibility section of the standard audit report states that the auditor is:
   
 Question 4
 
  The first step to be followed when deciding the appropriate audit report in a given set of circumstances is to:
   
 Question 5
 
  When a qualified or adverse opinion is issued, the qualifying paragraph is inserted:
   
 Question 6

  An audit of historical financial statements most commonly includes the:
   
 Question 7
 
  After the auditor determines whether any conditions exist which require a departure from a standard unqualified report, the next step in the decision process for audit reports is to:
   
 Question 8
 
  Items that materially affect the comparability of financial statements generally require disclosure in the footnotes. If the client refuses to properly disclose the item, the auditor will most likely issue:
   
 Question 9
 
  Auditing standards for public companies are established by the:
   
 Question 10
 
  The standard unqualified audit report for a non-public entity must:
   
 Question 11
 
  The auditor’s responsibility section of the standard unqualified audit report states that the audit is designed to:
   
 Question 12

  An adverse opinion is issued when the auditor believes:
   
 Question 13
 
  When dealing with materiality and scope limitation conditions:
   
 Question 14
0 out of 2 points
 
  Whenever the client imposes restrictions on the scope of the audit, the auditor should be concerned that management may be trying to prevent discovery of misstatements. In such cases, the auditor will likely issue a:
   
 Question 15
 
  The standard unqualified audit report:
   
 Question 16
 
  The underlying reason for a code of professional conduct for any profession is:
   
 Question 17
 
  Freedom from ________ means the absence of relationships that might interfere with objectivity or integrity.
   
 Question 18
 
  A CPA firm may charge a contingent fee for:
   
 Question 19
 
  When a member observes the profession’s technical and ethical standards and strives to continually improve her competence and quality of services, she is exercising:

   
 Question 20
 
  A six-step approach is often used to resolve an ethical dilemma. The first step in this process is to:
   
 Question 21
 
  An auditor’s independence is considered impaired if the auditor has:
   
 Question 22
 
  Interpretations of the rules regarding independence allow an auditor to serve as:
   
 Question 23
 
  ________ means that a person acts according to conscience, regardless of the situation.
   
 Question 24
 
  The financial interests of a CPA’s family members can affect the CPA’s independence. Which of the following parties would not be included as a “direct financial interest” of the CPA?
   
 Question 25
 
  The AICPA’s Code of Professional Conduct requires independence for all:
   
 Question 26
 
  The members of a client’s “audit committee” should be:
   
 Question 27
 
  “Independence” in auditing means:
   
 Question 28
 
  Several months after an unqualified audit report was issued, the auditor discovers the financial statements were materially misstated. The client’s CEO agrees that there are misstatements, but refuses to correct them. She claims that “confidentiality” prevents the CPA from informing anyone. Which of the following statements is correct?
   
 Question 29
 
  In determining independence with respect to any audit engagement, the ultimate decision as to whether or not the auditor is independent must be made by the:
 Question 30
 
  Rule 301 of the AICPA’s Code of Professional Conduct requires CPAs to maintain the confidentiality of client information. This rule would be violated if a CPA disclosed information without a client’s consent as a result of a:

Strayer University, Washington DC ACC 403 Quiz 4 Chp 9
 

•  Question 1
 
  The preliminary judgment about materiality and the amount of audit evidence accumulated are ________ related.
   
•  Question 2
 
  Auditors generally allocate the preliminary judgment about materiality to the:
   
•  Question 3
 
  If an auditor establishes a relatively high level for materiality, then the auditor will:
   
•  Question 4
 
  Auditors frequently refer to the terms audit assurance, overall assurance, and level of assurance to refer to ________.
   
•  Question 5
 
  Auditors typically rely on internal controls of their private company clients:
   
•  Question 6
 
  Why do auditors establish a preliminary judgment about materiality?
   
