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    ACC504/ACC 504 MID TERM EXAM– ADVANCED AUDITING (50 MCQ) 100% ANSWER ACC504/ACC 504 MID TERM EXAM– ADVANCED AUDITING (50 MCQ) 100% ANSWER Question 1. What is the term used to identify the risk that the client’s financial statements may be materially false and misleading? A. Business risk. B. Information risk. C. Client risk. D. Risk assessment. 2. The audit objective that all transactions are recorded in the proper account is related most closely to which one of the ASB transaction assertions? A. Occurrence. B. Completeness. C. Accuracy. D. Classification. 3. Assurance services involve all of the following except A. Relevance as well as the reliability of information. B. Nonfinancial information as well as traditional financial statements. C. Providing absolute rather than reasonable assurance. D. Electronic databases as well as printed reports. 4. An attestation engagement is one in which a CPA is engaged to A. Issue a report on subject matter or an assertion about the subject matter that is the responsibility of another party. B. Provide tax advice or prepare a tax return based on financial information the CPA has not audited or reviewed. C. Testify as an expert witness in accounting, auditing, or tax matters, given certain stipulated facts. D. Assemble prospective financial statements based on the assumptions of the entity’s management without expressing any assurance. 5. The process by which a CPA obtains a certificate and license in a state other than the state in which the CPA’s certificate was originally obtained is referred to as A. Substantial equivalency. B. Quid pro quo. C. Relicensing. D. Re-examination 6. Which of the following would be considered an assurance engagement? A. Giving an opinion on a prize promoter’s claims about the amount of sweepstakes prizes awarded in the past. B. Giving an opinion on the conformity of the financial statements of a university with generally accepted accounting principles. C. Giving an opinion on the fair presentation of a newspaper’s circulation data. D. Giving assurance about the average drive length achieved by golfers with a client’s golf balls. E. All of the above. 7. Bankers who are processing loan applications from companies seeking large loans will probably ask for financial statements audited by an independent CPA because A. Financial statements are too complex to analyze themselves. B. They are too far away from company headquarters to perform accounting and auditing themselves. C. The consequences of making a bad loan are very undesirable. D. They generally see a potential conflict of interest between company managers who want to get loans and the bank’s needs for reliable financial statements. 8. The Sarbanes-Oxley Act of 2002 prohibits public accounting firms from providing which of the following services to an audit client? A. Bookkeeping services. B. Internal audit services. C. Valuation services. D. All of the above. 9. The risk to investors that a company’s financial statements may be materially misleading is called A. Client acceptance risk. B. Information risk. C. Moral hazard. D. Business risk. 10. Substantial equivalency refers to A. An auditor’s tendency not to believe management’s assertions without sufficient corroboration. B. Providing consulting work for another firm’s audit client in exchange for the other firm’s providing consulting services to one of your clients. C. The waiving of certification exam parts for an individual holding an equivalent certification from another professional organization. D. Permitting a CPA to practice in another state without having to obtain a license in that state. 11. Which of the following best describes the relationship between auditing and attestation engagements? A. Auditing is a subset of attestation engagements that focuses on the certification of financial statements. B. Attestation is a subset of auditing that provides lower assurance than th

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    ACC504/ACC 504 MID TERM EXAM– ADVANCED AUDITING (50 MCQ) 100% ANSWER ACC504/ACC 504 MID TERM EXAM– ADVANCED AUDITING (50 MCQ) 100% ANSWER Question 1. What is the term used to identify the risk that the client’s financial statements may be materially false and misleading? A. Business risk. B. Information risk. C. Client risk. D. Risk assessment. 2. The audit objective that all transactions are recorded in the proper account is related most closely to which one of the ASB transaction assertions? A. Occurrence. B. Completeness. C. Accuracy. D. Classification. 3. Assurance services involve all of the following except A. Relevance as well as the reliability of information. B. Nonfinancial information as well as traditional financial statements. C. Providing absolute rather than reasonable assurance. D. Electronic databases as well as printed reports. 