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ACC 403 FINAL EXAMINATION

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Question;1. The most important general ledger account included in and affecting several cycles is the;A. cash account.;B. inventory account;C. income tax expense and liability accounts;D. retained earnings account;2. The detail tie-in is part of the_______ assertion for account balances.;A. completeness;B. classification;C. valuation and allocation;D. rights and obligations;3. Management assertions are;A. implied or expressed representations about accounts, transactions, and disclosures in the financial statements;B. stated in the footnotes to the financial statements;C. explicitly expressed representations about the financial statements;D. provided to the auditor in the assertions letter, but are not disclosed on the financial statements;4. The occurrence assertion applies to _______.;A. presentation and disclosure matters;B. classes of transactions and events during the period;C. account balances;D. proper classification of income statement accounts;5. The detail tie-in objective is not concerned that the details in the account balance;A. agree with related subsidiary ledger amounts;B. are properly disclosed in accordance with GAAP;C. foot to the total in the account balance;D. agree with the total in the general ledger;6. Which of the following statements about the existence and completeness assertions is not true?;A. The existence and completeness assertions emphasize different audit concerns;B. Existence deals with overstatements and completeness deals with understatements;C. Existence deals with understatements and completeness deals with overstatements;D. The completeness assertion deals with unrecorded transactions;7. To be considered reliable evidence, confirmations must be controlled by;A). a client employee responsible for accounts receivable.;B). a financial statement auditor.;C). a client?s internal audit department.;D). a client/s controller or CFO;8. Which of the following is not one of the major types of analytical procedures?;A) Compare client with industry averages;B) Compare client with prior year;C) Compare client with budget;D) Compare client with SEC averages;9. The primary purpose of performing analytical procedures in the planning phase of an audit is to;A). help the auditor obtain an understanding of the client?s industry and business.;B). assess the going concern assumption.;C). indicate possible misstatements.;D). reduce detailed tests;10. The Auditing Standards Board has concluded that analytical procedures are so important that they are required during;a). planning and test of control phases.;b). planning and completion phases.;c). test of control and completion phases.;d) 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?;a) Foot-reperformance.;b). Compare - documentation.;c). Vouch-documentation.;d). Trace-analytical procedures.;12. Which of the following statements regarding analytical procedures is not correct?;a). analytical tests emphasize, a comparison of client internal controls to GAP;b) analytical procedures are required on all audits.;c) analytical procedures can be used as substantive tests.;d). 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?;a) Corporate treasurer;b) Chief financial officer;c) Chairman of the board of directors;d) Audit committee;14. Which of the following is not likely to be a related party?;a) Affiliated companies;b) A major stockholder of the company;c) A warehouse employee;d) The chief executive officer;15. An engagement letter sent to an audit client usually would not include a(n);a) reference to the auditor?s responsibility for the detection of errors or irregularities.;b) estimation of the time to be spent on the audit work by audit staff and management;c) statement that management advisory services would be made available upon request;d) reference to management?s responsibility for the financial statements;16. Which of the following statements is not correct with respect to analytical procedures?;a) Auditing standards emphasize the need for auditors to develop and use expectations;b) Analytical procedures must be performed throughout the audit;c) Analytical procedures may be performed at any time during the audit;d) 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?;a) The corporate charter is granted by the federal government and is required to recognize the corporation as a separate entity;b) The corporate charter includes the rules and procedures used to operate a corporation;c) 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;d) 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;a) early appointment of the auditor is advantageous to the auditor and the client;b) acceptance of an audit engagement after the close of the client?s fiscal year is generally not permissible;c) appointment of the auditor subsequent to the physical count of inventories requires a disclaimer of opinion;d) 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;a). the allowance for doubtful accounts.;b). the useful life of equipment for tax purposes.;c). obsolete inventory.;d). the liability for warranty payments;20. Acceptable audit risk is ordinarily set by the auditor during planning and;a). held constant for each major cycle and account.;b). held constant for each major cycle but varies by account.;c). varies by each major cycle and by each account.;d). 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;a). increase.;b). decrease.;c). remain unchanged.;d). be indeterminate;22. When discussing control risk (CR) and the audit risk model, which of the following is false?;a). CR is a measure of the auditor?s assessment of the likelihood that misstatements will not be prevented or detected by internal control.;b). 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;c). The relationship between control risk, and detection risk, is inverse.;d). The relationship between control risk, and evidence needed to support account balances is direct;23. When setting a preliminary judgment about materiality;a). more evidence is required for a low dollar amount than for a high dollar amount.;b). less evidence is required for a low dollar amount than for a high dollar amount.;c). the same amount of evidence is required for either low or high dollar amounts.;d). there is no relationship between it and the dollar amount of evidence needed;24. To what extent do auditors typically rely on internal controls of their public company clients?;a). Extensively;b). Only very little;c). Infrequently;d). Never;25. A procedure designed to test for monetary misstatements directly affecting the correctness of financial statement balances is a;a). test of controls.;b). substantive test.;c). test of attributes.;d). monetary-unit sampling test;26. Tests of transactions are used to determine whether ___________ have been satisfied.;a). compliance test requirements.;b). balance coverage requirements.;c). transaction-related audit objectives.;d). 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;a). increase the amount of tests of controls.;b). increase the reliance on tests of controls.;c). cause the issuance of a qualified or adverse opinion.;d). eliminate the need for a test of controls.;28. Which of the following is not appropriate for purposes of testing the effectiveness of controls?;a). Make inquiries of client personnel;b). Evaluate prior experience with the client.;c). Observe control-related activities.;d). Reperform client procedures.;29. The primary emphasis in most tests of details of balances is on the;a). balance sheet accounts.;b). revenue accounts.;c). cash flow statement accounts.;d). expense accounts.;30. The most important consideration in developing the audit plan and audit program is the;a). client?s size.;b). client?s industry.;c). audit firm?s available personnel.;d). the audit risk model used in its planning form

 

Paper#37624 | Written in 18-Jul-2015

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