Question 1

Many individuals are apprehensive about using the Internet to purchase items.This apprehension mainly arises from users' concerns about

Accepted Answer

A) the reliability of computer technology. 
B) the time delays in Internet purchases. 
C) a lack of security for information transmitted over the Internet. 
D) the lack of CPA involvement in Internet company financial information. 
A) the reliability of computer technology. 
B) the time delays in Internet purchases. 
C) a lack of security for information transmitted over the Internet. 
D) the lack of CPA involvement in Internet company financial information.

Question 2

During a review engagement,which of the following is NOT a required inquiry of management?

Accepted Answer

A) The accounting principles and practices used 
B) Significant transactions occurring near the end of the reporting period 
C) Status of uncorrected misstatements identified in previous engagements 
D) The changes made to internal controls during the period under review 
A) The accounting principles and practices used 
B) Significant transactions occurring near the end of the reporting period 
C) Status of uncorrected misstatements identified in previous engagements 
D) The changes made to internal controls during the period under review

Question 3

An auditor's special report on financial statements prepared in conformity with the cash basis of accounting should include a separate explanatory paragraph before the opinion paragraph that

Accepted Answer

A) justifies the reasons for departing from generally accepted principles. 
B) states whether the financial statements are fairly presented in conformity with a special purpose framework. 
C) refers to the note to the financial statements that describes the special purpose framework. 
D) explains how the results of operations differ from financial statements prepared in conformity with generally accepted accounting principles. 
A) justifies the reasons for departing from generally accepted principles. 
B) states whether the financial statements are fairly presented in conformity with a special purpose framework. 
C) refers to the note to the financial statements that describes the special purpose framework. 
D) explains how the results of operations differ from financial statements prepared in conformity with generally accepted accounting principles.

Question 4

At a minimum,in order to comply with PCAOB AS 2201,an auditor of a public company that has material transactions processed by a service organization would have to request from the service organization

Accepted Answer

A) a description of its internal controls. 
B) a type one service auditors' report. 
C) a type two service auditors' report. 
D) a Service Organization Control (SO
C) 3 report. 
A) a description of its internal controls. 
B) a type one service auditors' report. 
C) a type two service auditors' report. 
D) a Service Organization Control (SO
C) 3 report.

Question 5

Delta Life Insurance Co.prepares its financial statements on an accounting basis insurance companies use pursuant to the rules of a state insurance commission.Wall,CPA,is Delta's auditor.If Wall discovers that the statements are not suitably titled,Wall should

Accepted Answer

A) disclose any reservations in an explanatory paragraph and qualify the opinion. 
B) apply to the state insurance commission for an advisory opinion. 
C) issue a special statutory basis report that clearly disclaims any opinion. 
D) explain in the notes to the financial statements the terminology used. 
A) disclose any reservations in an explanatory paragraph and qualify the opinion. 
B) apply to the state insurance commission for an advisory opinion. 
C) issue a special statutory basis report that clearly disclaims any opinion. 
D) explain in the notes to the financial statements the terminology used.

Question 6

A report on sustainability,as defined by the AICPA,might include all of the following except

Accepted Answer

A) economic viability. 
B) social responsibility. 
C) environmental responsibility. 
D) internal control over financial reporting. 
A) economic viability. 
B) social responsibility. 
C) environmental responsibility. 
D) internal control over financial reporting.

Question 7

Which of the following account titles would not be appropriate for a company that prepared its financial statements using the tax basis of accounting?

Accepted Answer

A) Balance Sheet 
B) Statement of Assets,Liabilities,and Owner's Equity 
C) Statement of Revenue and Expenses 
D) Statement of Change in Partners' Capital Accounts 
A) Balance Sheet 
B) Statement of Assets,Liabilities,and Owner's Equity 
C) Statement of Revenue and Expenses 
D) Statement of Change in Partners' Capital Accounts

Question 8

The phrase "Trust services" refers to

Accepted Answer

A) WebTrust and SysTrust Services. 
B) XBRL and SysTrust Services. 
C) WebTrust and XBRL Services. 
D) all AICPA designated assurance services. 
A) WebTrust and SysTrust Services. 
B) XBRL and SysTrust Services. 
C) WebTrust and XBRL Services. 
D) all AICPA designated assurance services.

Question 9

A preparation of financial statements engagement might include all of the following except

Accepted Answer

A) Preparation of financial statements prior to review by another accountant. 
B) Preparation of financial statements to be presented alongside an entity’s tax return. 
C) Preparation of financial statements solely for submission to a taxing authority. 
D) Preparation of financial statements for presentation alongside a personal financial plan. 
A) Preparation of financial statements prior to review by another accountant. 
B) Preparation of financial statements to be presented alongside an entity’s tax return. 
C) Preparation of financial statements solely for submission to a taxing authority. 
D) Preparation of financial statements for presentation alongside a personal financial plan.

Question 10

Enhanced Business Reporting (EBR)focuses on improving business reporting by developing a voluntary framework for presentation and disclosure of value drivers and non-financial measures of performance.The advantages of EBR include all of the following except

Accepted Answer

A) more efficient and effective regulatory process. 
B) reduced financing costs for companies. 
C) better allocation of capital by investors. 
D) better footnote disclosure in the companies' SEC filings. 
A) more efficient and effective regulatory process. 
B) reduced financing costs for companies. 
C) better allocation of capital by investors. 
D) better footnote disclosure in the companies' SEC filings.

Question 11

Shelly's Bank has loaned money to Pete's Auto Supply.The loan is collateralized by inventory.The loan also requires a CPA to observe the count of the inventory and trace sampled items to the vendor invoices in order to determine the value of inventory is not misstated.This service would be

Accepted Answer

A) an assurance service engagement. 
B) an attestation engagement. 
C) a review engagement. 
D) a compilation engagement. 
A) an assurance service engagement. 
B) an attestation engagement. 
C) a review engagement. 
D) a compilation engagement.

Question 12

When an accountant is engaged to compile a nonpublic entity's financial statements that omit substantially all disclosures required by GAAP,the accountant should indicate in the compilation report that the financial statements

Accepted Answer

A) might influence users' conclusions about the business,if the disclosures were included. 
B) are prepared in conformity with a comprehensive basis of accounting other than GAAP. 
C) are not compiled in accordance with Statements on Standards for Accounting and Review Services. 
D) are special-purpose financial statements that are not comparable to those of prior periods. 
A) might influence users' conclusions about the business,if the disclosures were included. 
B) are prepared in conformity with a comprehensive basis of accounting other than GAAP. 
C) are not compiled in accordance with Statements on Standards for Accounting and Review Services. 
D) are special-purpose financial statements that are not comparable to those of prior periods.

Question 13

Donna Prima,CPA,was engaged to review the unaudited financial statements of Rooster Restaurants Inc.,a nonpublic company.During her review,Donna found that Rooster had not capitalized leases as required by GAAP.The result was so material,that Donna modified the standard review report to state that "the financial statements are not in conformity with GAAP."
Required:
Is Donna's report in accordance with professional standards? If not,what should she have done under the circumstances? Explain.

Accepted Answer

Donna's report is not in accordance with

Question 14

In a compilation engagement,the accountant

Accepted Answer

A) provides reasonable assurance that no material misstatements exist. 
B) provides assurance that no material misstatement came to the auditors attention. 
C) provides a list of procedures performed and results found. 
D) does not express an opinion. 
A) provides reasonable assurance that no material misstatements exist. 
B) provides assurance that no material misstatement came to the auditors attention. 
C) provides a list of procedures performed and results found. 
D) does not express an opinion.

Question 15

What is the appropriate name for an assurance service provided by a CPA regarding a client's commercial Internet site with reference to the principles of privacy,security,processing integrity,availability,and confidentiality?