4. An attestation engagement is one in which a CPA is engaged to A. Issue a report on subject matter or an assertion about the subject matter that is the responsibility of another party. B. Provide tax advice or prepare a tax return based on financial information the CPA has not audited or reviewed. C. Testify as an expert witness in accounting, auditing, or tax matters, given certain stipulated facts. D. Assemble prospective financial statements based on the assumptions of the entity’s management without expressing any assurance. 5. The process by which a CPA obtains a certificate and license in a state other than the state in which the CPA’s certificate was originally obtained is referred to as A. Substantial equivalency. B. Quid pro quo. C. Relicensing. D. Re-examination 6. Which of the following would be considered an assurance engagement? A. Giving an opinion on a prize promoter’s claims about the amount of sweepstakes prizes awarded in the past. B. Giving an opinion on the conformity of the financial statements of a university with generally accepted accounting principles. C. Giving an opinion on the fair presentation of a newspaper’s circulation data. D. Giving assurance about the average drive length achieved by golfers with a client’s golf balls. E. All of the above. 7. Bankers who are processing loan applications from companies seeking large loans will probably ask for financial statements audited by an independent CPA because A. Financial statements are too complex to analyze themselves. B. They are too far away from company headquarters to perform accounting and auditing themselves. C. The consequences of making a bad loan are very undesirable. D. They generally see a potential conflict of interest between company managers who want to get loans and the bank’s needs for reliable financial statements. 8. The Sarbanes-Oxley Act of 2002 prohibits public accounting firms from providing which of the following services to an audit client? A. Bookkeeping services. B. Internal audit services. C. Valuation services. D. All of the above. 9. The risk to investors that a company’s financial statements may be materially misleading is called A. Client acceptance risk. B. Information risk. C. Moral hazard. D. Business risk. 10. Substantial equivalency refers to A. An auditor’s tendency not to believe management’s assertions without sufficient corroboration. B. Providing consulting work for another firm’s audit client in exchange for the other firm’s providing consulting services to one of your clients. C. The waiving of certification exam parts for an individual holding an equivalent certification from another professional organization. D. Permitting a CPA to practice in another state without having to obtain a license in that state. 11. Which of the following best describes the relationship between auditing and attestation engagements? A. Auditing is a subset of attestation engagements that focuses on the certification of financial statements. B. Attestation is a subset of auditing that provides lower assurance than th

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    Acc504 - Acc 504 Mid Term Exam - Advanced Auditing (50 MCQ) 100% Answer

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    teacher.theacestud
    ACC504/ACC 504 MID TERM EXAM– ADVANCED AUDITING (50 MCQ) 100% ANSWER ACC504/ACC 504 MID TERM EXAM– ADVANCED AUDITING (50 MCQ) 100% ANSWER Question 1. What is the term used to identify the risk that the client’s financial statements may be materially false and misleading? A. Business risk. B. Information risk. C. Client risk. D. Risk assessment. 2. The audit objective that all transactions are recorded in the proper account is related most closely to which one of the ASB transaction assertions? A. Occurrence. B. Completeness. C. Accuracy. D. Classification. 3. Assurance services involve all of the following except A. Relevance as well as the reliability of information. B. Nonfinancial information as well as traditional financial statements. C. Providing absolute rather than reasonable assurance. D. Electronic databases as well as printed reports. 4. An attestation engagement is one in which a CPA is engaged to A. Issue a report on subject matter or an assertion about the subject matter that is the responsibility of another party. B. Provide tax advice or prepare a tax return based on financial information the CPA has not audited or reviewed. C. Testify as an expert witness in accounting, auditing, or tax matters, given certain stipulated facts. D. Assemble prospective financial statements based on the assumptions of the entity’s management without expressing any assurance. 5. The process by which a CPA obtains a certificate and license in a state other than the state in which the CPA’s certificate was originally obtained is referred to as A. Substantial equivalency. B. Quid pro quo. C. Relicensing. D. Re-examination 6. Which of the following would be considered an assurance engagement? A. Giving an opinion on a prize promoter’s claims about the amount of sweepstakes prizes awarded in the past. B. Giving an opinion on the conformity of the financial statements of a university with generally accepted accounting principles. C. Giving an opinion on the fair presentation of a newspaper’s circulation data. D. Giving assurance about the average drive length achieved by golfers with a client’s golf balls. E. All of the above. 