•  Question 7
 
  Inherent risk and control risk:
   
•  Question 8
 
  As the risk of material misstatement increases, detection risk should:
   
•  Question 9
 
  When management has an adequate level of integrity for the auditor to accept the engagement but cannot be regarded as completely honest in all dealings, auditors normally:
   
•  Question 10
 
  As the acceptable level of detection risk increases, an auditor may change the:
   
•  Question 11
 
  When the auditor is attempting to determine the extent to which external users rely on a client’s financial statements, they may consider several factors except for:
   
•  Question 12
 
  When auditors allocate the preliminary judgment about materiality to account balances, the materiality allocated to any given account balance is referred to as:
   
•  Question 13
 
  If it is probable that the judgment of a reasonable person will be changed or influenced by the omission or misstatement of information, then that information is, by definition of FASB Statement No. 2:
   
•  Question 14
 
  When taken together, the concepts of risk and materiality in auditing:
   
•  Question 15
 
  Inherent risk is ________ related to detection risk and ________ related to the amount of audit evidence.
   

Strayer University, Washington DC ACC 403 Quiz 5 Chp 10-11
 

 Question 1
 
  Which of the following components of the control environment define the existing lines of responsibility and authority?
   
 Question 2
 
  Which of the following is responsible for establishing a private company’s internal control?
   
 Question 3
 
  Reasonable assurance allows for:
   
 Question 4
 
  Narratives, flowcharts, and internal control questionnaires are three common methods of:
   
 Question 5
 
  Internal controls normally include procedures designed to provide reasonable assurance that:
   
 Question 6
 
  Proper segregation of functional responsibilities calls for separation of:
   
 Question 7
 
  When the auditor attempts to understand the operation of the accounting system by tracing a few transactions through the accounting system, the auditor is said to be:
   
 Question 8
 
  The PCAOB places responsibility for the reliability of internal controls over the financial reporting process on:
   
 Question 9
 
  When determining what type of report to issue on internal control under Section 404:
   
 Question 10
 
  Internal controls:
   
 Question 11
 
  Two key concepts that underlie management’s design and implementation of internal control are:

   
 Question 12
 
  The employee in charge of authorizing credit to the company’s customers does not fully understand the concept of credit risk. This lack of knowledge would constitute:
   
 Question 13
 
  A five-step approach can be used to identify deficiencies, significant deficiencies, and material weaknesses. The first step in this approach is:
   
 Question 14
 
  Internal controls can never be regarded as completely effective. Even if company personnel could design an ideal system, its effectiveness depends on the:
   
 Question 15
 
  Sarbanes-Oxley requires management to issue an internal control report that includes two specific items. Which of the following is one of these two requirements?
   
 Question 16
 
  A company is concerned with the theft of cash after the sale has been recorded. One way in which fraudsters conceal the theft is by a process called “lapping.” Which of the following best describes lapping?
   
 Question 17
 
  Fraud is more prevalent in smaller businesses and not-for-profit organizations because it is more difficult for them to maintain:
   
 Question 18
 
  Fictitious revenues:
   
 Question 19
 
  Misappropriation of assets is normally perpetrated by:
 Question 20
 
  When assessing the risk for fraud, the auditor must be cognizant of the fact that:
   
 Question 21
 
  Two of the most useful warning signals that can indicate that revenue fraud is occurring are:
 Question 22

  Analytical procedures can be very effective in detecting inventory fraud. Which of the following analytical procedures would not be useful in detecting fraud?
   
 Question 23
 
  Most cases of fraudulent reporting involve:
   
 Question 24
 
  Which of the following is a factor that relates to attitudes or rationalization to commit fraudulent financial reporting?
   
 Question 25
 
  Which of the following parties is responsible for implementing internal controls to minimize the likelihood of fraud?
   
 Question 26
 
  Company management is often under pressure to increase revenue and/or net income. One approach is to use a “bill and hold” arrangement. This is an example of which of the following?
   
 Question 27
 
  Which of the following is not a factor that relates to opportunities to misappropriate assets?
   
 Question 28
 
  Who is most likely to perpetrate fraudulent financial reporting?
   
