Acct 402 - Accounting Principles - Class Quiz 1/2

The flashcards below were created by user acelaker on FreezingBlue Flashcards.

  1. The risk associated with a company's survival and profitability is referred to as
    Business Risk
  2. The organization charged with protecting investors and the public by requiring full disclosure of financial information by companies offering securities to the public is the
    Securities and Exchange Commission
  3. Which of the following attributes most clearly differentiates a CPA who audits management's financial statements as contrasted to management?
  4. Which of the following is a priciple underlying an audit conducted in accordance with GAAP
    An auditor's opinion enhanced the degree of confidence that intended users can place in the financial statements
  5. An audit should be designed to obtain reasonable assurance of detecting material misstatements due to
    Errors, fraud, and noncompliance with laws with a direct effect on financial statement amounts
  6. Which of the following is not an underlying of an audit
    Management and the auditors have responsibility for the preparation of financial statements in accordance with the applicable financial reporting framework.
  7. What are 3 underlying premises of an audit
    • 1.Management should provide the auditor with all information relevant to the preparation and fair presentation of the financial statements
    • 2.Where appropriate, the auditor may obtain information from those charged with governance¬†
    • 3.The auditors should be provided unrestricted access to those withing the entity from whom the auditor determines it necessary to obtain audit evidence.
  8. If the AICPA code of professional conduct does not specifically address a threat to auditor independence the auditor should
    Consider the threat from the perspective of a reasonable an informed third part who has knowledge of all relevant information
  9. A CPA should maintain objectivity and be free of conflicts of interest when performing
    All professional services
  10. Which of the following is a correct statement related to CPA legal liability under common law
    CPAs are liable for either ordinary or gross negligence to identified third parties for whose benefit the audit was perfromed
  11. Under the restatement of torts approach to liability the auditor is generally liable to the bank which subsequently grants the loan for when auditor knew purpose of audit:
    either ordinary gross or gross negligence
  12. Assertions that have a meaningful bearing on whether an account balance, transaction class or disclosure is fairly stated are referred to as
    relevant assertions
  13. Analytical procedures are required at the risk assessment stage and as
    a part of the final overall review
  14. Which of the following is not a financial statement assertion relating to account balances
    recorded value and discounts
  15. Name 3 financial statement assertions related to account balances
    • completeness
    • existence
    • rights and obligations
  16. An auditor is performing an analytical procedure that involves developing common-size financial statements. This technique is referred to as
    Vertical analysis
  17. A schedule listing account balances for the current and previous years, and columns for adjusting and reclassifying entries proposed by the auditors to arrive at the final amount that will appear in the financial statement if referred to as a
    working trial balance
  18. While assessing the risks of material misstatement auditors identify risks, relate risk to what could go wrong, consider the magnitude of risks and
    consider the likelihood that the risks could result in material misstatements
  19. When a company has changed auditors, according to the professional standards
    The successor auditor has the responsibility to initiate contact with the predecessor auditor to ask about the client before the engagement is accepted; the predecessor has no responsibility to initiate this contact, even when aware of matters bearing on the integrity of management
  20. Which of the following procedures is not performed as apart of planing an audit engagement
    confirmation of all major accounts
  21. 3 procedures that are a part of an audit engagement
    • 1.reviewing the working papers of the prior year
    • 2.developing an overall audit strategy
    • 3.Desiging an audit program
  22. The risk of a material misstatement occurring in an account, assuming an absence of internal control is refereed to as
    Inherent Risk
  23. Which of the following is not an example of a likely adjustment in the auditors overall audit approach when significant risk is found to exist
    increase the assessed level of detection risk
  24. 3 examples of likely adjustments in the auditors overall audit
    • 1.Apply increased professional skepticism about material transactions
    • 2.assign personnel with particular skill to areas of high risk
    • 3.obtain increased evidence about the appropriateness of managements selection of accounting principles.
Card Set:
Acct 402 - Accounting Principles - Class Quiz 1/2
2014-10-11 04:35:32
Acct 402 Accounting Principles Class Quiz

Acct 402 - Accounting Principles - Class Quiz 1/2
Show Answers: