Question 1

The Code of Professional Conduct is established by the membership of the AICPA, and the Interpretations of the Rules of Conduct are prepared by the:

Accepted Answer

A)  Financial Accounting Standards Board. 
B)  Securities and Exchange Commission. 
C)  CPA licensing agencies within each state. 
D)  Professional Ethics Executive Committee of the AICPA. 
A)  Financial Accounting Standards Board. 
B)  Securities and Exchange Commission. 
C)  CPA licensing agencies within each state. 
D)  Professional Ethics Executive Committee of the AICPA.

Question 2

Ethical Rulings are:
I. Explanations relating to broad hypothetical circumstances.
II. Not enforceable, but one must justify departure.
III. Explanations relating to specific factual circumstances.

Accepted Answer

A)  I and II 
B)  I and III 
C)  II and III 
D)  I, II, and III 
A)  I and II 
B)  I and III 
C)  II and III 
D)  I, II, and III

Question 3

Which of the following is(are) true concerning the Ethical Principles of the Code of Professional Conduct?
I. They identify ideal conduct.
II. They are general ideals and difficult to enforce.

Accepted Answer

A)  I only 
B)  II only 
C)  I and II 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  I and II 
D)  Neither I nor II

Question 4

An advantage of specific rules in the Code of Professional Conduct is the enforceability of minimum behavior and performance standards.

Accepted Answer

A) True 
 B)False

Question 5

Generally, loans between a CPA firm or its members and an audit client are prohibited because it is a financial relationship. Which of the following, made under normal lending procedures, is not an exception to this rule?

Accepted Answer

A)  immaterial loans 
B)  home mortgages 
C)  material loans 
D)  secured loans 
A)  immaterial loans 
B)  home mortgages 
C)  material loans 
D)  secured loans

Question 6

The Independence Standards Board was formed to provide a conceptual framework for independence issues related to audits of public companies.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not one of the four parts of the AICPA's Code of Professional Conduct?

Accepted Answer

A)  Principles 
B)  Rules of Conduct 
C)  Interpretations 
D)  Definitions 
A)  Principles 
B)  Rules of Conduct 
C)  Interpretations 
D)  Definitions

Question 8

Auditors are allowed to have an indirect financial interest in an audit client, such as ownership of stock in a client's company by the auditor's brother, as long as the amount of the financial interest is immaterial to the brother.

Accepted Answer

A) True 
 B)False

Question 9

Under Rule 505, Form of Organization and Name, a CPA firm may use any name as long as it is not misleading.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is required for a firm to designate itself "Member of the American Institute of Certified Public Accountants" on its letterhead?

Accepted Answer

A)  At least one of the partners must be a member of the AICPA. 
B)  All partners must be members of the AICPA. 
C)  The partners whose names appear in the firm name must be members of the AICPA. 
D)  A majority of the partners must be members of the AICPA. 
A)  At least one of the partners must be a member of the AICPA. 
B)  All partners must be members of the AICPA. 
C)  The partners whose names appear in the firm name must be members of the AICPA. 
D)  A majority of the partners must be members of the AICPA.

Question 11

When CPAs are able to maintain their actual independence, it is referred to as independence in:

Accepted Answer

A)  conduct. 
B)  appearance. 
C)  fact. 
D)  total. 
A)  conduct. 
B)  appearance. 
C)  fact. 
D)  total.

Question 12

Interpretations to the Rules of Conduct permit a CPA firm to do both bookkeeping and auditing for the same client if three criteria are met. Which of the following is not one of those criteria?

Accepted Answer

A)  The client must accept full responsibility for the financial statements. 
B)  The client is required to file an annual report, including audited financial statements, with the Securities and Exchange Commission. 
C)  The CPA must not assume the role of employee or of manager. 
D)  The CPA must follow applicable auditing standards. 
A)  The client must accept full responsibility for the financial statements. 
B)  The client is required to file an annual report, including audited financial statements, with the Securities and Exchange Commission. 
C)  The CPA must not assume the role of employee or of manager. 
D)  The CPA must follow applicable auditing standards.

Question 13

Briefly describe the advantages and disadvantages of a code of conduct based on general statements of ideal conduct as opposed to specific rules that define unacceptable behavior.

Accepted Answer

Advantages Disadvantages
General stateme

Question 14

Four of the six Ethical Principles in the AICPA's Code of Professional Conduct are equally applicable to all members of the AICPA. Which of the following principles applies only to members in public practice?

Accepted Answer

A)  Scope and Nature of Services 
B)  Integrity 
C)  Due Care 
D)  The Public Interest 
A)  Scope and Nature of Services 
B)  Integrity 
C)  Due Care 
D)  The Public Interest

The Code of Professional Conduct is established by the membership of the AICPA, and the Interpretations of the Rules of Conduct are prepared by the:

Ethical Rulings are: I. Explanations relating to broad hypothetical circumstances. II. Not enforceable, but one must justify departure. III. Explanations relating to specific factual circumstances.

Which of the following is(are) true concerning the Ethical Principles of the Code of Professional Conduct? I. They identify ideal conduct. II. They are general ideals and difficult to enforce.

An advantage of specific rules in the Code of Professional Conduct is the enforceability of minimum behavior and performance standards.

Generally, loans between a CPA firm or its members and an audit client are prohibited because it is a financial relationship. Which of the following, made under normal lending procedures, is not an exception to this rule?

The Independence Standards Board was formed to provide a conceptual framework for independence issues related to audits of public companies.

Which of the following is not one of the four parts of the AICPA's Code of Professional Conduct?

Auditors are allowed to have an indirect financial interest in an audit client, such as ownership of stock in a client's company by the auditor's brother, as long as the amount of the financial interest is immaterial to the brother.

Under Rule 505, Form of Organization and Name, a CPA firm may use any name as long as it is not misleading.

Which of the following is required for a firm to designate itself "Member of the American Institute of Certified Public Accountants" on its letterhead?

When CPAs are able to maintain their actual independence, it is referred to as independence in:

Interpretations to the Rules of Conduct permit a CPA firm to do both bookkeeping and auditing for the same client if three criteria are met. Which of the following is not one of those criteria?

Briefly describe the advantages and disadvantages of a code of conduct based on general statements of ideal conduct as opposed to specific rules that define unacceptable behavior.

Four of the six Ethical Principles in the AICPA's Code of Professional Conduct are equally applicable to all members of the AICPA. Which of the following principles applies only to members in public practice?

The Demand for Audit and Other Assurance Services

The CPA Profession

Audit Reports

Legal Liability

The CPA Profession

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Section 404 Audits of Internal Control and Control Risk

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Plan and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

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 and Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls and 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 Balances

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

Filters

Exam 4: Professional Ethics

The Code of Professional Conduct is established by the membership of the AICPA, and the Interpretations of the Rules of Conduct are prepared by the:

Ethical Rulings are: I. Explanations relating to broad hypothetical circumstances. II. Not enforceable, but one must justify departure. III. Explanations relating to specific factual circumstances.

Which of the following is(are) true concerning the Ethical Principles of the Code of Professional Conduct? I. They identify ideal conduct. II. They are general ideals and difficult to enforce.

An advantage of specific rules in the Code of Professional Conduct is the enforceability of minimum behavior and performance standards.

Generally, loans between a CPA firm or its members and an audit client are prohibited because it is a financial relationship. Which of the following, made under normal lending procedures, is not an exception to this rule?

The Independence Standards Board was formed to provide a conceptual framework for independence issues related to audits of public companies.

Which of the following is not one of the four parts of the AICPA's Code of Professional Conduct?

Auditors are allowed to have an indirect financial interest in an audit client, such as ownership of stock in a client's company by the auditor's brother, as long as the amount of the financial interest is immaterial to the brother.

Under Rule 505, Form of Organization and Name, a CPA firm may use any name as long as it is not misleading.

Which of the following is required for a firm to designate itself "Member of the American Institute of Certified Public Accountants" on its letterhead?

When CPAs are able to maintain their actual independence, it is referred to as independence in:

Interpretations to the Rules of Conduct permit a CPA firm to do both bookkeeping and auditing for the same client if three criteria are met. Which of the following is not one of those criteria?

Briefly describe the advantages and disadvantages of a code of conduct based on general statements of ideal conduct as opposed to specific rules that define unacceptable behavior.

Four of the six Ethical Principles in the AICPA's Code of Professional Conduct are equally applicable to all members of the AICPA. Which of the following principles applies only to members in public practice?

The Demand for Audit and Other Assurance Services

The CPA Profession

Audit Reports

Legal Liability

The CPA Profession

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Section 404 Audits of Internal Control and Control Risk

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Plan and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

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 and Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls and 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 Balances

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

Filters