Question 1

The typical business activity of the finance and investment cycle would not include

Accepted Answer

A) proposals for cash forecasts, capital budgets, and business expansion. 
B) analysis of excess cash funds. 
C) reconciliation of cash. 
D) sale of stocks, bonds, or notes. 
A) proposals for cash forecasts, capital budgets, and business expansion. 
B) analysis of excess cash funds. 
C) reconciliation of cash. 
D) sale of stocks, bonds, or notes.

Question 2

Which of the following audit procedures would not likely be performed for audits of shareholders' equity?

Accepted Answer

A) Read board of directors' minutes for authorization of equity transactions. 
B) Confirm outstanding common and preferred stock with stock registrar. 
C) Compare valuation of stock to published market prices. 
D) Obtain management representation about number of shares issued and outstanding. 
A) Read board of directors' minutes for authorization of equity transactions. 
B) Confirm outstanding common and preferred stock with stock registrar. 
C) Compare valuation of stock to published market prices. 
D) Obtain management representation about number of shares issued and outstanding.

Question 3

The focus of controls in the finance and investment cycle is on:

Accepted Answer

A) proper authorizations and competent personnel. 
B) computer controls over transactions. 
C) physical security of assets. 
D) prenumbered documents. 
A) proper authorizations and competent personnel. 
B) computer controls over transactions. 
C) physical security of assets. 
D) prenumbered documents.

Question 4

An _______ is an approximation of a financial statement element, item, or accoun

Accepted Answer

The answer of An _______ is an approximation of a...

Question 5

A _______ approved by the board of directors constitutes the authorization for capital asset acquisitions and investments.

Accepted Answer

The answer of A _______ approved by the board of...

Question 6

When auditing the valuation assertion of an equity method investment, which of the following is the auditor most likely to do?

Accepted Answer

A) Inspect stock certificates. 
B) Obtain audited financial statements of the investee company. 
C) Obtain the market price of the stock as of year-end. 
D) Review management's calculations. 
A) Inspect stock certificates. 
B) Obtain audited financial statements of the investee company. 
C) Obtain the market price of the stock as of year-end. 
D) Review management's calculations.

Question 7

Which of the following is not a substantive audit procedure for estimates of management?

Accepted Answer

A) Recalculating the mathematical estimate 
B) Observing whether estimates are prepared by qualified personnel 
C) Developing an independent estimate based on alternative assumptions 
D) Comparing the estimates of management to subsequently discovered facts before the end of fieldwork 
A) Recalculating the mathematical estimate 
B) Observing whether estimates are prepared by qualified personnel 
C) Developing an independent estimate based on alternative assumptions 
D) Comparing the estimates of management to subsequently discovered facts before the end of fieldwork

Question 8

_______ is responsible for making estimates and should have a _______ and _______ designed to reduce the likelihood of material misstatements in them.

Accepted Answer

[Client's

Question 9

Which of the following management assertions for long-term liabilities is related to the ASB balance assertion of completeness?

Accepted Answer

A) All material long-term liabilities are recorded. 
B) New long-term liabilities and debt extinguishments are properly authorized. 
C) Terms, conditions, and restrictions relating to noncurrent debt are adequately disclosed. 
D) Disclosures of maturities for the next five years are accurate and adequate. 
A) All material long-term liabilities are recorded. 
B) New long-term liabilities and debt extinguishments are properly authorized. 
C) Terms, conditions, and restrictions relating to noncurrent debt are adequately disclosed. 
D) Disclosures of maturities for the next five years are accurate and adequate.

Question 10

The auditors should insist that a representative of the client be present during the inspection and count of securities to:

Accepted Answer

A) lend authority to the auditors' directives. 
B) detect forged securities. 
C) coordinate the return of all securities to proper locations. 
D) acknowledge the receipt of securities returned. 
A) lend authority to the auditors' directives. 
B) detect forged securities. 
C) coordinate the return of all securities to proper locations. 
D) acknowledge the receipt of securities returned.

Question 11

Which of the following is not a relevant aspect of internal controls over estimates?

Accepted Answer

A) External auditor involvement in developing assumptions 
B) Adequate review by appropriate levels of authority 
C) Comparison of prior estimates with subsequent results 
D) All the above are relevant aspects of internal controls over estimates. 
A) External auditor involvement in developing assumptions 
B) Adequate review by appropriate levels of authority 
C) Comparison of prior estimates with subsequent results 
D) All the above are relevant aspects of internal controls over estimates.

Question 12

_______ of securities can prevent the use of company securities as _______ for personal loans.

Accepted Answer

[Proper cu

Question 13

Investment accounting may be on the _______ method, _______ method, or _______ method.

Accepted Answer

[cost, equ

Question 14

Which ASB balance assertion is of the most importance to auditors for long-term liabilities?

Accepted Answer

A) Existence 
B) Completeness 
C) Rights and obligations 
D) Valuation 
A) Existence 
B) Completeness 
C) Rights and obligations 
D) Valuation

Question 15

Compensating controls in the finance and investment cycle:

Accepted Answer

A) feature separation of duties by upper management. 
B) feature involvement of two or more persons handling all important responsibilities. 
C) include involvement by the external auditor. 
D) include all the above. 
A) feature separation of duties by upper management. 
B) feature involvement of two or more persons handling all important responsibilities. 
C) include involvement by the external auditor. 
D) include all the above.

Question 16

When circumstances call for extended procedures, information on outstanding stock may be _______ .

Accepted Answer

confirmed

Question 17

Which of the following is not an estimate required in the finance and investment cycle?

