02 Jan (TCO 2) Blue, CPA, has

ACCT444 Week 1 Quiz Latest 2017 August

Question 1

3 / 3 pts

(TCO 3) The organization that is responsible for providing oversight for auditors of public companies is called the _____

Auditing Standards Board.

American Institution of Public Accountants.

Accounting Oversight Board.

Public Company Accounting Oversight Board.

Question 2

3 / 3 pts

(TCO 1) Standards issued by the Public Company Accounting Oversight Board must be followed by CPAs who audit _____

both private and public companies.

public companies only.

private companies, public companies, and nonprofit entities.

private companies only.

Question 3

3 / 3 pts

(TCO 1) Which of the following actions should a CPA firm take to comply with the AICPA’s quality control standards?

Establish procedures that comply with the standards of the Sarbanes-Oxley Act.

Use attributes sampling techniques in testing internal controls.

Consider inherent risk and control risk before determining detection risk.

Establish policies to ensure that the audit work meets applicable professional standards.

Question 4

3 / 3 pts

(TCO 1) Any service that requires a CPA firm to issue a report about the reliability of an assertion that is made by another party is a(n) _____

accounting and bookkeeping service.

attestation service.

assurance service.

tax service.

Question 5

3 / 3 pts

(TCO 1) Jackson & Company, CPAs, plan to audit the financial statements of Perigee Technologies, an issuer as defined under the Sarbanes-Oxley Act of 2002. Which of the following situations would impair Jackson’s independence?

Provision of personal tax services to Johnson, the accounts payable manager of Perigee

Preparation of Perigee’s routine annual tax return, where Jackson’s fee will be calculated as a percentage of the tax refund obtained

Audit of Perigee’s internal control is performed contemporaneously with the annual financial statement audit

Discovering that Lowe, the chief financial officer of Perigee, started his accounting career 10 years earlier as a staff accountant for Jackson & Company and continues to maintain ties with current partners at the firm

Question 6

3 / 3 pts

(TCO 3) Burrow & Co., CPAs, have provided annual audit and tax compliance services to Mare Corp. for several years. Mare has been unable to pay Burrow in full for services Burrow rendered 19 months ago. Burrow is ready to begin fieldwork for the current year’s audit. Under the ethical standards of the profession, which of the following arrangements will permit Burrow to begin the fieldwork on Mare’s audit?

Mare sets up a 2-year payment plan with Burrow to settle the unpaid fee balance.

Mare commits to pay the past due fee in full before the audit report is issued.

Mare gives Burrow an 18-month note payable for the full amount of the past due fees before Burrow begins the audit.

Mare engages another firm to perform the fieldwork, and Burrow is limited to reviewing the workpapers and issuing the audit report.

Question 7

0 / 3 pts

(TCO 3) Interpretations of Rule 101 prohibit covered members from owning any stock or other direct investment in audit clients. Covered members include all but which of the following?

All partners in an office that have no responsibility for the engagement

The firm and its employee benefit plans

Individuals on the attest engagement

All of the above describe covered members.

Question 8

3 / 3 pts

(TCO 3) Several months after an unqualified audit report was issued, the auditor discovered 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.

The CEO is correct and the auditor must maintain confidentiality.

The CEO is incorrect, but because the audit report has been issued, it is too late.

The CEO is correct, but to be ethically correct the auditor should violate the confidentiality rule and disclose the error.

The CEO is incorrect, and the auditor has an obligation to issue a revised audit report, even if the CEO will not correct the financial statements.

Question 9

3 / 3 pts

(TCO 1) The phrase U.S. generally accepted accounting principles is an accounting term that

includes broad guidelines of general application but not detailed practices and procedures.

encompasses the conventions, rules, and procedures necessary to define U.S. accepted accounting practice at a particular time.

provides a measure of conventions, rules, and procedures governed by the AICPA.

is included in the audit report to indicate that the audit has been conducted in accordance with generally accepted auditing standards (GAAS).

Question 10

3 / 3 pts

(TCO 1) The auditor of an issuer may provide which of the following tax services?