Accepted Answer

A) WebTrust 
B) SysTrust 
C) XBRL 
D) WebSecure 
A) WebTrust 
B) SysTrust 
C) XBRL 
D) WebSecure

Question 16

Auditors can gain sufficient understanding of the internal controls at a service organization by

Accepted Answer

A) reviewing the contract with the service organization. 
B) inquiry with management of the service organization. 
C) reviewing a report on internal controls provided by the service organization's auditors. 
D) sending a confirmation concerning internal controls to the service organization's auditors. 
A) reviewing the contract with the service organization. 
B) inquiry with management of the service organization. 
C) reviewing a report on internal controls provided by the service organization's auditors. 
D) sending a confirmation concerning internal controls to the service organization's auditors.

Question 17

Which of the following is NOT a condition that must be met before an accountant can conduct an engagement concerning a nonpublic entity's internal control over financial reporting?

Accepted Answer

A) Management accepts responsibility for the effectiveness of its internal control. 
B) Management has appropriately documented the internal controls. 
C) Management's evaluation of control can be supported by sufficient evidence. 
D) Management presents a written assertion about the effectiveness of its internal control. 
A) Management accepts responsibility for the effectiveness of its internal control. 
B) Management has appropriately documented the internal controls. 
C) Management's evaluation of control can be supported by sufficient evidence. 
D) Management presents a written assertion about the effectiveness of its internal control.

Question 18

In order to perform a review of interim financial information,the auditor must

Accepted Answer

A) have audited or be in the process of auditing the entity's latest financial statements. 
B) tested the entity's internal controls to determine that financial information is reliable. 
C) sent confirmation to third-parties concerning significant related-party transactions. 
D) established sufficient criteria to form an opinion on the fair presentation of the financial information. 
A) have audited or be in the process of auditing the entity's latest financial statements. 
B) tested the entity's internal controls to determine that financial information is reliable. 
C) sent confirmation to third-parties concerning significant related-party transactions. 
D) established sufficient criteria to form an opinion on the fair presentation of the financial information.

Question 19

The procedures used in a review engagement are

Accepted Answer

A) physical examination,reperformance,and obtaining a management representation letter. 
B) analytical procedures,reperformance,and obtaining a management representation letter. 
C) analytical procedures,inquiry,and obtaining a management representation letter. 
D) physical examination,inquiry,and obtaining a management representation letter. 
A) physical examination,reperformance,and obtaining a management representation letter. 
B) analytical procedures,reperformance,and obtaining a management representation letter. 
C) analytical procedures,inquiry,and obtaining a management representation letter. 
D) physical examination,inquiry,and obtaining a management representation letter.

Question 20

Which of the following procedures would not be performed in a review of financial statements of a nonpublic company?

Accepted Answer

A) Inquire about the accounting system and bookkeeping procedures. 
B) Perform analytical procedures to identify relationships and individual items that appear to be unusual. 
C) Obtain an attorney's letter regarding litigation and unasserted claims. 
D) Study the financial statements for indications that they conform to generally accepted accounting principles. 
A) Inquire about the accounting system and bookkeeping procedures. 
B) Perform analytical procedures to identify relationships and individual items that appear to be unusual. 
C) Obtain an attorney's letter regarding litigation and unasserted claims. 
D) Study the financial statements for indications that they conform to generally accepted accounting principles.

Many individuals are apprehensive about using the Internet to purchase items.This apprehension mainly arises from users' concerns about

During a review engagement,which of the following is NOT a required inquiry of management?

