ACC492 Final Exam (Score: 100% )

1. The specific audit objective that all purchases and cash disbursements made
during the period were recorded relates to:
existence
or occurrence.
presentation and disclosure.
rights and obligations.
completeness.
2. The use of the computer to compare production
hours to direct labor hours on daily production reports relates to the:
rights
and obligations assertion.
completeness
assertion.
existence or occurrence assertion.
valuation
or allocation assertion.
3. During the count of cash on hand, it is NOT necessary for the auditor to:
insist
on the presence of the custodian of the cash throughout the count.
insist on the presence of an internal auditor
throughout the count.
obtain
a signed receipt from the custodian on return of the funds.
control
both cash and non-cash negotiable instruments held by the client.
4. By definition, subsequent events occur between:
the
report date and the date the report is issued.
the
interim and balance sheet date.
the
balance sheet date and the report date.
the balance sheet date and the date the report
is issued.
5. The expenditure cycle would include:
payroll
transactions.
payments by check.
the
purchase of another entity’s stocks.
the
purchase of treasury stock.
6. The specific account balance audit objective, plant assets and related expenses are
properly identified and classified in the financial statements, relates
to the:
presentation or disclosure assertion.
existence
or occurrence assertion.
rights
and obligations assertion.
completeness
assertion.
7. The specific account balance audit objective, the entity owns or has rights to all recorded
plant assets at the balance sheet date, relates to the:
rights and obligations assertion.
existence
or occurrence assertion.
completeness
assertion.
valuation
or allocation assertion.
8. When inventories are material and the auditor
does not observe the inventory at or near the year-end, professional standards
require the auditor to:
disclaim
an opinion on the financial statements.
observe some physical counts of the inventory.
thoroughly
test the accounting records.
resign
from the engagement.
9. All sales, cash receipts, and sales adjustments
are accurately valued using GAPP and correctly journalized, summarized, and
posted. These actions are transaction objectives for:
completeness
accurancy
cutoff
occurance
10. Section 18 liability is relatively narrow in
scope because it relates only to a false or misleading statement in documents
“filed” with the:
AICPA
SEC
IRS
FASB
11. Which of the following functions is NOT part of the production cycle?
acquisition of raw materials
maintaining
the correctness of inventory balances
processing
goods in production
determining
and recording manufacturing costs
12. The specific audit objective for the audit of
investments, investment balances are
properly identified and classified in the financial statements, relates
to the:
presentation or disclosure assertion.
rights
and obligations assertion.
completeness
assertion.
existence
or occurrence assertion.
13. The specific audit objective that the entity is liable for the payables
resulting from the recorded purchase transactions relates to:
rights and obligations.
completeness.
presentation
and disclosure.
existence
or occurrence.
14. The specific audit objective for the audit of investments,
investment revenues, and realized and unrealized gains and losses, are reported
at proper amounts, relates to the:
rights
and obligations assertion.
completeness
assertion.
valuation or allocation assertion.
existence
or occurrence assertion.
15. The control of all funds during the count of
cash on hand is meant primarily to prevent:
unauthorized
disbursements.
transfers by the client.
any
chance of double counting.
client
personnel from viewing the count procedure.
16. The standard bank confirmation, developed
jointly by the AICPA, the American Bankers Association, and the Bank
Administration Institute, requests information about all of the following EXCEPT:
secondary endorsements.
deposit
balances.
loan
balances.
loan
interest rates.
17. Which of the following is NOT a tort?
negligence
gross
negligence
fraud
breach of contract
18. Which of the following accounts in a
merchandising company is affected by both the revenue cycle and another cycle?
accounts
receivable
sales
returns and allowances
inventory
sales
19. Whether the entity maintains effective controls
to provide reasonable assurance that private customer information obtained as a
result of e-commerce is protected from uses not related to the entity’s
business defines:
risk
assessment.
information protection.
performance
measurement.
transaction
integrity.
20. Which one
of the following is NOT true of
the Principles in the AICPA’s Code of
Professional Conduct?
They
provide a framework for the Rules.
They
express the basic tenets of ethical conduct.