Services related to confidential tax transactions

Tax services for officers of the issuer

Tax services for immediate family members of corporate officers

Tax planning services

ACCT444 Week 2 Quiz Latest 2017 August

Question 1

3 / 3 pts

(TCO 4) In connection with the audit of financial statements, an independent auditor could be responsible for failure to detect a material fraud if

statistical sampling techniques were not used on the audit engagement.

the auditor planned the audit in a negligent manner.

accountants performing important parts of the work failed to discover a close relationship between the treasurer and the cashier.

the fraud was perpetrated by one employee who circumvented the existing internal controls.

Question 2

3 / 3 pts

(TCO 4) “Absence of reasonable care that can be expected of a person is a set of circumstances” defines

pecuniary negligence.

gross negligence.

extreme negligence.

ordinary negligence.

Question 3

3 / 3 pts

(TCO 4) The prudent person concept establishes that

the CPA firm is not expected to make only perfect judgments.

an audit in accordance with GAAS is subject to limitations and cannot be relied upon for complete assurance that all errors and irregularities will be found.

the courts do not require that the auditor become the insurer or guarantor of the accuracy of the statements.

all three of the above are true.

Question 4

3 / 3 pts

(TCO 4) Tort actions against CPAs are more common than breach of contract actions because

there are more torts than contracts.

the burden of proof is on the auditor rather than on the person suing.

the person suing need prove only negligence.

the amounts recoverable are normally larger.

Question 5

3 / 3 pts

(TCO 4) If the auditor believes that the financial statements are not fairly stated or is unable to reach a conclusion because of insufficient evidence, the auditor

should withdraw from the engagement.

should request an increase in audit fees so that more resources can be used to conduct the audit.

has the responsibility of notifying financial statement users through the auditor’s report.

should notify regulators of the circumstances.

Question 6

3 / 3 pts

(TCO 3) Which of the following statements is most correct regarding errors and fraud?

An error is unintentional, whereas fraud is intentional.

Frauds occur more often than errors in financial statements.

Errors are always fraud and frauds are always errors.

Auditors have more responsibility for finding fraud than errors.

Question 7

3 / 3 pts

(TCO 3) In the fraud triangle, fraudulent financial reporting and misappropriation of assets

share little in common.

share most of the same risk factors.

share the same three conditions.

share most of the same conditions.

Question 8

3 / 3 pts

(TCO 3) Because of the risk of material misstatements due to fraud, an audit of financial statements in accordance with generally accepted auditing standards should be performed with an attitude of

objective judgment.

impartial conservatism.

independent integrity.

professional skepticism.

Question 9

3 / 3 pts

(TCO 3) Which of the following statements describes circumstances that underlie employee incentives to misappropriate assets?

Dissatisfied employees may steal from a sense of entitlement.

Weak internal controls encourage employees to take chances.

If management cheats customers and gets away with it, then employees believe they can do the same to the company.

Each of the above describes circumstances underlying employee incentives to misappropriate assets.

Question 10

3 / 3 pts

(TCO 3) Auditors may identify conclusions during fieldwork that change or support a judgment about the initial assessment of fraud risk. Which of the following conditions should alert an auditor about the initial assessment?

Missing or conflicting evidence

Discrepancies in the accounting records

Unusual relationships between the auditor and management

All of the above

ACCT444 Week 3 Quiz Latest 2017 August

Question 1

3 / 3 pts

(TCO 6) Physical examination is the inspection or count by the auditor of items such as

cash or inventory only.

cash, inventory, canceled checks, and sales documents.

cash, inventory, canceled checks, and tangible fixed assets.

cash, inventory, securities, notes receivable, and tangible fixed assets.

Question 2

0 / 3 pts

(TCO 6) Analytical procedures are

diagnostic tests of financial information that may not be classified as evidential matter.

calculations of financial information made by a computer.

substantive tests of financial information made by a study and comparison of relationships among data.

statistical tests of financial information designed to identify areas requiring intensive investigation.

Question 3

3 / 3 pts

(TCO 6) The Auditing Standards Board has concluded that analytical procedures are so important that they are required during

planning and testing phases.

planning and completion phases.

testing and completion phases.

planning, testing, and completion phases.

Question 4

3 / 3 pts

(TCO 6) Traditionally, confirmations are used to verify

individual transactions between organizations, such as sales transactions.

bank balances and accounts receivables.

fixed asset additions.