An auditor's special report on financial statements prepared in conformity with the cash basis of accounting should include a separate explanatory paragraph before the opinion paragraph that

At a minimum,in order to comply with PCAOB AS 2201,an auditor of a public company that has material transactions processed by a service organization would have to request from the service organization

Delta Life Insurance Co.prepares its financial statements on an accounting basis insurance companies use pursuant to the rules of a state insurance commission.Wall,CPA,is Delta's auditor.If Wall discovers that the statements are not suitably titled,Wall should

A report on sustainability,as defined by the AICPA,might include all of the following except

Which of the following account titles would not be appropriate for a company that prepared its financial statements using the tax basis of accounting?

The phrase "Trust services" refers to

A preparation of financial statements engagement might include all of the following except

Enhanced Business Reporting (EBR)focuses on improving business reporting by developing a voluntary framework for presentation and disclosure of value drivers and non-financial measures of performance.The advantages of EBR include all of the following except

Shelly's Bank has loaned money to Pete's Auto Supply.The loan is collateralized by inventory.The loan also requires a CPA to observe the count of the inventory and trace sampled items to the vendor invoices in order to determine the value of inventory is not misstated.This service would be

When an accountant is engaged to compile a nonpublic entity's financial statements that omit substantially all disclosures required by GAAP,the accountant should indicate in the compilation report that the financial statements

In a compilation engagement,the accountant

What is the appropriate name for an assurance service provided by a CPA regarding a client's commercial Internet site with reference to the principles of privacy,security,processing integrity,availability,and confidentiality?

Auditors can gain sufficient understanding of the internal controls at a service organization by

Which of the following is NOT a condition that must be met before an accountant can conduct an engagement concerning a nonpublic entity's internal control over financial reporting?

In order to perform a review of interim financial information,the auditor must

The procedures used in a review engagement are

Which of the following procedures would not be performed in a review of financial statements of a nonpublic company?

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

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Professional Ethics

Legal Liability

Internal Audits, Governmental Audits, and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Exam 13: Other Public Accounting Services

Many individuals are apprehensive about using the Internet to purchase items.This apprehension mainly arises from users' concerns about

During a review engagement,which of the following is NOT a required inquiry of management?

An auditor's special report on financial statements prepared in conformity with the cash basis of accounting should include a separate explanatory paragraph before the opinion paragraph that

At a minimum,in order to comply with PCAOB AS 2201,an auditor of a public company that has material transactions processed by a service organization would have to request from the service organization

Delta Life Insurance Co.prepares its financial statements on an accounting basis insurance companies use pursuant to the rules of a state insurance commission.Wall,CPA,is Delta's auditor.If Wall discovers that the statements are not suitably titled,Wall should

A report on sustainability,as defined by the AICPA,might include all of the following except

Which of the following account titles would not be appropriate for a company that prepared its financial statements using the tax basis of accounting?

The phrase "Trust services" refers to

A preparation of financial statements engagement might include all of the following except

Enhanced Business Reporting (EBR)focuses on improving business reporting by developing a voluntary framework for presentation and disclosure of value drivers and non-financial measures of performance.The advantages of EBR include all of the following except

Shelly's Bank has loaned money to Pete's Auto Supply.The loan is collateralized by inventory.The loan also requires a CPA to observe the count of the inventory and trace sampled items to the vendor invoices in order to determine the value of inventory is not misstated.This service would be

When an accountant is engaged to compile a nonpublic entity's financial statements that omit substantially all disclosures required by GAAP,the accountant should indicate in the compilation report that the financial statements

In a compilation engagement,the accountant

What is the appropriate name for an assurance service provided by a CPA regarding a client's commercial Internet site with reference to the principles of privacy,security,processing integrity,availability,and confidentiality?

Auditors can gain sufficient understanding of the internal controls at a service organization by

Which of the following is NOT a condition that must be met before an accountant can conduct an engagement concerning a nonpublic entity's internal control over financial reporting?

In order to perform a review of interim financial information,the auditor must

The procedures used in a review engagement are

Which of the following procedures would not be performed in a review of financial statements of a nonpublic company?

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

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Professional Ethics

Legal Liability

Internal Audits, Governmental Audits, and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters