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ACC 460 Final Exam
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
consistency in applying accounting principles.
reasonableness of management’s accounting estimates.
proper application of valuation principles, such as cost, net reliable value,
market value, and present value.
reasonableness of management’s accounting policies.
completeness assertion would be violated if
unbilled shipments occurred during the period.
fictitious sales transactions were included in accounts receivable.
allowance for doubtful accounts was understated.
disclosure in the statements of pledged receivables was inadequate.
concept of materiality is defined by the Financial Accounting Standards Board
(FASB) in terms of the judgment of the
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
be found in FASB pronouncements.acc 460 final exam
the auditor’s professional judgment.
been established by the SEC as a percent of net income or of total assets.
the average prudent investor.
Anyone identified to the auditor by name prior to the audit who is the
principal recipient of the auditor’s report is a
Individuals or entities the auditor knew or should have known and would rely on
the audit report in making business and investment decisions are
Statements on auditing standards (SAS) are interpretations of what?
level of assurance does the reader of a private company financial statement
receive on the company’s system of internal controls?
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
Statement on Quality Control Standards No. 2 identifies certain quality control
elements that should be considered when performing which types of services?
Internal auditors are primarily involved with
When providing audit services, the certified public accountant (CPA) is
expected to be
With respect to audit objectives, the term validity relates to which of the
five management assertions outlined in generally accepted auditing standards
include all of the following EXCEPT
Specific audit objectives are normally
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?
risk that the auditor will NOT detect a material misstatement that exists in an
susceptibility of an assertion to a material misstatement, assuming there are
no controls, is
Auditor changes result from a variety of factors EXCEPT
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
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?
When setting the level of materiality on a particular engagement, the auditor
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
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
Which of the following is NOT one of the fundamental concepts in the COSO
report’s definition of internal control?
Which of the following is an INCORRECT quotation from the second field work
Committee of Sponsoring Organizations (COSO) report identified five
interrelated components of internal control. Since then, a sixth category has
been identified, which is
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
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
Which of the following statements is TRUE about an auditor’s responsibility to
communicate with respect to a public company’s internal controls?
Which of the following is NOT a characteristic of management`s philosophy and
effective accounting system should identify and record only the valid
transaction of the entity that occurred in the current period, which relates to
Management’s risk assessment should include the following special consideration
of risks that may arise from changed circumstances EXCEPT
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
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
is responsible for establishing the process and controls for preparing
Probability-proportional-to-size (PPS) sampling should NOT be used when
sampling should NOT be used when
sampling would most likely NOT be cost-effective in
Which of the following is NOT a hardware and systems software control?
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?
Which of the following is NOT recognized as a type of general controls?