 Question 29
 
  Which of the following is a factor that relates to incentives to misappropriate assets?
   
 Question 30
 
  ________ is fraud that involves theft of an entity’s assets.

Strayer University, Washington DC ACC 403 Quiz 6 Chp 12-13

 Question 1
 
  Which of the following is a component of general controls?
   
 Question 2
 
  Programmers should be allowed access to:
   
 Question 3
 
  An example of a physical control is:
   
 Question 4
 
  Old and new systems operating simultaneously in all locations is a test approach known as:
   
 Question 5
 
  An internal control deficiency occurs when computer personnel:
   
 Question 6
 
  A ________ total represents the summary total of codes from all records in a batch that do not represent a meaningful total.
   
 Question 7
 
  Which of the following describes the process of implementing a new system in one part of the organization, while other locations continue to use the current system?
   
 Question 8
 
  A database management system:
   
 Question 9
 
  The continued integration of IT in accounting systems can impact a company by:
   
 Question 10
 
  A control that relates to all parts of the IT system is called a(n):
 Question 11
 
  Controls that are designed for each software application and are intended to help a company satisfy the transaction-related audit objectives are:
   
 Question 12
 
  General controls may include firewalls which are used to protect from:
   
 Question 13
 
  Which of the following computer-assisted auditing techniques inserts an audit module in the client’s application system to identify specific types of transactions?
   
 Question 14
 
  The audit approach in which the auditor runs his or her own program on a controlled basis to verify the client’s data recorded in a machine language is:
   
 Question 15
 
  ________ is not a risk specific to the IT environments.
   
 Question 16
 
  An increased extent of tests of controls is most likely to occur when:
   
 Question 17
 
  Analytical procedures must be performed in:
   
 Question 18
 
  Which of the following audit tests is usually the least costly to perform?
   
 Question 19
 
  When the auditor has completed the tests of details of balances and enters phase 4 of the audit process, she must still perform audit procedures for which of the following?
   
 Question 20
 
  Management implements internal controls to ensure that all required footnote disclosures are accurate. Auditors tests those controls to provide evidence supporting the ________ presentation.
   
 Question 21
 
  If tests of controls support the control risk assessment, then ________ in the audit risk model is increased.
   
 Question 22
 
  In order to promote audit efficiency the auditor considers cost in selecting audit tests to perform. Which of the following audit tests would be the most costly?
   
 Question 23
 
  Which of the following procedures would most likely be performed in response to the auditor’s assessment of the risk of monetary misstatements in the financial statements?
   
 Question 24
 
  At what point in the audit process are tests of details most appropriately designed?
 Question 25
 
  If no material differences are found using analytical procedures and the auditor concludes that misstatements are not likely to have occurred:
   
 Question 26
 
  Transaction related audit objectives would most likely be performed in which phase of the audit process?
   
 Question 27
 
  The reliance the auditor places on substantive tests in relation to the reliance placed on internal control varies in a relationship that is ordinarily:
   
 Question 28
 
  The document that details the specific audit procedures for each type of test is the:
 Question 29
 
  An exception or deficiency found in a test of controls:
   
 Question 30
 
  Which of the following is ordinarily designed to detect material dollar errors on the financial statements?

Strayer University, Washington DC ACC 403 Quiz 7 Chp 14 -15

 Question 1
 
  The document that accompanies the customer’s payment is the:
   
 Question 2
 
  Before goods are shipped on account, a properly authorized person must:
   
 Question 3
 
  Credit memos are normally issued to:
   
 Question 4
 
  Who is generally responsible for opening receipts when a company uses a lockbox to speed the handling of cash receipts?
   
 Question 5
 
  The auditor’s objectives for the sales and cash collections activities when the client is primarily an e-commerce business as compared to a “bricks and mortar” business are:
   
 Question 6
 
  A document prepared to initiate shipment of the goods sold by an independent shipper is the:
   
 Question 7
 
  What event initiates a transaction in the sales and collection cycle?
   
