acct 241 ch 2

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acct 241 ch 2
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2010-08-04 22:18:03
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acct 241 ch 2
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  1. What body is reponsible for promulgating governmental auditing rules?
    A. The AICPA Auditing Standards Board
    B. The U.S. Government Accountablility Office
    C. The Federal Auditing Standards Board
    D. The Public Company Accounting Oversight Board
    B. The U.S. Government Accountablility Office
    (this multiple choice question has been scrambled)
  2. Which of the following is not one of the 3 standards of field work
    A. adequate planning and supervision
    B. due professional care
    C. sufficient appropriate evidence
    D. undertanding of the entity, including the risk of material misstatement
    B. due professional care
    (this multiple choice question has been scrambled)
  3. A list of audit proceudres auditors need to perform to obtain evidence is called an
    A. audit budget
    B. audit standard
    C. audit plan
    D. audit program
    D. audit program
    (this multiple choice question has been scrambled)
  4. To be appropriate, evidence must be all of the following except
    A. sufficient
    B. reliable
    C. relevant
    D. unbiased
    A. sufficient
    (this multiple choice question has been scrambled)
  5. An audit report that expresses a favorable opinion on the financial statements is a(n)
    A. qualified opinion
    B. disclaimer of opinion
    C. adverse opinion
    D. unqualified opinion
    D. unqualified opinion
    (this multiple choice question has been scrambled)
  6. Which of the following procedures would provide the most reliable audit evidence?
    a. inquires of the entity's audit staff held in private
    b. inspection of prenumbered client purchase orders filed in the vourchers payment department
    c. analytical procedures performed by auditors on the entity's trail balance
    d. inspection of bank statements obtained directly from the client's financial institution
    • d. inspection of bank statements obtained directly from the client's
    • financial institution
  7. Which of the following is not one of the 4 generally accepted standards of reporting?
    a. The auditor must identify in the auditor's report those circumstances in which such principles have not been consistently observed in the current period in relation to the precediing period
    b. When the auditor determines that information disclosures are not reasonable adequate, the auditor must so state in the auditor's report
    c. the auditor must either express an opinion regarding the financial statements, taken as a whole, or state that an opinion cannot be expressed, in the auditor's report. When the auditor cannot express an overall opinion, the auditor should state the reasons therefore in the auditor's report. In all cases where an auditor's name is associated with financial statements, the auditor should clearly indicate the character of the auditor's work, if any, and the degree of responsibility the auditor is taking, in the auditor's report
    d. the auditor should state in the auditor's report whether the audit was conducted in accordance with GAAS
    • d. the auditor should state in the auditor's report whether the audit
    • was conducted in accordance with GAAS
  8. Management's responsibilty for the financial statements is
    a. implicitly represented in the auditors standard report
    b. explicitly represented in the opening paragraph of the auditors' standard report
    c. explicitly represented in the scope paragraph of the auditor's standard report
    d. explicitly represented in the opinion paragraph of the auditors' standard report
    • b. explicitly represented in the opening paragraph of the auditors'
    • standard report
  9. The auditors' standard report refers to GAAS and GAAP in which paragraph
    GAAS GAAP
    A. introductory only scope and opinion only
    B. scope only opinion only
    C. introductory only all paragraphs
    D. introductory and scope opinionly only
    B. scope only opinion only
    (this multiple choice question has been scrambled)
  10. Ordinarily, what source of evidence should least affect audit conclusions?
    A. external
    B. auditor prepared
    C. inquiry of management
    D. inquiry of company legal counsel
    C. inquiry of management
    (this multiple choice question has been scrambled)
  11. Which of the following is one of the four standards of reporting included in GAAS?
    a. Due professional care is to be exercised in the performance of the audit and the preparation of the report.
    b. The report shall state whether the financial statements are presented in accordance with GAAP.
    c. Sufficient competent audit evidence is to be obtained to afford a reasonable basis for an opinion regarding the financial statements under audit.
    d. The report shall state that GAAS have been followed in the conduct of the audit.
    • b. The report shall state whether the financial statements are presented
    • in accordance with GAAP.
  12. To exercise due professional care, a CPA should:
    a. take continuing professional education classes
    b. report whether the financial statements are in accordance with GAAP
    c. Gather enough audit evidence to have complete assurance that there is enough support for the CPA’s opinion on the financial statements.
    d. Conduct the engagement in accordance with GAAS and ensure that the engagement is completed on a timely basis.
    • d. Conduct the engagement in accordance with GAAS and ensure that the
    • engagement is completed on a timely basis.
  13. One of a CPA firm’s basic objectives is to provide professional services that conform to professional standards. Reasonable assurance of achieving this objective can be obtained by following:
    A. generally accepted auditing standards (GAAS)
    B. generally accepted accounting practices (GAAP)
    C. quality control standards
    D. international auditing standards
    C. quality control standards
    (this multiple choice question has been scrambled)
  14. After the auditors learned of Client Company’s failure to record an expense for obsolete inventory, they agreed to a small adjustment to the financial statements because the Client president told them the company would violate its debt agreements if the full amount were recorded. This is an example of a lack of:
    A. audit reporting independence
    B. audit investigative independence
    C. auditors’ training and proficiency
    D. planning and supervision
    A. audit reporting independence
    (this multiple choice question has been scrambled)
  15. The primary purpose for obtaining an understanding of the company’s environment (including its internal control) in a financial statement audit is:
    a. to determine the nature, timing, and extent of further audit procedures to be performed
    b. to make consulting suggestions to the management
    c. to obtain direct sufficient competent audit evidence to afford a reasonable basis for an opinion on the financial statements
