Question 1

Quality controls are established for the entire CPA firm whereas auditing standards are applicable to the individual engagement.

Accepted Answer

A) True 
 B)False

Question 2

The overall purpose of the Securities and Exchange Commission is to assist in providing investors with reliable information upon which to make investment decisions.

Accepted Answer

A) True 
 B)False

Question 3

The form that must be filed with the Securities and Exchange Commission whenever a company plans to issue new securities to the public is the

Accepted Answer

A)  Form S-1. 
B)  Form 8-K. 
C)  Form 10-K. 
D)  Form 10-Q. 
A)  Form S-1. 
B)  Form 8-K. 
C)  Form 10-K. 
D)  Form 10-Q.

Question 4

Performance is one of the principles underlying an audit. List three performance responsibilities.

Accepted Answer

Performance responsibilities include:
•

Question 5

Which of the following is an element of the CPA's quality control system that should be considered in establishing its quality control policies and procedures?

Accepted Answer

A)  considering audit risk and materiality 
B)  using statistical sampling techniques 
C)  assigning appropriately experienced personnel to engagements 
D)  complying with laws and regulations 
A)  considering audit risk and materiality 
B)  using statistical sampling techniques 
C)  assigning appropriately experienced personnel to engagements 
D)  complying with laws and regulations

Question 6

Which of the following is a true statement regarding auditing standards?

Accepted Answer

A)  Prior to the passage of Sarbanes-Oxley, the FASB established auditing principles for U.S. public companies. 
B)  PCAOB auditing standards are applicable to entities outside the U.S. 
C)  There are no similarities between PCAOB standards and International Standards on Auditing. 
D)  The Auditing Standards Board has revised most of its standards to converge with the international standards. 
A)  Prior to the passage of Sarbanes-Oxley, the FASB established auditing principles for U.S. public companies. 
B)  PCAOB auditing standards are applicable to entities outside the U.S. 
C)  There are no similarities between PCAOB standards and International Standards on Auditing. 
D)  The Auditing Standards Board has revised most of its standards to converge with the international standards.

Question 7

Which of the following statements is true as it relates to limited liability partnerships?

Accepted Answer

A)  Only senior partners are liable for the partnership's debts. 
B)  Partners have no liability in a limited liability partnership arrangement. 
C)  Partners are personally liable for the acts of those under their supervision. 
D)  All partners must be AICPA members. 
A)  Only senior partners are liable for the partnership's debts. 
B)  Partners have no liability in a limited liability partnership arrangement. 
C)  Partners are personally liable for the acts of those under their supervision. 
D)  All partners must be AICPA members.

Question 8

Statements on Auditing Standards (SASs) are issued by the Public Company Accounting Oversight Board.

Accepted Answer

A) True 
 B)False

Question 9

In order to properly plan and perform an audit, an important fact for both the auditor and the client to understand is that

Accepted Answer

A)  the internal control policies and procedures are developed by the auditors. 
B)  the purpose of an audit is to prevent fraud. 
C)  management is responsible for the preparation of the financial statements. 
D)  management can restrict the auditor's access to important information relevant to the financial statements. 
A)  the internal control policies and procedures are developed by the auditors. 
B)  the purpose of an audit is to prevent fraud. 
C)  management is responsible for the preparation of the financial statements. 
D)  management can restrict the auditor's access to important information relevant to the financial statements.

Question 10

Which of the following is not true regarding the purpose of an audit performed on a set of financial statements in accordance with generally accepted auditing standards?

Accepted Answer

A)  to provide users of the financial statements with an opinion on the financial statements 
B)  to provide users of the financial statements with absolute assurance that the financial statements contain no errors in them 
C)  to provide financial statement users with an opinion on whether the financial statements are presented fairly or not 
D)  to provide financial statement users with an opinion in accordance with the applicable financial reporting framework 
A)  to provide users of the financial statements with an opinion on the financial statements 
B)  to provide users of the financial statements with absolute assurance that the financial statements contain no errors in them 
C)  to provide financial statement users with an opinion on whether the financial statements are presented fairly or not 
D)  to provide financial statement users with an opinion in accordance with the applicable financial reporting framework

Question 11

All of the Big Four accounting firms and many of the smaller CPA firms now operate as limited liability partnerships.