 Question 8
 
  To test for recorded sales for which there were no actual shipments, the auditor vouches from the:
   
 Question 9
 
  Generally, when is the earliest point in the sales and collection cycle in which revenue can be recognized?
   
 Question 10
 
  A document sent to each customer showing his or her beginning accounts receivable balance and the amount and date of each sale, cash payment received, any debit or credit memo issued, and the ending balance is the:
   
 Question 11
 
  What critical event must take place before goods can be shipped in order to assure payment can be reasonably expected?
   
 Question 12
 
  Most companies recognize sales revenue when:
   
 Question 13
 
  Which of the following is not a business function within the “Sales” class of transactions?
   
 Question 14
 
  When an employee who is authorized to make customer entries in the accounts receivable subsidiary ledger, purposefully enters cash received into the wrong customer’s account that employee may be suspected of:
   
 Question 15
 
  The audit procedure referred to as proof of cash receipts is particularly useful to test:
   
 Question 16
 
  In systematic sample selection, the population size is divided by the number of sample items desired in order to determine the:
   
 Question 17
 
  Which of the following is the risk that audit tests will not uncover existing exceptions in a sample?
   
 Question 18
 
  There are three phases in both statistical and nonstatistical sampling. The first phase is to:
 Question 19
 
  Attributes sampling is based on the ________ distribution, in which each possible sample in the population has one of two possible values, such as yes or no.
   
 Question 20
 
  The acceptable risk of overreliance:
   
 Question 21
 
  When the auditor decides to select less than 100 percent of the population for testing, the auditor is said to use:
   
 Question 22
 
  Which of the following occurrences would be least likely to warrant further audit attention for the auditor?
   
 Question 23
 
  Which of the following is the risk that an auditor will reach an incorrect conclusion because a sample is not representative of the population?
   
 Question 24
 
  When auditors wish to evaluate a sample statistically, an acceptable selection method is:
   
 Question 25
 
  When the auditor goes through a population and selects items using nonprobabilistic selection methods, without regard to their size, source, or other distinguishing characteristics, it is called:
   
 Question 26
 
  If the auditor decides to assess control risk at the moderate level in a private company audit, when in previous years the auditor set control risk at the maximum level, then tests of controls for the current year would be:
   
 Question 27
 
  The most serious shortcoming of the haphazard sample selection method is:
 Question 28
 
  The exception rate the auditor will permit in the population and still be willing to reduce the assessed level of control risk is called the:
   
 Question 29
 
  To determine if a sample is truly representative of the population, an auditor would be required to:
   
 Question 30

  Attributes sampling would be an appropriate method to use on which one of the following procedures in an audit program?

Strayer University, Washington DC ACC 403 Quiz-Chapter-21-24
Question 1

 

  Testing the information on the aged trial balance for detail tie-in is a necessary audit procedure, which would normally include:

 

  

 Question 2

 

  Which of the following is the principle “weakness” of using negative confirmations for your tests of details of balances for accounts receivable?

  

 Question 3

 

  Most tests of accounts receivable are based on what schedule, file, or listing?

  

 Question 4

 

  When do most companies record sales returns and allowances?

  

 Question 5

 

  Audit procedures designed to uncover credit sales made after the client’s fiscal year end that relate to the current year being audited provide evidence for which of the following audit objective?

  

 Question 6

 

  Tests of which balance-related audit objective are normally performed first in an audit of the sales and collection?

  

 Question 7

 

  The correct accounting for accounts receivable accounts with credit balances, provided they are significant, would be:

  

 Question 8

 

  An auditor is performing a credit analysis of customers with balances over 60 days due. She is most likely obtaining evidence for which audit related objective?

  

 Question 9

 

  In performing your audit you noticed that often times goods are shipped that are not matched with the corresponding sales invoice. This control deficiency could cause:

  

 Question 10

 

  For cash receipts, the occurrence transaction-related audit objective affects which of the following balance-related audit objective?