    d. to determine whether the company has changed any accounting principles
    • a. to determine the nature, timing, and extent of further audit
    • procedures to be performed
  16. Ordinarily, what source of evidence should least affect audit conclusions?
    A. Inquiry of company legal counsel.
    B. Inquiry of management.
    C. Auditor prepared.
    D. External.
    B. Inquiry of management.
    (this multiple choice question has been scrambled)
  17. The most persuasive evidence regarding the existence of newly acquired computer equipment is:
    A. observation of auditee’s procedures
    B. physical examination
    C. inquiry of management
    D. documentation prepared externally
    B. physical examination
    (this multiple choice question has been scrambled)
  18. Which of the following procedures would provide the most reliable audit evidence?
    a. Inquiries of the client’s internal audit staff held in private.
    b. Inspection of prenumbered client purchase orders filed in the vouchers payable department.
    c. Analytical procedures performed by the auditor on the entity’s trial balance.
    d. Inspection of bank statements obtained directly from the client’s financial institution.
    • d. Inspection of bank statements obtained directly from the client’s
    • financial institution.
  19. Breaux & Co., CPAs requires that all audit documentation contains the initials of the preparer and the reviewer in the top righthand corner. This procedure provides evidence of Breaux & Co., CPAs’ professional concern regarding which generally accepted auditing standard?
    A. Adequate technical training and proficiency.
    B. Gathering sufficient competent evidence.
    C. Independence.
    D. Adequate planning and supervision.
    D. Adequate planning and supervision.
    (this multiple choice question has been scrambled)
  20. The attestation standards do not contain a requirement that auditors obtain:
    A. sufficient evidence for the conclusions expressed in an attestation report
    B. adequate knowledge in the subject matter of the assertions being examined
    C. independence in mental attitude
    D. an understanding of the auditee’s internal controls
    D. an understanding of the auditee’s internal controls
    (this multiple choice question has been scrambled)
  21. Auditor Jones is studying a company’s accounting treatment of a series of complicated transactions in exotic financial instruments. She should look for the highest level of authoritative support for proper accounting in:
    A. FASB statements on accounting standards
    B. ACIPA industry audit and accounting guides
    C. FASB statements on financial accounting concepts
    D. consensus positions of the FASB Emerging Issues Task Force (EITF)
    A. FASB statements on accounting standards
    (this multiple choice question has been scrambled)
  22. The evidence considered most competent by auditors is best described as:
    a. internal documents, such as sales invoice copies produced under conditions of strong internal control
    b. written representations made by the president of the company
    c. documentary evidence obtained directly from independent external sources
    d. direct personal knowledge obtained through physical observation and mathematical recalculation
    • d. direct personal knowledge obtained through physical observation and
    • mathematical recalculation
  23. An auditor’s understanding of the control system in an auditee’s organization contributes information for:
    a. determining whether members of the audit team have the required technical training and proficiency to perform the audit
    b. ascertaining the independence in mental attitude of members of the audit team
    c. planning the professional development courses the audit staff needs to keep up to date with new auditing standards
    d. planning the nature, timing, and extent of further audit procedures on an audit
    • d. planning the nature, timing, and extent of further audit procedures
    • on an audit
  24. What are the 3 categories of requirements to become a CPA
    A) Education, Exam, and Ethics.
    B) Education, Exam, and Experience.
    C) GAAP, GAAS, and Exam.
    D) GAAS, Exam, and Ethics.
    B) Education, Exam, and Experience.
    (this multiple choice question has been scrambled)
  25. Which one of the following includes the three general auditing standards?
    A) Planning, independence, and internal control.
    B) Knowledge/training, planning, and due professional care.
    C) Knowledge/training, independence, and due professional care.
    D) AICPA, SEC, and GAAS.
    C) Knowledge/training, independence, and due professional care.
    (this multiple choice question has been scrambled)
  26. What is the general character of the three generally accepted auditing standards classified as standards of field work?
    A) The need to maintain an independence in mental attitude in all matters pertaining to the audit.
    B) Criteria for the content of the auditor’s report on financial statements and related footnote disclosures.
    C) The criteria of audit planning and evidence gathering.
    D) The competence, independence, and professional care of persons performing the audit.
    C) The criteria of audit planning and evidence gathering.
    (this multiple choice question has been scrambled)
  27. Which of the following are part of the standards of reporting?
    A) GAAP, consistency, and disclosure.
    B) GAAP, GAAS, and disclosure.
    C) GAAS, disclosure, and opinion.
    D) FASB, SEC, and GAAS.
    A) GAAP, consistency, and disclosure.
    (this multiple choice question has been scrambled)
  28. Management’s representation that all transactions and accounts are included in the financial statements are assertions about
    A) existence or occurrence
    B) presentation and disclosure
    C) completeness
    D) valuation or allocation
    C) completeness
    (this multiple choice question has been scrambled)
  29. Management’s representation that all the recorded transactions are real transactions is an example of which of the following assertions?
    A) existence or occurrence
    B) valuation or allocation
    C) completeness
    D) presentation and disclosure.
    A) existence or occurrence
    (this multiple choice question has been scrambled)
  30. In order to make an audit more manageable and efficient the accounts and journals are grouped into?
    A) Rows.
    B) Columns.
    C) Circles.
    D) Cycles.
    D) Cycles.
    (this multiple choice question has been scrambled)

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