Question 1

An integrated approach to auditing considers both the risk of misstatements and operating controls intended to prevent misstatements.

Accepted Answer

A) True 
 B)False

Question 2

As society becomes more complex, decision makers are more likely to receive reliable information.

Accepted Answer

A) True 
 B)False

Question 3

In the audit of historical financial statements, management asserts that the financial statements are fairly stated in accordance with what standards?

Accepted Answer

A)  regulatory accounting principles 
B)  applicable international accounting standards 
C)  applicable U.S. accounting standards 
D)  B and C 
A)  regulatory accounting principles 
B)  applicable international accounting standards 
C)  applicable U.S. accounting standards 
D)  B and C

Question 4

The criteria by which an auditor evaluates the information under audit may vary with the information being audited.

Accepted Answer

A) True 
 B)False

Question 5

An examination of part of an organization's procedures and methods for the purpose of evaluating efficiency and effectiveness is what type of audit?

Accepted Answer

A)  operational audit 
B)  compliance audit 
C)  financial statement audit 
D)  production audit 
A)  operational audit 
B)  compliance audit 
C)  financial statement audit 
D)  production audit

Question 6

A correct relationship among the auditor, the client, and the external users is

Accepted Answer

A)  management of a public company hires the independent auditor. 
B)  the audit committee of a private company hires the independent auditor. 
C)  the client provides capital to the external users. 
D)  the external users can rely upon the auditor's report to reduce information risk. 
A)  management of a public company hires the independent auditor. 
B)  the audit committee of a private company hires the independent auditor. 
C)  the client provides capital to the external users. 
D)  the external users can rely upon the auditor's report to reduce information risk.

Question 7

The primary role of the United States General Accounting Office is the enforcement of the Federal tax laws as defined by Congress and interpreted by the courts.

Accepted Answer

A) True 
 B)False

Question 8

Discuss the differences and similarities between the roles of accountants and auditors. What additional expertise must an auditor possess beyond that of an accountant?

Accepted Answer

The role of accountants is to record, cl

Question 9

Which one of the following is more difficult to evaluate objectively?

Accepted Answer

A)  presentation of financial statements in accordance with generally accepted accounting principles 
B)  compliance with government regulations 
C)  efficiency and effectiveness of operations 
D)  All three of the above are equally difficult. 
A)  presentation of financial statements in accordance with generally accepted accounting principles 
B)  compliance with government regulations 
C)  efficiency and effectiveness of operations 
D)  All three of the above are equally difficult.

Question 10

In a financial statement audit, the auditor

Accepted Answer

A)  gathers evidence to determine whether the statements contain material errors or other misstatements. 
B)  must have a thorough understanding of the entity and its environment. 
C)  determines whether the financial statements are stated in accordance with specified criteria. 
D)  all of the above. 
A)  gathers evidence to determine whether the statements contain material errors or other misstatements. 
B)  must have a thorough understanding of the entity and its environment. 
C)  determines whether the financial statements are stated in accordance with specified criteria. 
D)  all of the above.

Question 11

An accountant

Accepted Answer

A)  must possess expertise in the accumulation of audit evidence. 
B)  must decide the number and types of items to test. 
C)  must have an understanding of the principles and rules that provide the basis for preparing the accounting information. 
D)  must be a CPA. 
A)  must possess expertise in the accumulation of audit evidence. 
B)  must decide the number and types of items to test. 
C)  must have an understanding of the principles and rules that provide the basis for preparing the accounting information. 
D)  must be a CPA.

Question 12

Evidence is paramount to audit and attestation engagements. List the four basic types of audit evidence.

Accepted Answer

The four types of audit and attestation

Question 13

To perform an audit, it is necessary for the information to be in a verifiable form and there must be some criteria by which the auditor can evaluate the information. Detail the information and criteria that would be used when
(A) an independent CPA firm audits a company's historical financial statements.
(B) an Internal Revenue Service auditor audits that same company's tax return.
(C) an internal auditor performs an operational audit to evaluate whether the company's computerized payroll processing system is operating efficiently and effectively.