  

 Question 11

 

  An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared. This test is performed to satisfy the audit objective of:

  

 Question 12

 

  The audit procedure of tracing sales invoices to shipping documents will provide the auditor evidence that:

 

 Question 13

 

  The most important test of details of balances to determine the existence of recorded accounts receivable is:

  

 Question 14

 

  For most audits, inherent risk for accounts receivable is moderate or low except for which balance-related audit objectives?

  

 Question 15

 

  Cutoff misstatements occur when:

  

 Question 16

 

  Tests for rates of occurrence are appropriately used in all but which of the following situations?

  

 Question 17

 

  If acceptable audit risk is increased, acceptable risk of incorrect acceptance should be:

  

 Question 18

 

  Which of the following is not a type of statistical method that provides results in dollar terms?

  

 Question 19

 

  The method used to measure the estimated total error amount in a population when there is both a recorded value and an audited value for each item in the sample is:

  

 Question 20

 

  What is the purpose of applying stratified sampling to a population?

  

 Question 21

 

  The final step in the evaluation of the audit results is the decision to:

  

 Question 22

 

  In estimating the population misstatement, the first step in projecting from the sample to the population is to:

  

 Question 23

 

  You are auditing Nelson and Company and determined that the sample results support a conclusion that the account is materially misstated, when in fact it was not misstated. This illustrates the risk of:

  

 Question 24

 

  As the amount of misstatements expected in the population approaches tolerable misstatement, the planned sample size will:

  

 Question 25

 

  The auditor is concerned with the audited value rather than the error amount of each item in the sample when using:

  

 Question 26

 

  When selecting a sample size for substantive tests of balances which factor, other factors being equal, would result in a larger sample?

  

 Question 27

 

  The risk the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance under audit is greater than the tolerable misstatement is:

  

 Question 28

 

  When errors are found in a sample, auditors in practice generally make the assumption:

 Question 29

 

  Which of the following does not have to be considered in determining the initial sample size of a test of details?

  

 Question 30

 

  The auditor’s principal objective when using a sample of tests of details of balances is whether the:

 

 

1. The most important general ledger account included in and affecting several cycles is the: (Points : 10)
       cash account.
       inventory account.
       income tax expense and liability accounts.
       retained earnings account.
2. The detail tie-in is part of the_______ assertion for account balances. (Points : 10)
       classification
       valuation and allocation
       rights and obligations
       completeness
3. Management assertions are: (Points : 10)
       implied or expressed representations about accounts, transactions, and disclosures in the financial statements.
       stated in the footnotes to the financial statements.
       explicitly expressed representations about the financial statements.
       provided to the auditor in the assertions letter, but are not disclosed on the financial statements.
4. The occurrence assertion applies to _______. (Points : 10)
       presentation and disclosure matters
       classes of transactions and events during the period
       account balances
       proper classification of income statement accounts
5. The detail tie-in objective is not concerned that the details in the account balance: (Points : 10)
       agree with related subsidiary ledger amounts.

       are properly disclosed in accordance with GAAP.
       foot to the total in the account balance.
       agree with the total in the general ledger.