7. Bankers who are processing loan applications from companies seeking large loans will probably ask for financial statements audited by an independent CPA because A. Financial statements are too complex to analyze themselves. B. They are too far away from company headquarters to perform accounting and auditing themselves. C. The consequences of making a bad loan are very undesirable. D. They generally see a potential conflict of interest between company managers who want to get loans and the bank’s needs for reliable financial statements. 8. The Sarbanes-Oxley Act of 2002 prohibits public accounting firms from providing which of the following services to an audit client? A. Bookkeeping services. B. Internal audit services. C. Valuation services. D. All of the above. 9. The risk to investors that a company’s financial statements may be materially misleading is called A. Client acceptance risk. B. Information risk. C. Moral hazard. D. Business risk. 10. Substantial equivalency refers to A. An auditor’s tendency not to believe management’s assertions without sufficient corroboration. B. Providing consulting work for another firm’s audit client in exchange for the other firm’s providing consulting services to one of your clients. C. The waiving of certification exam parts for an individual holding an equivalent certification from another professional organization. D. Permitting a CPA to practice in another state without having to obtain a license in that state. 11. Which of the following best describes the relationship between auditing and attestation engagements? A. Auditing is a subset of attestation engagements that focuses on the certification of financial statements. B. Attestation is a subset of auditing that provides lower assurance than th

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    TheAceStudent:ACC504/ACC504MIDTERMEXAMADVANCEDAUDITING(50MCQ)100%ANSWER

    ACC504/ACC504MIDTERMEXAMADVANCED
    AUDITING(50MCQ)100%ANSWER
    ACC504/ACC504MIDTERMEXAMADVANCEDAUDITING(50MCQ)100%ANSWER
    Question
    1.Whatisthetermusedtoidentifytheriskthattheclientsfinancialstatementsmaybematerially
    falseandmisleading?
    A.Businessrisk.
    B.Informationrisk.
    C.Clientrisk.
    D.Riskassessment.
    2.Theauditobjectivethatalltransactionsarerecordedintheproperaccountisrelatedmostclosely
    towhichoneoftheASBtransactionassertions?
    A.Occurrence.
    B.Completeness.
    C.Accuracy.
    D.Classification.
    3.Assuranceservicesinvolveallofthefollowingexcept
    A.Relevanceaswellasthereliabilityofinformation.
    B.Nonfinancialinformationaswellastraditionalfinancialstatements.
    C.Providingabsoluteratherthanreasonableassurance.
    D.Electronicdatabasesaswellasprintedreports.
    4.AnattestationengagementisoneinwhichaCPAisengagedto
    A.Issueareportonsubjectmatteroranassertionaboutthesubjectmatterthatistheresponsibility
    ofanotherparty.
    B.ProvidetaxadviceorprepareataxreturnbasedonfinancialinformationtheCPAhasnotaudited
    orreviewed.
    C.Testifyasanexpertwitnessinaccounting,auditing,ortaxmatters,givencertainstipulated
    facts.
    D.Assembleprospectivefinancialstatementsbasedontheassumptionsoftheentitys
    managementwithoutexpressinganyassurance.
    5.TheprocessbywhichaCPAobtainsacertificateandlicenseinastateotherthanthestatein
    whichtheCPAscertificatewasoriginallyobtainedisreferredtoas
    A.Substantialequivalency.
    B.Quidproquo.
    C.Relicensing.
    D.Reexamination
    6.Whichofthefollowingwouldbeconsideredanassuranceengagement?
    A.Givinganopiniononaprizepromotersclaimsabouttheamountofsweepstakesprizesawarded
    inthepast.
    B.Givinganopinionontheconformityofthefinancialstatementsofauniversitywithgenerally
    acceptedaccountingprinciples.
    C.Givinganopiniononthefairpresentationofanewspaperscirculationdata.
    D.Givingassuranceabouttheaveragedrivelengthachievedbygolferswithaclientsgolfballs.
    E.Alloftheabove.
    7.Bankerswhoareprocessingloanapplicationsfromcompaniesseekinglargeloanswillprobably
    askforfinancialstatementsauditedbyanindependentCPAbecause
    A.Financialstatementsaretoocomplextoanalyzethemselves.
    B.Theyaretoofarawayfromcompanyheadquarterstoperformaccountingandauditing
    themselves.
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    C.Theconsequencesofmakingabadloanareveryundesirable.
    D.Theygenerallyseeapotentialconflictofinterestbetweencompanymanagerswhowanttoget
    loansandthebanksneedsforreliablefinancialstatements.
    8.TheSarbanesOxleyActof2002prohibitspublicaccountingfirmsfromprovidingwhichofthe
    followingservicestoanauditclient?
