Question 1

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 2

To determine whether facts support management's intent to hold securities to maturity,an auditor might

Accepted Answer

A)  Study the entity's cash flow forecasts. 
B)  Obtain published market quotations. 
C)  Compare fair value of the securities to cost. 
D)  Confirm that the securities are held by a broker. 
A)  Study the entity's cash flow forecasts. 
B)  Obtain published market quotations. 
C)  Compare fair value of the securities to cost. 
D)  Confirm that the securities are held by a broker.

Question 3

Documenting ownership of bonds can be handled by a trustee having duties and responsibilities similar to those of registrars and transfer agents.

Accepted Answer

A) True 
 B)False

Question 4

Selecting a sample of paid notes and tracing interest to the general ledger account is a test of the PCAOB assertion for

Accepted Answer

A)  Accounting. 
B)  Valuation or allocation. 
C)  Completeness. 
D)  Existence or occurrence. 
A)  Accounting. 
B)  Valuation or allocation. 
C)  Completeness. 
D)  Existence or occurrence.

Question 5

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 6

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

Accepted Answer

Client's m

Question 7

Which of the following is not an off-balance-sheet item?

Accepted Answer

A)  Purchase commitment. 
B)  Capitalized lease. 
C)  Loan commitment. 
D)  Synthetic lease. 
A)  Purchase commitment. 
B)  Capitalized lease. 
C)  Loan commitment. 
D)  Synthetic lease.

Question 8

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 9

What is a compensating control? Describe what type of compensating controls might be implemented in the finance and investment cycle.

Accepted Answer

A compensating control is a control acti

Question 10

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 11

The typical assertion relating to investments and related accounts in a manufacturing company would not include the assertion that

Accepted Answer

A)  All investments are valued at cost. 
B)  Investment securities are on hand or held in safekeeping by a trustee. 
C)  Investment income has been received and recorded. 
D)  Investments are adequately classified and described in the balance sheet, including disclosures. 
A)  All investments are valued at cost. 
B)  Investment securities are on hand or held in safekeeping by a trustee. 
C)  Investment income has been received and recorded. 
D)  Investments are adequately classified and described in the balance sheet, including disclosures.

Question 12

Auditors count investment securities held by the client primarily to test the ASB balance assertion of

Accepted Answer

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

Question 13

Loan covenants are used for which of the following reasons?

Accepted Answer

A)  To protect the lender from the borrower substantially weakening the borrower's financial position. 
B)  To protect the borrower from the lender calling the loan early. 
C)  To protect the auditors from false information by the borrower. 
D)  To protect shareholders from management taking on too much debt. 
A)  To protect the lender from the borrower substantially weakening the borrower's financial position. 
B)  To protect the borrower from the lender calling the loan early. 
C)  To protect the auditors from false information by the borrower. 
D)  To protect shareholders from management taking on too much debt.

Question 14

The ASB balance assertion of _____________________________ is paramount in the verification of long-term liabilities and determination that all liabilities are recorded.

Accepted Answer

The answer of The ASB balance assertion of _____________________________ is...

Question 15

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)  Analyses 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)  Analyses of excess cash funds. 
C)  Reconciliation of cash. 
D)  Sale of stocks, bonds, or notes.

Question 16

When auditing the market value of an investment,an auditor would be least likely to

Accepted Answer

A)  Examine quoted market prices. 
B)  Evaluate management's procedure for determining market prices. 
C)  Make his or her own determination of market prices. 
D)  Confirm market prices with a broker. 
A)  Examine quoted market prices. 
B)  Evaluate management's procedure for determining market prices. 
C)  Make his or her own determination of market prices. 
D)  Confirm market prices with a broker.

Question 17

An ___________________________________ is an approximation of a financial statement element,item,or account.

Accepted Answer

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

Question 18

Records of interest rates and bonds payable are maintained by the _____________________________ and the ____________________________.

Accepted Answer

accounting

Question 19

The segregation of functional responsibilities is relatively easy for the finance and investment cycle.

Accepted Answer

A) True 
 B)False

Question 20

If it would be appropriate to confirm capital stock,the auditor would obtain the confirmation from

Accepted Answer

A)  Management. 
B)  The board of directors. 
C)  Stockholders. 
D)  An independent registrar. 
A)  Management. 
B)  The board of directors. 
C)  Stockholders. 
D)  An independent registrar.

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

To determine whether facts support management's intent to hold securities to maturity,an auditor might

Documenting ownership of bonds can be handled by a trustee having duties and responsibilities similar to those of registrars and transfer agents.

Selecting a sample of paid notes and tracing interest to the general ledger account is a test of the PCAOB assertion for

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 is not an off-balance-sheet item?

Compensating controls in the finance and investment cycle

What is a compensating control? Describe what type of compensating controls might be implemented in the finance and investment cycle.

Tests of controls in the finance and investment cycle

The typical assertion relating to investments and related accounts in a manufacturing company would not include the assertion that

Auditors count investment securities held by the client primarily to test the ASB balance assertion of

Loan covenants are used for which of the following reasons?

The ASB balance assertion of _____________________________ is paramount in the verification of long-term liabilities and determination that all liabilities are recorded.

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

When auditing the market value of an investment,an auditor would be least likely to

An ___________________________________ is an approximation of a financial statement element,item,or account.

Records of interest rates and bonds payable are maintained by the _ and the .

The segregation of functional responsibilities is relatively easy for the finance and investment cycle.

If it would be appropriate to confirm capital stock,the auditor would obtain the confirmation from

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

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Exam 10: Finance and Investment Cycle

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

To determine whether facts support management's intent to hold securities to maturity,an auditor might

Documenting ownership of bonds can be handled by a trustee having duties and responsibilities similar to those of registrars and transfer agents.

Selecting a sample of paid notes and tracing interest to the general ledger account is a test of the PCAOB assertion for

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 is not an off-balance-sheet item?

Compensating controls in the finance and investment cycle

What is a compensating control? Describe what type of compensating controls might be implemented in the finance and investment cycle.

Tests of controls in the finance and investment cycle

The typical assertion relating to investments and related accounts in a manufacturing company would not include the assertion that

Auditors count investment securities held by the client primarily to test the ASB balance assertion of

Loan covenants are used for which of the following reasons?

The ASB balance assertion of _____________________________ is paramount in the verification of long-term liabilities and determination that all liabilities are recorded.

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

When auditing the market value of an investment,an auditor would be least likely to

An ___________________________________ is an approximation of a financial statement element,item,or account.

Records of interest rates and bonds payable are maintained by the _____________________________ and the ____________________________.

The segregation of functional responsibilities is relatively easy for the finance and investment cycle.

If it would be appropriate to confirm capital stock,the auditor would obtain the confirmation from

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

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

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

Records of interest rates and bonds payable are maintained by the _ and the .