6. Which of the following statements about the existence and completeness assertions is not true? (Points : 10)
       The existence and completeness assertions emphasize different audit concerns.
       Existence deals with overstatements and completeness deals with understatements.
       Existence deals with understatements and completeness deals with overstatements.
       The completeness assertion deals with unrecorded transactions.
7. To be considered reliable evidence, confirmations must be controlled by: (Points : 10)
       a client employee responsible for accounts receivable.
       a financial statement auditor.
       a client’s internal audit department.
       a client’s controller or CFO.
8. Which of the following is not one of the major types of analytical procedures? (Points : 10)
       Compare client with industry averages.
       Compare client with prior year.
       Compare client with budget.
       Compare client with SEC averages.
9. The primary purpose of performing analytical procedures in the planning phase of an audit is to: (Points : 10)
       help the auditor obtain an understanding of the client’s industry and business.
       assess the going concern assumption.
       indicate possible misstatements.
       reduce detailed tests.
10. The Auditing Standards Board has concluded that analytical procedures are so important that they are required during: (Points : 10)
       planning and test of control phases.
       planning and completion phases.
       test of control and completion phases.
       planning, test of control, and completion phases.
11. Which of the following is not a correct combination of terms and related type of audit evidence? (Points : 10)
       Foot – reperformance.
       Compare – documentation.
       Vouch – documentation.
       Trace – analytical procedures.
12. Which of the following statements regarding analytical procedures is not correct? (Points : 10)
       Analytical tests emphasize a comparison of client internal controls to GAAP.
       Analytical procedures are required on all audits.
       Analytical procedures can be used as substantive tests.
       For certain accounts with small balances, analytical procedures alone may be sufficient evidence.
13. Which of the following normally signs the engagement letter for an audit of a public company? (Points : 10)
       Corporate treasurer.
       Chief financial officer.
       Chairman of the board of directors.
       Audit committee.
14. Which of the following is not likely to be a related party? (Points : 10)
       Affiliated companies.
       A major stockholder of the company.
       A warehouse employee.
       The chief executive officer.
15. An engagement letter sent to an audit client usually would not include a(n): (Points : 10)
       reference to the auditor’s responsibility for the detection of errors or irregularities.
       estimation of the time to be spent on the audit work by audit staff and management.
       statement that management advisory services would be made available upon request.
       reference to management’s responsibility for the financial statements.
16. Which of the following statements is not correct with respect to analytical procedures? (Points : 10)
       Auditing standards emphasize the need for auditors to develop and use expectations.
       Analytical procedures must be performed throughout the audit.
       Analytical procedures may be performed at any time during the audit.
       Analytical procedures use comparisons and relationships to assess whether account balances appear reasonable.

17. Which of the following is correct with respect to a company’s corporate charter? (Points : 10)
       The corporate charter is granted by the federal government and is required to recognize the corporation as a separate entity.
       The corporate charter includes the rules and procedures used to operate a corporation.
       The corporate charter includes the exact name of the corporation, the date of incorporation, and the types of business the corporation is authorized to conduct.
       The corporate charter must be annually reviewed by the PCAOB.
18. The first standard of field work, which states that the work is to be adequately planned and that assistants, if any, are to be properly supervised, recognizes that: (Points : 10)
       early appointment of the auditor is advantageous to the auditor and the client.
       acceptance of an audit engagement after the close of the client’s fiscal year is generally not permissible.
       appointment of the auditor subsequent to the physical count of inventories requires a             disclaimer of opinion.
       performance of substantial parts of the examination is necessary at interim dates.
19. One accounting issue that does not require management to use significant judgments is: (Points : 10)
       the allowance for doubtful accounts.
       the useful life of equipment for tax purposes.
       obsolete inventory.
       the liability for warranty payments.
20. Acceptable audit risk is ordinarily set by the auditor during planning and: (Points : 10)
       held constant for each major cycle and account.
       held constant for each major cycle but varies by account.
       varies by each major cycle and by each account.
       varies by each major cycle but is constant by account.
21. If planned detection risk is reduced, the amount of evidence the auditor accumulates will: (Points : 10)
       increase.
       decrease.
       remain unchanged.
       be indeterminate.
22. When discussing control risk (CR) and the audit risk model, which of the following is false? (Points : 10)
       CR is a measure of the auditor’s assessment of the likelihood that misstatements will not be prevented or detected by internal control.
       If the auditor concludes that internal control is completely ineffective to prevent or detect errors, he/she would assign a low value (e.g., 0%) to CR.
       The relationship between control risk and detection risk is inverse.
       The relationship between control risk and evidence needed to support account balances is direct.
23. When setting a preliminary judgment about materiality: (Points : 10)
       more evidence is required for a low dollar amount than for a high dollar amount.
       less evidence is required for a low dollar amount than for a high dollar amount.
       the same amount of evidence is required for either low or high dollar amounts.
       there is no relationship between it and the dollar amount of evidence needed.
                                 
                                 
Chapter 13

24. To what extent do auditors typically rely on internal controls of their public company clients? (Points : 10)
       Extensively
       Only very little
       Infrequently
       Never
25. A procedure designed to test for monetary misstatements directly affecting the correctness of financial statement balances is a: (Points : 10)
       test of controls.
       substantive test.
       test of attributes.
       monetary-unit sampling test.
26. Tests of transactions are used to determine whether ___________ have been satisfied. (Points : 10)
       compliance test requirements.
       balance coverage requirements.
       transaction-related audit objectives.
       existence assertions
27. When the auditor finds that there are missing controls in an area of the accounting system, the audit program in that area would be modified in such a way as to: (Points : 10)
       increase the amount of tests of controls.
       increase the reliance on tests of controls.
       cause the issuance of a qualified or adverse opinion.
       eliminate the need for a test of controls.
28. Which of the following is not appropriate for purposes of testing the effectiveness of controls? (Points : 10)
       Make inquiries of client personnel.
       Evaluate prior experience with the client.
       Observe control-related activities.
       Reperform client procedures.
29. The primary emphasis in most tests of details of balances is on the: (Points : 10)
       balance sheet accounts.
       revenue accounts.
       cash flow statement accounts.
       expense accounts.
30. The most important consideration in developing the audit plan and audit program is the: (Points : 10)
       client’s size.
       client’s industry.
       audit firm’s available personnel.
       the audit risk model used in its planning form.

 

Strayer University, Washington DC ACC 403 Final Exam 1 Chp. 9-13

  
Course Auditing I
Test Final Exam Part 1

 Question 1
6 out of 6 points
 
  If an auditor believes the chance of financial failure is high and there is a corresponding increase in business risk for the auditor, acceptable audit risk would likely:
   
 Question 2
6 out of 6 points
 
  The preliminary judgment about materiality and the amount of audit evidence accumulated are ________ related.
   
 Question 3
6 out of 6 points
 
  Auditors generally allocate the preliminary judgment about materiality to the:
   
 Question 4
6 out of 6 points
 
  Auditors are ________ to document the known and likely misstatements in the financial statements under audit.
 Question 5
6 out of 6 points
 
  An auditor who audits a business cycle that has low inherent risk should:
   
 Question 6
6 out of 6 points
 
  When one material weakness is present at the end of the year, management of a public company must conclude that internal control over financial reporting is:
   
 Question 7
6 out of 6 points
 
  An audit procedure that would most likely be used by an auditor in performing tests of control procedures in which the segregation of functions and that leaves no “audit” trail is:
   
 Question 8
6 out of 6 points
 
  Which of the following is responsible for establishing a private company’s internal control?
 
 Question 9
6 out of 6 points
 
  Internal controls normally include procedures designed to provide reasonable assurance that:
   
 Question 10
6 out of 6 points
 
  Internal controls:
   
 Question 11
6 out of 6 points
 
  Financial statement manipulation risk is arguably present for all companies’ financial statements. However, the risk is elevated for companies that:
 Question 12
6 out of 6 points
 
  Which of the following is not a factor that relates to opportunities to misappropriate assets?
 Question 13
6 out of 6 points
 
  Two of the most useful warning signals that can indicate that revenue fraud is occurring are:
 Question 14
6 out of 6 points
 
  In the fraud triangle, fraudulent financial reporting and misappropriation of assets:
   
 Question 15
6 out of 6 points
 
  Which of the following is a factor that relates to incentives to misappropriate assets?
 Question 16
6 out of 6 points
 
  The audit approach in which the auditor runs his or her own program on a controlled basis to verify the client’s data recorded in a machine language is:

   
 Question 17
0 out of 6 points
 
  Auditors should evaluate which of the following before evaluating application controls because of the potential for pervasive effects?
 Question 18
6 out of 6 points
 
  Which of the following is a component of general controls?
   
