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ACC 460 Final Exam
1)
Determining whether amounts are in conformity with generally accepted
accounting principles addresses the proper measurement of assets, liabilities,
revenues, and expenses, which includes all of the following EXCEPT the
A.
consistency in applying accounting principles.
B.
reasonableness of management’s accounting estimates.
C.
proper application of valuation principles, such as cost, net reliable value,
market value, and present value.
D.
reasonableness of management’s accounting policies.
2) The
completeness assertion would be violated if
A.
unbilled shipments occurred during the period.
B.
fictitious sales transactions were included in accounts receivable.
C. the
allowance for doubtful accounts was understated.
D.
disclosure in the statements of pledged receivables was inadequate.
3) The
concept of materiality is defined by the Financial Accounting Standards Board
(FASB) in terms of the judgment of the
A. FASB
members.
B.
auditor.
C.
preparer.
D.
users.
4)
Section 11 of the Securities Act of 1933 uses the term material fact to limit
the amount of information required. Under the Act, the standard used to
determine an item’s materiality
A. may
be found in FASB pronouncements.acc 460 final exam
B. is
the auditor’s professional judgment.
C. has
been established by the SEC as a percent of net income or of total assets.
D. is
the average prudent investor.
5)
Anyone identified to the auditor by name prior to the audit who is the
principal recipient of the auditor’s report is a
6)
Individuals or entities the auditor knew or should have known and would rely on
the audit report in making business and investment decisions are
7)
Statements on auditing standards (SAS) are interpretations of what?
8) What
level of assurance does the reader of a private company financial statement
receive on the company’s system of internal controls?
9)
Which of the following best describes the relationship that should exist
between the external auditor and the management of the client company? Acc 460
final exam answer
10)
Statement on Quality Control Standards No. 2 identifies certain quality control
elements that should be considered when performing which types of services?
11)
Internal auditors are primarily involved with
12)
When providing audit services, the certified public accountant (CPA) is
expected to be
13)
With respect to audit objectives, the term validity relates to which of the
assertions below?
14) The
five management assertions outlined in generally accepted auditing standards
include all of the following EXCEPT
15)
Specific audit objectives are normally
16) The
assessment of inherent risk requires considering matters that have a pervasive
effect on assertions for all or many accounts and matters that may pertain only
to assertions for specific accounts. Which of the following is an example of a
specific account matter?
17) The
risk that the auditor will NOT detect a material misstatement that exists in an
assertion is
18) The
susceptibility of an assertion to a material misstatement, assuming there are
no controls, is
19)
Auditor changes result from a variety of factors EXCEPT
20) The
third phase of the audit involves performing audit tests. The primary purpose
of this step is to obtain evidence about the acc 460 final exam
21)
Before accepting an engagement, the auditor should evaluate whether other
conditions exist that raise questions as to the prospective client’s
auditability. Which of the following factors would be least likely to cause
concern about an entity’s auditability?
22)
When setting the level of materiality on a particular engagement, the auditor
must consider
23) In
making preliminary judgments about materiality, the auditor initially
determines the aggregate level of materiality for each statement. For planning
purposes, the auditor should use the
24) In
a normal audit, the relationship between the level of materiality used to plan
the engagement and the level of materiality used to evaluate evidence is that
25)
Which of the following is NOT one of the fundamental concepts in the COSO
report’s definition of internal control?
26)
Which of the following is an INCORRECT quotation from the second field work
standard?
27) The
Committee of Sponsoring Organizations (COSO) report identified five
interrelated components of internal control. Since then, a sixth category has
been identified, which is
28) The
nature of tests of controls relates to the type of evidence obtained. Which of
the following is NOT an example of a type of evidence relevant to tests of
controls?
29)
Which of the following tests of controls would be most effective in testing
controls designed to prevent checks from being issued or recorded for the wrong
amount?
30)
Which of the following statements is TRUE about an auditor’s responsibility to
communicate with respect to a public company’s internal controls?
31)
Which of the following is NOT a characteristic of management`s philosophy and
operating style?
32) An
effective accounting system should identify and record only the valid
transaction of the entity that occurred in the current period, which relates to
the
33)
Management’s risk assessment should include the following special consideration
of risks that may arise from changed circumstances EXCEPT
34) In
performing tests of details of balances, the auditor would obtain the bank
statement directly from the bank, prepare the bank reconciliation, and verify
all reconciling items and mathematical accuracy if detection risk was
35)
When evaluating the planned level of substantive tests for each significant
financial statement assertion, the auditor will consider the evidence obtained
from all of the following EXCEPT
36) Who
is responsible for establishing the process and controls for preparing
accounting estimates?
37)
Probability-proportional-to-size (PPS) sampling should NOT be used when
38) PPS
sampling should NOT be used when
39) PPS
sampling would most likely NOT be cost-effective in
40)
Which of the following is NOT a hardware and systems software control?
41)
Public Company Accounting Oversight Board (PCAOB) standards require the auditor
to evaluate the effectiveness of the audit committee as part of understanding
the control environment and monitoring. Which of the following is NOT a factor
the auditor should consider in making this evaluation?
42)
Which of the following is NOT recognized as a type of general controls?
