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Strayer University, Washington DC ACC 403 Final Exam 2014

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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.

 

Paper#80297 | Written in 18-Jul-2015

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