 Question 19
6 out of 6 points
 
  General controls may include firewalls which are used to protect from:
   
 Question 20
6 out of 6 points
 
  An internal control deficiency occurs when computer personnel:
   
 Question 21
6 out of 6 points
 
  Analytical procedures:
   
 Question 22
6 out of 6 points
 
  In the context of an audit of financial statements, substantive tests are audit procedures that:
   
 Question 23
6 out of 6 points
 
  A system walkthrough is primarily used to help the auditor:
   
 Question 24
6 out of 6 points
 
  Which of the following audit tests is usually the least costly to perform?
 Question 25
   

Strayer University, Washington DC ACC 403 Final Exam 2 Chp. 14-17 & 21&24

 
Course Auditing I
Test Final Exam Part 2
 

 Question 1
 
  What critical event must take place before goods can be shipped in order to assure payment can be reasonably expected?
   
 Question 2

 
  When designing audit procedures, tracing of source documents to the customers subsidiary ledger and subsequently to the general ledger is done to satisfy what assertion?
   
 Question 3
 
  The audit procedure referred to as proof of cash receipts is particularly useful to test:
   
 Question 4
 
  When an employee who is authorized to make customer entries in the accounts receivable subsidiary ledger, purposefully enters cash received into the wrong customer’s account that employee may be suspected of:
   
 Question 5
 
  A document sent to each customer showing his or her beginning accounts receivable balance and the amount and date of each sale, cash payment received, any debit or credit memo issued, and the ending balance is the:
   
 Question 6
 
  One of the causes of nonsampling risk is:
   
 Question 7
 
  A sample in which every possible combination of items in the population has an equal chance of constituting the sample is a:
   
 Question 8
 
  To determine if a sample is truly representative of the population, an auditor would be required to:
   
 Question 9
 
  When the auditor decides to select less than 100 percent of the population for testing, the auditor is said to use:
   
 Question 10

  Which of the following would have the least impact in determining sample size?
   
 Question 11
 
  When do most companies record sales returns and allowances?
   
 Question 12
 
  Analytical procedures:
   
 Question 13
 
  The audit procedure that provides the auditor with the most appropriate evidence when performing test of details of balances for accounts receivable is:
   
 Question 14
 
  Most tests of accounts receivable are based on what schedule, file, or listing?
   
 Question 15
 
  The two primary classes of transactions in the sales and collection cycle are:
   
 Question 16
 
  The appropriate assumption to make regarding the overall percent of error in those population items containing an error is:
   
 Question 17

 
  The method used to measure the estimated total error amount in a population when there is both a recorded value and an audited value for each item in the sample is:
   
 Question 18
 
  The auditor is concerned with the audited value rather than the error amount of each item in the sample when using:
   
 Question 19
 
  The allowance for sampling risk when no misstatements are found in the sample is:
   
 Question 20
 
  The most commonly used method of statistical sampling for tests of details of balances is:
   
 Question 21
 
  Which of the following is a significant audit concern related to the transfer of inventory from one location to another?
   
 Question 22
 
  A major difficulty in the verification of inventory cost records for the purpose of inventory valuation is in determining the reasonableness of the:
   
 Question 23
 
  In most manufacturing companies, the inventory and warehousing cycle begins with the:
   
 Question 24
 
  When determining the sample size for the number of items the auditor should count during the physical inventory:
   
 Question 25
 
  The inventory and warehousing cycle can be thought of as having two separate but closely related systems, one involving the actual physical flow of goods, and the other the:
   
 Question 26
 
  The standard letter of inquiry to the client’s legal counsel should be prepared on:
   
 Question 27
 
  Auditing standards require the auditor to communicate all management frauds and illegal acts to the audit committee:
   
 Question 28
 
  A client representation letter is:
   
 Question 29
 
  At the completion of the audit, management is asked to make a written statement that it is not aware of any undisclosed contingent liabilities. This statement would appear in the:
   
 Question 30
 
  Which of the following subsequent events is most likely to result in an adjustment to a company’s financial statements?