Accepted Answer

(A) The information used by a CPA firm i

Question 14

A high, but not absolute, level of assurance is called

Accepted Answer

A)  probable assurance. 
B)  reasonable assurance. 
C)  limited assurance. 
D)  incomplete assurance. 
A)  probable assurance. 
B)  reasonable assurance. 
C)  limited assurance. 
D)  incomplete assurance.

Question 15

The three requirements for becoming a CPA include all but which of the following?

Accepted Answer

A)  uniform CPA examination requirement 
B)  education requirements 
C)  character requirements 
D)  experience requirement 
A)  uniform CPA examination requirement 
B)  education requirements 
C)  character requirements 
D)  experience requirement

Question 16

A bank loan officer is trying to decide whether the bank should make a loan to a particular company. The interest rate the bank will charge the company is determined by many factors. Which of the following factors is influenced by the auditor's report?

Accepted Answer

A)  the risk-free interest rate risk 
B)  information risk 
C)  the business risk for/of the customer 
D)  All of the above are influenced by the auditor's report. 
A)  the risk-free interest rate risk 
B)  information risk 
C)  the business risk for/of the customer 
D)  All of the above are influenced by the auditor's report.

Question 17

Management is required by GAAP to reduce information risk, even if the costs outweigh the benefits.

Accepted Answer

A) True 
 B)False

Question 18

Both accountants and auditors must possess expertise in the accumulation and interpretation of audit evidence.

Accepted Answer

A) True 
 B)False

Question 19

The primary purpose of a management consulting engagement is to generate a recommendation to management.

Accepted Answer

A) True 
 B)False

Question 20

The trait that distinguishes auditors from accountants is the

Accepted Answer

A)  auditor's ability to interpret accounting principles generally accepted in the United States. 
B)  auditor's education beyond the bachelor's degree. 
C)  auditor's ability to interpret FASB Statements. 
D)  auditor's expertise in the accumulation and the interpretation of audit evidence. 
A)  auditor's ability to interpret accounting principles generally accepted in the United States. 
B)  auditor's education beyond the bachelor's degree. 
C)  auditor's ability to interpret FASB Statements. 
D)  auditor's expertise in the accumulation and the interpretation of audit evidence.

Exam 1: The Demand for Audit and Other Assurance Services

An integrated approach to auditing considers both the risk of misstatements and operating controls intended to prevent misstatements.

As society becomes more complex, decision makers are more likely to receive reliable information.

In the audit of historical financial statements, management asserts that the financial statements are fairly stated in accordance with what standards?

The criteria by which an auditor evaluates the information under audit may vary with the information being audited.

An examination of part of an organization's procedures and methods for the purpose of evaluating efficiency and effectiveness is what type of audit?

A correct relationship among the auditor, the client, and the external users is

The primary role of the United States General Accounting Office is the enforcement of the Federal tax laws as defined by Congress and interpreted by the courts.

Discuss the differences and similarities between the roles of accountants and auditors. What additional expertise must an auditor possess beyond that of an accountant?

Which one of the following is more difficult to evaluate objectively?

In a financial statement audit, the auditor

An accountant

Evidence is paramount to audit and attestation engagements. List the four basic types of audit evidence.

A high, but not absolute, level of assurance is called

The three requirements for becoming a CPA include all but which of the following?

A bank loan officer is trying to decide whether the bank should make a loan to a particular company. The interest rate the bank will charge the company is determined by many factors. Which of the following factors is influenced by the auditor's report?

Management is required by GAAP to reduce information risk, even if the costs outweigh the benefits.

Both accountants and auditors must possess expertise in the accumulation and interpretation of audit evidence.

The primary purpose of a management consulting engagement is to generate a recommendation to management.

The trait that distinguishes auditors from accountants is the

The CPA Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Materiality

Assessing the Risk of Material Misstatement

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

Filters