    A.Bookkeepingservices.
    B.Internalauditservices.
    C.Valuationservices.
    D.Alloftheabove.
    9.Therisktoinvestorsthatacompanysfinancialstatementsmaybemateriallymisleadingis
    called
    A.Clientacceptancerisk.
    B.Informationrisk.
    C.Moralhazard.
    D.Businessrisk.
    10.Substantialequivalencyrefersto
    A.Anauditorstendencynottobelievemanagementsassertionswithoutsufficientcorroboration.
    B.Providingconsultingworkforanotherfirmsauditclientinexchangefortheotherfirmsproviding
    consultingservicestooneofyourclients.
    C.Thewaivingofcertificationexampartsforanindividualholdinganequivalentcertificationfrom
    anotherprofessionalorganization.
    D.PermittingaCPAtopracticeinanotherstatewithouthavingtoobtainalicenseinthatstate.
    11.Whichofthefollowingbestdescribestherelationshipbetweenauditingandattestation
    engagements?
    A.Auditingisasubsetofattestationengagementsthatfocusesonthecertificationoffinancial
    statements.
    B.Attestationisasubsetofauditingthatprovideslowerassurancethanthatprovidedbyanaudit
    engagement.
    C.Auditingisasubsetofattestationengagementsthatfocusesonprovidingclientswithadviceand
    decisionsupport.
    D.Attestationisasubsetofauditingthatimprovesthequalityofinformation,oritscontext,for
    decisionmakers.
    12.Whichofthefollowingbestdescribesthefocusofthefollowingengagements?
    A.OptionA
    B.OptionB
    C.OptionC
    D.OptionD
    13.Whichofthefollowingisanexampleofaregulatoryauditor?
    A.Internalauditors.
    B.Big4auditors.
    C.U.S.InternalRevenueServiceauditors.
    D.Operationalauditors.
    14.Thedefinitionofperformanceauditsdoesnotinclude
    A.Economyaudits.
    B.Efficiencyaudits.
    C.Financialaudits.
    D.Programaudits.
    15.CPAcertificatesandlicensestopracticeareissuedbythe
    A.AICPA.
    B.Statesorterritories.
    C.AICPAExaminationsDivision.
    D.GAO.
    16.Theattestationstandardsdonotrequiretheattestationreporttoincludeastatementthat
    A.Providesaconclusionwhetherthesubjectmatterispresentedinconformitywithestablishedor
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    statedcriteria.
    B.Indicatesthatthepractitionerhassignificantreservationsabouttheengagement.
    C.Identifiesthesubjectmatterorassertionbeingreportedon.
    D.Indicatesthattheaccountantassumesnoresponsibilitytoupdatethereport.
    17.Controlriskis
    A.Theprobabilitythatamaterialmisstatementcouldnotbepreventedordetectedbytheentitys
    internalcontrolpoliciesandprocedures.
    B.Theprobabilitythatamaterialmisstatementcouldoccurandnotbedetectedbyauditors
    procedures.
    C.Theriskthatauditorswillnotbeabletocompletetheauditonatimelybasis.
    D.Theriskthatauditorswillnotproperlycontrolthestaffontheauditengagement.
    18.Whichofthefollowingisanelementofasystemofqualitycontrolthatshouldbeconsideredby
    apublicaccountingfirminestablishingitsqualitycontrolpoliciesandprocedures?
    A.Lendingcredibilitytoaclientsfinancialstatements.
    B.Usingstatisticalsamplingtechniques.
    C.Acceptingandcontinuingclientrelationshipsandspecificengagements.
    D.ObtainingmembershipintheCenterforPublicCompanyAuditFirms.
    19.Auditorstrytoachieveindependenceinappearanceinorderto:
    A.Maintainpublicconfidenceintheprofession.
    B.Becomeindependentinfact.
    C.Complywiththeresponsibilitiesprinciple.
    D.Maintainanunbiasedmentalattitude.
    20.Whichofthefollowingisnotincludedintheauditorsstandardreportrepresentinganunqualified
    opinion?
    A.Abriefindicationoftheresponsibilityofauditorsandmanagementforthefinancialstatements.
    B.Anindicationthatallappropriatedisclosureshavebeenmadeandincludedinthefinancial
    statements.
    C.Anindicationthattheauditwasconductedinaccordancewithstandardsestablishedbythe
    PCAOB.