All of the above

Question 5

3 / 3 pts

(TCO 7) Analytical procedures used in planning an audit should focus on identifying

material weaknesses of internal control.

the predictability of financial data from individual transactions.

the various assertions that are embodied in the financial statements.

areas that may represent specific risks relevant to the audit.

Question 6

0 / 3 pts

(TCO 7) When inherent risk is high, there will need to be

more evidence accumulated.

more experienced staff assigned to the work.

either a or b, but not both.

both a and b.

Question 7

3 / 3 pts

(TCO 7) A successor auditor may perform which of the following for a new audit client?

Speak to local attorneys, banks, and other businesses regarding the company’s reputation

Speak to the predecessor auditor about disagreements they had with management

Interview client personnel to better understand the business and associated risks

All of the above

Question 8

3 / 3 pts

(TCO 8) The preliminary judgment about materiality is the _____ amount by which the auditor believes the statements could be misstated and still not affect the decisions of reasonable users.

minimum

maximum

mean average

median average

Question 9

0 / 3 pts

(TCO 8) In setting materiality guidelines for current assets, the two standard setters, FASB and the AICPA, provide the following guidelines to practitioners

Both agree that materiality should be set at an amount greater than 10% of current assets.

FASB’s guideline is greater than 10%, but the AICPA’s is greater than 5%.

Both agree that it should be greater than 5%.

No specific materiality guidelines are provided by either of them.

Question 10

0 / 3 pts

(TCO 8) Which of the following elements ultimately determines the specific auditing procedures that are necessary in the circumstances to afford a reasonable basis for an opinion?

Inherent risk

Materiality

Auditor judgment

Reasonable assurance

ACCT444 Week 4 Quiz Latest 2017 August

Question 1

3 / 3 pts

(TCO 5) Which of the following is responsible for establishing a private company’s internal control?

Management

Auditors

Management and auditors

Committee of Sponsoring Organizations

Question 2

3 / 3 pts

(TCO 5) Which section of the Sarbanes-Oxley Act requires management to issue an internal control report?

202

203

404

408

Question 3

3 / 3 pts

(TCO 5) Which of management’s concerns with respect to implementing internal controls is the auditor primarily concerned?

Efficiency of operations

Reliability of financial reporting

Effectiveness of operations

Compliance with applicable laws and regulations

Question 4

3 / 3 pts

(TCO 5) Even with the most effectively designed internal control, the auditor must obtain audit evidence, beyond testing the controls, for every

transaction.

financial statement account.

material financial statement account.

financial statement account that will be relied upon by third parties.

Question 5

3 / 3 pts

(TCO 5) Which of the following is correct?

A significant deficiency is always a material weakness.

A reportable condition is always a material weakness.

A material weakness is less significant that a control deficiency.

A significant deficiency may be a material weakness.

Question 6

3 / 3 pts

(TCO 10) Which of the following is not a risk to IT systems?

Need for IT experience

Separation of IT duties

Improved audit trail

Hardware and data vulnerability

Question 7

3 / 3 pts

(TCO 10) The extent to which IT duties are separated in an organization depends on

the organization’s size.

the organization’s complexity.

both A and B.

neither A nor B.

Question 8

3 / 3 pts

(TCO 10) Which of the following is a category of general controls?

Processing controls

Output controls

Physical and online security

Input controls

Question 9

3 / 3 pts

(TCO 10) A control that relates to all parts of the IT system is called a(n)

general control.

systems control.

universal control.

applications control.

Question 10

3 / 3 pts

(TCO 10) Which of the following is not an example of an application control?

An equipment failure causes system downtime.

There is a preprocessing authorization of the sales transactions.

There are reasonableness tests for the unit selling price of a sale.

After processing, all sales transactions are reviewed by the sales department.

ACCT444 Week 5 Quiz Latest 2017 August

Question 1

3 / 3 pts

(TCO 6) The auditor looks for an indication on duplicate sales invoices to see whether the invoices have been verified. This is an example of

a test of details of balances.

a test of control.

a substantive test of transactions.

both a test of control and a substantive test of transactions.

Question 2

3 / 3 pts

(TCO 6) Analytical procedures are defined in the auditing standards as

compliance tests.

substantive tests.

tests of controls.

helpful procedures not possessing the validity of other tests available to the auditor.