They
are expressions of ideals of professional conduct.
They are set forth as enforceable standards.
21. The two main sections of the AICPA’s Code of Professional Conduct are:
Principles and Rules of Conduct.
Interpretations
of the Rules of Conduct and Ethics Rulings.
Principles
and Ethics Rulings.
Rules
of Conduct and Interpretations of the Rules of Conduct.
22. The Principle of Integrity in the AICPA’s Code of Professional Conduct would be
violated in cases of:
subordination of judgment.
unintentional
distortion of facts.
inadvertent
error.
genuine
differences in opinion.
23. The audit objective, “The accounts receivable
balance represents gross claims on customers and agrees with the sum of the
accounts receivable subsidiary ledger” is derived from the assertion of:
existence
or occurrence.
valuation or allocation.
rights
and obligations.
completeness.
24. The specific audit objective for the audit of
investments, all investments are
included in the balance sheet investment accounts, relates to the:
rights
and obligations assertion.
completeness assertion.
valuation
or allocation assertion.
existence
or occurrence assertion.
25. In performing an attest engagement, a CPA
performs all of the following EXCEPT:
gathers
evidence to support the assertions.
relies on management statements.
objectively
assesses the communications of the individual making the assertions.
objectively
assesses the measurements of assertions.
26. The auditor’s strategy in performing test counts
during the inventory observation is to:
concentrate tests on high dollar items and take
a representative sample of other items.
test
all high dollar items.
concentrate
tests in areas where employees seem to be disregarding the inventory
instructions.
randomly
select all test items.
27. Which one of the following is an investing activity?
acquiring
debt
issuing
bonds
capital
leases
selling land
28. Whether the system is protected against
unauthorized physical and logical access defines:
system
availability.
system
verifiability.
system security.
system
integrity.
29. When an investigation of the discovery of facts
existing at the report date confirms the existence of the fact and the auditor
believes the information is important to those relying or likely to rely on the
financial statements, the auditor should immediately:
resign
from the engagement.
take steps to prevent future reliance on the
audit report.
notify
the SEC or other regulatory agency.
notify
the audit committee.
30. The auditor’s special report on financial
statements prepared on an OCBOA should contain all of the following EXCEPT:
an
introductory paragraph.
a
scope paragraph.
an exclusion paragraph.
an
explanatory paragraph.
31. Which of the following is NOT among the characteristics of the
procedures performed in completing the
audit?
They are optional since they have only an
indirect impact on the opinion to be expressed.
They
are performed after the balance sheet date.
They
involve many subjective judgments by the auditor.
They
are usually performed by audit managers or other senior members of the audit
team who have extensive audit experience with the client.
32. Which of the following is NOT among the specific auditing
procedures the auditor performs to obtain additional audit evidence?
reading
minutes of meetings
making
subsequent events review
reviewing evidence concerning litigation,
claims, and assessments
obtaining
client representation letter
33. Gross negligence can best be defined as:
criminal
fraud.
misrepresentation.
failure
to exercise due care.
failure to exercise even slight care.
34. Whether the system processing is complete,
accurate, timely, and authorized defines:
system
security.
system integrity.
system
maintainability.
system
availability.
35. When statistical sampling methods are used by
the client in determining inventories, professional standards require that the
auditor ascertain the following EXCEPT
that the:
sampling
plan has statistical validity.
appropriate tests of transactions have been
applied.
sampling
plan has been properly applied.
results
in terms of reliability are reasonable.
36. With a manufacturer, wholesaler, or retailer,
however, inherent risk for inventory may be assessed at or near the maximum level
for all of the following reasons EXCEPT:
inventories
are vulnerable to spoilage, obsolescence, and other factors such as general
economic conditions that may affect demand and salability, and thus the proper
valuation of the inventories.
the
wide diversity of inventory items may present special problems in determining
their quality and market value.
inventories
are often stored at multiple sites, adding to the difficulties associated with
maintaining physical controls over theft and damages, and properly accounting
for goods in transit between sites.
the volume of purchases, manufacturing, and
sales transactions that affects these accounts is generally high, decreasing
the opportunities for misstatements to occur.