30 Quick Auditing questions

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1.The name _____ is used to describe the broad range of information enhancement servicesthat are provided by certified public accountants.

A.assurance service

B.attest engagement

C.audit of financial statements

D.compliance audit

E.CPA examination

2.To _____to information means to provide assurance as to its reliability.

A.assert

B.assure

C.attest

D.audit

E.comply

3.Ina(n) _____ audit, the auditors undertake to gather evidence and provide a high level ofassurance that the financial statements follow generally accepted accounting principles,or some other appropriate basis of accounting.

A.compliance

B.financial statement

C.integrated

D.operational

E.systems

4.In adequate accounting and reporting _____.

A.conceal waste and inefficiency

B.prevent an efficient allocation of economic resources

C.promote an efficient allocation of economic resources

D.A and/or B

E.A and/or C

5.The Sarbanes-Oxley Act of 2002 _____.

A.created the Public Company Accounting Oversight Board to oversee theaccounting profession

B.included a set of reforms that toughened penalties for corporate fraud

C.restricted the types of consulting CPAs may perform on public company auditclients

D.all of the above

E.A and/or B, only

6.An integrated audit includes providing assurance on the _____.

A.the effectiveness and efficiency of operations

B.effectiveness of internal controls over financial reporting

C.financial statements

D.all of the above

E.B and C, only

7.With respect to the accounting profession, _____.

A.each state recognizes public accountancy as a profession and issues a certificate ofcertified public accountant

B.the CPA examination is a uniform national examination prepared and graded bythe American Institute of Certified Public Accountants

C.the CPA examination is a uniform national examination prepared and graded bythe Public Company Accounting Oversight Board

D.A and B, only

E.A and C, only

8.Public accounting firms are organized as_____,

A.limited liability companies

B.partnerships

C.practitioners

D.professional corporations

E.all of the above

9.Critical to the profession is the need for independence in _____.

A.appearance

B.fact

C.both A and B

D.either A or B, but not both

E.neither A nor B

10.Errors relate to _____ the financial statements.

A.intentional acts that cause a misstatement of

B.unintentional misstatement or omissions of amounts in

C.unintentional misstatement or omissions of disclosures in

D.any of the above

E.B or C, only

11.A standard audit report includesa(n) _____ opinion.

A.unmodified

B.unqualified

C.standard

D.any of the above

E.A or B, only

12.Auditors issue aqualified opinion when there is _____.

A.a limitation so significant as to overshadow an overall opinion on the financialstatements

B.any limitation on the scope of their audit work

C.a significant limitation on the scope of their audit work

D.any of the above

E.A and/or C, only

13.The attestation standards are meant to _____.

A.provide guidance for the performance of audits of historical financial statements

B.serve as a general framework for the attest function

C.set boundaries for the attest functions

D.all of the above

E.B and C, only

14.In the broad sense, the concept of “quality control” means that CPA firms shouldestablish controls to provide assurance that they meet their responsibilities to _____.

A.theirclients

B.the public

C.both A and B

D.either A or B, but not both

E.neither A nor B

15.International financial reporting standards are considered to be _____ generally acceptedaccounting principles of the United States.

A.equally principle-based as the

B.less principle-based than

C.more principle-based than

D.unrelated to the

E.none of the above

16.Ethics has been defined as the study of moral principles and values that govern _____ ofan individual or a group.

A.actions

B.decisions

C.both A and B

D.either A or B, but not both

E.neither A nor B

17.An individualin a situation in which a decision must be made with respect to appropriatebehavior isa(n) _____.

A.ethical dilemma

B.ethic predicament

C.moral dilemma

D.moral predicament

E.none of the above

18.Statement 1:Perhaps, the most importantconcept embodied in public accountings Codeof Professional Conduct” is independence. Statement 2:The certified public accountingprovides credibility.Statement 3:The attest function serves no useful purpose withoutpublic confidence in the attestor.

A.all of the statements are false

B.all of the statements are true

C.only the first and second statements are true

D.only the first and third statements are true

E.only the second and third statements are true

19.Certified Public Accountants are required to maintain a confidential relationship withtheir clients, _____.

A.but they may disclose confidential client information if the client is a publicly- traded company operating in the United States

B.so they must not disclose any confidential client information

C.so they must not disclose any confidential client information without the generalconsent of the client

D.so they must not disclose any confidential client information without the specificconsent of the client

E.none of the above

20.If certified public accountants are negligent in expressing an opinion on financialstatements, _____ may sustain losses

A.firm creditors

B.millions of investors

C.both A and B

D.either A or B, but not both

E.neither A nor B

21.Certified public accountants in the United States have liability under _____ law.

A.common

B.statutory

C.both A and B

D.either A or B, but not both

E.neither A nor B

22.More audit evidence is required when the _____.

A.risk of misstatement is greater

B.quality of evidence is lower

C.A and/or B

D.either A or B, but not both

E.neither A nor B

23.Detection risk is _____.

A.a function of the effectiveness of the audit procedures performed

B.reduced by obtaining additional appropriate evidence

C.the only risk that is completely a function of the sufficiency of the proceduresperformed by the auditors

D.all of the above

E.A and/or B, only

24._____ is a measure of the quantity of audit evidence that should be obtained, and _____is a measure of the quality of audit evidence obtained.

A.Appropriate; necessity

B.Appropriate; sufficiency

C.Necessity; appropriate

D.Necessity, sufficiency

E.Sufficiency, appropriate

25.Substantive procedures include _____.

A.evaluations of financial statement information by a study of relationship amongfinancial and non-financial data

B.tests of account balances, tests of classes of transactions, and tests of disclosures

C.both A and B

D.either A or B, but not both

E.neither A nor B

26.Making accounting estimates is _____ responsibility, and such estimates are generally_____ susceptible to material misstatement than other financial statement amounts thatare more certain in amount.

A.management’s; equally

B.management’s;less

C.management’s; more

D.the auditor’s; less

E.the auditor’s; more

27.Audit documentation is the record of _____.

A.relevant audit evidence obtained

B.the audit procedures performed

C.the conclusions the auditors’ reach

D.all of the above

E.A and B, only

28.The working papers should demonstrate that the accounting records _____ to thefinancial statements being audited.

A.agree

B.reconcile

C.refute

D.A and/or B, only

E.A and/or C, only

29.Audit documentation should identify _____.

A.those who performed the work

B.those that reviewed the work

C.the related dates of performance

D.all of the above

E.A and C, only

30.Auditing is limited to the examination of financial records, and working papers areconfined to schedules and analysis.

A.true

B.false:auditing is NOT limited to the examination of financial records

C.false: working papers are NOT confined to schedules and analysis.

D.both B and C

E.either A or B, but not both

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