Question 3

3 / 3 pts

(TCO 6) Which of the following audit tests is usually the most costly to perform?

Analytical procedures

Tests of controls

Tests of balances

Substantive tests of transactions

Question 4

3 / 3 pts

(TCO 6) Which of the following represents an incorrect pairing of a type of audit test and evidence?

Procedures to obtain an understanding of internal controls—documentation

Analytical procedures—ratio analysis

Substantive tests of transactions—confirmation

Tests of details of balances—physical examination

Question 5

3 / 3 pts

(TCO 6) The purpose of tests of controls is to provide reasonable assurance that the

accounting treatment of transactions and balances is valid and proper.

internal control procedures are functioning as intended.

entity has complied with GAAP disclosure requirements.

entity has complied with requirements of quality control.

Question 6

3 / 3 pts

(TCO 9) It is important that sales be billed and recorded in the journal as soon as possible after

the order is received.

the order is received and credit is approved.

credit is approved and it is verified that there is enough inventory to fill the order.

the shipment takes place.

Question 7

3 / 3 pts

(TCO 9) Which one of the following is not an auditor’s concern about a key authorization point in the sales or collection cycle?

The receiving room must have authorization before releasing items to inventory control.

Credit must be authorized before the sale.

Goods must be shipped after the authorization.

Prices must be authorized.

Question 8

3 / 3 pts

(TCO 9) To achieve good internal control, which department should perform the activities of matching shipping documents with sales orders and preparing daily sales summaries?

Billing

Shipping

Credit

Payables

Question 9

3 / 3 pts

(TCO 9) When designing substantive tests of transactions for sales, the auditor is concerned with the possibility of several types of misstatements. Which of the following is not one of the types of these misstatements?

Sales being included in the journal for which no shipment was made

Sales to related parties, such as officers and subsidiaries

Sales recorded more than once

Shipments being made to nonexistent customers and recorded as sales

Question 10

3 / 3 pts

(TCO 9) A key internal control in the sales and collection cycle is the separation of duties between cash handling and record keeping. The objective most directly associated with this control is to verify that

cash receipts recorded in the cash receipts journal are reasonable.

cash receipts are properly classified.

recorded cash receipts result from legitimate transactions.

existing cash receipts are recorded.

ACCT444 Week 6 Quiz Latest 2017 August

Question 1

3 / 3 pts

(TCO 9) 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

tolerable exception rate.

estimated population exception rate.

acceptable risk of overreliance.

sample exception rate.

Question 2

3 / 3 pts

(TCO 9) A sample in which every possible combination of items in the population has an equal chance of constituting the sample is a

random sample.

statistical sample.

judgment sample.

representative sample.

Question 3

3 / 3 pts

(TCO 9) To determine if a sample is truly representative, an auditor must

conduct multiple samples of the same population.

never use sampling because of the expense involved.

audit the entire population.

perform none of the above.

Question 4

3 / 3 pts

(TCO 9) The most important aspect of evaluating the client’s method of obtaining a reliable cutoff is to

perform extensive detailed testing of cutoff.

evaluate the client’s control procedures around cutoff.

confirm a sample of transactions near period end with customers.

perform any of the above.

Question 5

3 / 3 pts

(TCO 9) The understatement of sales and accounts receivable is best uncovered by

confirming receivables.

reviewing the aged trial balance.

test of transactions for shipments made but not recorded.

reconciling the accounts receivable general ledger account with the schedule of accounts receivable.

Question 6

3 / 3 pts

(TCO 9) For most audits, inherent risk for accounts receivable is moderate or low except for which balance-related audit objectives?

Timing and realizable value

Completeness and existence

Existence and accuracy

Realizable value and cutoff

Question 7

3 / 3 pts

(TCO 9) An auditor should perform alternative procedures to substantiate the existence of accounts receivable when

no reply to a positive confirmation request is received.

no reply to a negative confirmation request is received.

collectibility of receivables is in doubt.

pledging of the receivables is probable.

Question 8

3 / 3 pts

(TCO 9) Which of the following does not have to be considered in determining the initial sample size of a test of details?