    D.Theauditorsopiniononthefairnessofthefinancialstatements.
    21.Whichofthefollowingstatementsistruewithrespecttothepersuasivenessofauditevidence?
    A.Persuasivenessisrelatedtotherelevanceofevidencebutnotthereliabilityofevidence.
    B.Evidenceisconsideredmorepersuasivewhengatheredpriortoyearendthanfollowingyearend.
    C.Evidenceobtainedunderenvironmentsofstrongerinternalcontrolismorepersuasivethan
    evidenceobtainedunderenvironmentsofweakerinternalcontrol.
    D.Inevaluatingpersuasiveness,sufficiencyofevidenceisofmoreimportancethan
    appropriatenessofevidence.
    22.Whichofthefollowingisleastrelatedtotheconceptofindependenceinappearance?
    A.Theauditorsobjectivityandabilitytoactimpartiallytowardtheclient.
    B.Theperceptionsofindividualswhorelyonthefinancialstatementsandauditorsopiniononthe
    financialstatements.
    C.Theownershipofafinancialinterestinaclientbytheauditor.
    D.Theemploymentoftheauditorsfamilymemberinanimportantpositionwiththeclient.
    23.Themostpersuasiveevidenceregardingtheexistenceofnewlyacquiredcomputerequipment
    is
    A.Inquiryofmanagement.
    B.Documentationpreparedexternally.
    C.Observationofauditeesprocedures.
    D.Physicalobservation.
    24.Whichofthefollowingcombinationswouldprovidetheauditorthemostpersuasiveevidence?
    A.OptionA
    B.OptionB
    C.OptionC
    D.OptionD
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    25.Thehumanresourceselementofqualitycontrolinapublicaccountingfirmincludeswhichofthe
    following?
    A.Supervisionappropriateforthecompetenciesofthepersonnelassignedtotheworkisimportant.
    B.Professionaldevelopmentshouldbeprovidedsothatpersonnelwillhavetheknowledgerequired
    toenablethemtofulfilltheirresponsibilities.
    C.Peopleatallorganizationallevelsmustmaintainindependenceinfactandappearance.
    D.Whenacceptingandcontinuingclientrelationships,firmsshouldconsidertheirowncompetence.
    26.Theapplicationofrelevanttraining,knowledge,andexperienceinmakinginformeddecisions
    aboutappropriatecoursesofactionduringanauditisknownas
    A.Absoluteassurance.
    B.Professionaljudgment.
    C.Professionalskepticism.
    D.Reasonableassurance.
    27.C.Hill,CPA,hasbeenretainedtoauditthefinancialstatementsofMondayCo.Mondays
    predecessorauditorwasK.Post,CPA,whomMondayhasnotifiedbythatitsserviceshavebeen
    terminated.Underthesecircumstances,whichpartyshouldinitiatethecommunicationsbetween
    HillandPost?
    A.Hill,theauditor.
    B.Post,thepredecessorauditor.
    C.MondayscontrollerorCFO.
    D.ThechairofMondaysboardofdirectors.
    28.ThefirmofBanta,Brown,andBurgess,CPAs,requiresthatauditdocumentationcontainthe
    initialsofthepreparerandthereviewerinthetoprighthandcorner.Thisprocedureprovides
    evidenceofprofessionalconcernregardingwhichgenerallyacceptedauditingstandard?
    A.Independence.
    B.Adequatetechnicalcompetenceandcapabilities.
    C.Adequateplanningandsupervision.
    D.Gatheringsufficientcompetentevidence.
    29.Comparingdataonseparatefilescanbeaccomplishedbyusingcomputerassistedaudit
    techniques(CAATs)todeterminewhethercomparableinformationisinagreement.Examplesof
    suchcomparisonswouldnotinclude
    A.Payrolldetailswithpersonnelrecords.
    B.Currentandpriorinventorytodetailsofpurchasesandsales.
    C.Paidvoucherstodisbursements.
    D.Observationofinventoryaccounts.
    30.Theideaofthecycleapproachistogroupaccountstogetherby
    A.Specificfunction.
    B.Financialstatementassertion.
    C.Auditobjective.
    D.Transactionsthataffectallaccountsinthatparticulargroup.
    ACC504/ACC504MIDTERMEXAMADVANCEDAUDITING(50MCQ)100%ANSWER

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