Accepted Answer

A) Actuarial assumptions for pension accruals 
B) Residual values for leases 
C) Stated market value of publicly traded stocks 
D) All the above are estimates. 
A) Actuarial assumptions for pension accruals 
B) Residual values for leases 
C) Stated market value of publicly traded stocks 
D) All the above are estimates.

Question 18

"Are interest payments and accruals monitored for due dates and financial statement dates?" is an internal control questionnaire item that is related to the ASB transaction assertion of:

Accepted Answer

A) occurrence. 
B) completeness. 
C) cutoff. 
D) accuracy. 
A) occurrence. 
B) completeness. 
C) cutoff. 
D) accuracy.

Question 19

Tests of controls in the finance and investment cycle:

Accepted Answer

A) normally focus on tests of transactions. 
B) primarily involve observing physical security of assets. 
C) typically amount to inquiries and observations related to management involvement. 
D) can significantly reduce the extent of substantive tests. 
A) normally focus on tests of transactions. 
B) primarily involve observing physical security of assets. 
C) typically amount to inquiries and observations related to management involvement. 
D) can significantly reduce the extent of substantive tests.

Question 20

When an entity uses a trust company as custodian of its marketable securities, the possibility of concealing fraud most likely would be reduced if the:

Accepted Answer

A) trust company has no direct contact with the entity employees responsible for maintaining investment accounting records. 
B) securities are registered in the name of the trust company rather than the entity itself. 
C) interest and dividend checks are mailed directly to an entity employee who is authorized to sell securities. 
D) the trust company places the securities in a bank safe deposit vault under the custodian's exclusive control. 
A) trust company has no direct contact with the entity employees responsible for maintaining investment accounting records. 
B) securities are registered in the name of the trust company rather than the entity itself. 
C) interest and dividend checks are mailed directly to an entity employee who is authorized to sell securities. 
D) the trust company places the securities in a bank safe deposit vault under the custodian's exclusive control.

The typical business activity of the finance and investment cycle would not include

Which of the following audit procedures would not likely be performed for audits of shareholders' equity?

The focus of controls in the finance and investment cycle is on:

An _______ is an approximation of a financial statement element, item, or accoun

A _______ approved by the board of directors constitutes the authorization for capital asset acquisitions and investments.

When auditing the valuation assertion of an equity method investment, which of the following is the auditor most likely to do?

Which of the following is not a substantive audit procedure for estimates of management?

___ is responsible for making estimates and should have a _ and _____ designed to reduce the likelihood of material misstatements in them.

Which of the following management assertions for long-term liabilities is related to the ASB balance assertion of completeness?

The auditors should insist that a representative of the client be present during the inspection and count of securities to:

Which of the following is not a relevant aspect of internal controls over estimates?

_ of securities can prevent the use of company securities as _ for personal loans.

Investment accounting may be on the ___ method, _ method, or _____ method.

Which ASB balance assertion is of the most importance to auditors for long-term liabilities?

Compensating controls in the finance and investment cycle:

When circumstances call for extended procedures, information on outstanding stock may be _______ .

Which of the following is not an estimate required in the finance and investment cycle?

"Are interest payments and accruals monitored for due dates and financial statement dates?" is an internal control questionnaire item that is related to the ASB transaction assertion of:

Tests of controls in the finance and investment cycle:

When an entity uses a trust company as custodian of its marketable securities, the possibility of concealing fraud most likely would be reduced if the:

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash 227

Revenue and Collection Cycle 279

Acquisition and Expenditure Cycle 336

Production Cycle 394

Completing the Audit 500

Reports on Audited Financial Statements

Filters

Exam 10: Finance and Investment Cycle 443

The typical business activity of the finance and investment cycle would not include

Which of the following audit procedures would not likely be performed for audits of shareholders' equity?

The focus of controls in the finance and investment cycle is on:

An _______ is an approximation of a financial statement element, item, or accoun

A _______ approved by the board of directors constitutes the authorization for capital asset acquisitions and investments.

When auditing the valuation assertion of an equity method investment, which of the following is the auditor most likely to do?

Which of the following is not a substantive audit procedure for estimates of management?

_______ is responsible for making estimates and should have a _______ and _______ designed to reduce the likelihood of material misstatements in them.

Which of the following management assertions for long-term liabilities is related to the ASB balance assertion of completeness?

The auditors should insist that a representative of the client be present during the inspection and count of securities to:

Which of the following is not a relevant aspect of internal controls over estimates?

_______ of securities can prevent the use of company securities as _______ for personal loans.

Investment accounting may be on the _______ method, _______ method, or _______ method.

Which ASB balance assertion is of the most importance to auditors for long-term liabilities?

Compensating controls in the finance and investment cycle:

When circumstances call for extended procedures, information on outstanding stock may be _______ .

Which of the following is not an estimate required in the finance and investment cycle?

"Are interest payments and accruals monitored for due dates and financial statement dates?" is an internal control questionnaire item that is related to the ASB transaction assertion of:

Tests of controls in the finance and investment cycle:

When an entity uses a trust company as custodian of its marketable securities, the possibility of concealing fraud most likely would be reduced if the:

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash 227

Revenue and Collection Cycle 279

Acquisition and Expenditure Cycle 336

Production Cycle 394

Completing the Audit 500

Reports on Audited Financial Statements

Filters

___ is responsible for making estimates and should have a _ and _____ designed to reduce the likelihood of material misstatements in them.

_ of securities can prevent the use of company securities as _ for personal loans.

Investment accounting may be on the ___ method, _ method, or _____ method.