Tolerable misstatement

Acceptable risk of incorrect rejection

Estimate of misstatements in the population

Each of the above must be considered

Question 9

3 / 3 pts

(TCO 9) Sampling risk maybe controlled by

reducing down the sample size.

using only random sampling.

using the sample technique most appropriate for the population.

using audit software.

Question 10

3 / 3 pts

(TCO 9) The acceptable risk of incorrect acceptance is most related to

audit efficiency.

audit results.

audit effectiveness.

None of the above

ACCT444 Week 7 Quiz Latest 2017 August

Question 1

3 / 3 pts

(TCO 2) When a misstatement in the financial statements exists, but is unlikely to affect the decisions of a reasonable user, it would be appropriate to issue

an unqualified opinion.

a qualified opinion.

an adverse opinion.

a disclaimer of opinion.

Question 2

0 / 3 pts

(TCO 2) Under which of the following sets of circumstances should an auditor issue a qualified opinion?

The financial statements contain a departure from generally accepted accounting principles, the effect of which is material.

The principal auditor decides to make reference to the report of another auditor who audited a subsidiary.

There has been a material change between periods in the method of the application of accounting principles.

There are significant uncertainties affecting the financial statements.

Question 3

3 / 3 pts

(TCO 2) An auditor who is unable to form an opinion on a new client’s opening inventory balances may issue an unmodified opinion on the current year’s:

Income statement only.

Statement of cash flows only.

Balance sheet only.

Statement of shareholders’ equity only.

Question 4

3 / 3 pts

(TCO 2) Comparative financial statements include the financial statements of the prior year that were audited by a predecessor auditor whose report is not presented. If the predecessor’s report was qualified, the successor should:

Indicate the substantive reasons for the qualification in the predecessor auditor’s opinion.

Request the client to reissue the predecessor’s report on the prior year’s statements.

Issue an updated comparative audit report indicating the division of responsibility.

Express an opinion only on the current year’s statements and make no reference to the prior year’s statements.

Question 5

3 / 3 pts

(TCO 11) A principal purpose of a letter of representation from management is to

serve as an introduction to company personnel and an authorization to examine the records.

discharge the auditor from legal liability for the audit.

remind management of its primary responsibility for financial statements.

confirm in writing management’s approval of limitations on the scope of the audit.

Question 6

3 / 3 pts

(TCO 2) For an entity’s financial statements to be presented fairly in accordance with an applicable financial reporting framework, the framework selected should:

Be U.S. GAAP, for all audits performed in the United States.

Be approved by the Auditing Standards Board or the appropriate industry subcommittee.

Include an adequate description of the framework in the financial statements.

Match the reporting framework used by most other entities within the entity’s particular industry.

Question 7

3 / 3 pts

(TCO 2) In May, Year 4, an auditor reissues the auditor’s report on the Year 2 financial statements at a continuing client’s request. The Year 2 financial statements are not restated and the auditor does not revise the wording of the report. The auditor should:

Dual date the reissued report.

Use the release date of the reissued report.

Use the original report date on the reissued report.

Use the current-period auditor’s report date on the reissued report.

Question 8

3 / 3 pts

(TCO 11) Which of the following items would ordinarily not be included in the standard letter of inquiry to the client’s attorney?

A list, prepared by management, of pending threatened litigation of material amounts.

A request that the attorney furnish information or comment about the likelihood of an unfavorage outcome of litigation.

A request that the attorney furnish an estimate of the amount or range of the potential loss.

A request that the attorney confirm the amount of outstanding fees, which the client owes for legal services.

Question 9

3 / 3 pts

(TCO 2) In which type of report would you read the following statement: “We believe that our examination provides a reasonable basis for our opinion.”?

Review

Audit

Examination

Agreed-upon procedures

Question 10

3 / 3 pts

(TCO 2) Blue, CPA, has been asked to issue a written report on the application of the requirements of an applicable financial reporting framework to a specific transaction by an entity that is audited by another CPA. Blue may accept this engagement, but should:

Consult with the continuing CPA to obtain information relevant to the transaction.

Report the engagement’s findings to the entity’s audit committee, the continuing CPA, and management.

Disclaim any opinion that the hypothetical application of the applicable financial reporting framework conforms with generally accepted accounting principles.

Notify the entity that the report is for the general use of all interested parties.