Accepted Answer

A) True 
 B)False

Question 12

An auditor should accept the fact that management of an audit client may restrict access to persons within the entity from whom the auditor may need to obtain audit evidence due to client confidentiality.

Accepted Answer

A) True 
 B)False

Question 13

Professional skepticism must be maintained only if the auditor suspects fraud.

Accepted Answer

A) True 
 B)False

Question 14

In a CPA firm, the audit senior or the in-charge auditor performs most of the detailed audit work.

Accepted Answer

A) True 
 B)False

Question 15

How often is the AICPA Peer Review Program performed of an AICPA member CPA firm administered by a State CPA Society under the overall direction of the AICPA Peer Review Board?

Accepted Answer

A)  every year 
B)  every 2 years 
C)  every 3 years 
D)  every 5 years 
A)  every year 
B)  every 2 years 
C)  every 3 years 
D)  every 5 years

Question 16

The principles underlying an audit

Accepted Answer

A)  contain the procedures that must be followed during an audit. 
B)  carry the same authority as AICPA auditing standards. 
C)  only apply to the audits of public companies. 
D)  provide structure for the clarified Codification. 
A)  contain the procedures that must be followed during an audit. 
B)  carry the same authority as AICPA auditing standards. 
C)  only apply to the audits of public companies. 
D)  provide structure for the clarified Codification.

Question 17

The AU-C number identifies the order in which it was issued in relation to all other codified auditing standards.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a publication issued by the Securities and Exchange Commission?

Accepted Answer

A)  Accounting and Auditing Enforcement Actions 
B)  Accounting Series Releases 
C)  Regulation S-X 
D)  State Board of Accountancy Enforcement Actions 
A)  Accounting and Auditing Enforcement Actions 
B)  Accounting Series Releases 
C)  Regulation S-X 
D)  State Board of Accountancy Enforcement Actions

Question 19

Which of the following are audit standards used in professional practice by audit firms?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 20

International Standards on Auditing are issued by the International Auditing and Assurance Standards Board (IAASB).

Accepted Answer

A) True 
 B)False

Exam 2: The CPA Profession

Quality controls are established for the entire CPA firm whereas auditing standards are applicable to the individual engagement.

The overall purpose of the Securities and Exchange Commission is to assist in providing investors with reliable information upon which to make investment decisions.

The form that must be filed with the Securities and Exchange Commission whenever a company plans to issue new securities to the public is the

Performance is one of the principles underlying an audit. List three performance responsibilities.

Which of the following is an element of the CPA's quality control system that should be considered in establishing its quality control policies and procedures?

Which of the following is a true statement regarding auditing standards?

Which of the following statements is true as it relates to limited liability partnerships?

Statements on Auditing Standards (SASs) are issued by the Public Company Accounting Oversight Board.

In order to properly plan and perform an audit, an important fact for both the auditor and the client to understand is that

Which of the following is not true regarding the purpose of an audit performed on a set of financial statements in accordance with generally accepted auditing standards?

All of the Big Four accounting firms and many of the smaller CPA firms now operate as limited liability partnerships.

An auditor should accept the fact that management of an audit client may restrict access to persons within the entity from whom the auditor may need to obtain audit evidence due to client confidentiality.

Professional skepticism must be maintained only if the auditor suspects fraud.

In a CPA firm, the audit senior or the in-charge auditor performs most of the detailed audit work.

How often is the AICPA Peer Review Program performed of an AICPA member CPA firm administered by a State CPA Society under the overall direction of the AICPA Peer Review Board?

The principles underlying an audit

The AU-C number identifies the order in which it was issued in relation to all other codified auditing standards.

Which of the following is not a publication issued by the Securities and Exchange Commission?

Which of the following are audit standards used in professional practice by audit firms?

International Standards on Auditing are issued by the International Auditing and Assurance Standards Board (IAASB).

The Demand for Audit and Other Assurance Services

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