Question 1

Which of the following characteristics exist in critical accounting communications?

Accepted Answer

A) the nature of the estimate is material due to the levels of subjectivity 
B) judgment is necessary to account for highly uncertain matters or the susceptibility of such matters to change 
C) the impact of the estimate on financial condition or operating performance is material 
D) All of these answer choices are correct. 
A) the nature of the estimate is material due to the levels of subjectivity 
B) judgment is necessary to account for highly uncertain matters or the susceptibility of such matters to change 
C) the impact of the estimate on financial condition or operating performance is material 
D) All of these answer choices are correct.

Question 2

An example of a Type II subsequent event would be the bankruptcy of a client's customer after year-end as a result of poor financial condition that existed as of the balance sheet date.

Accepted Answer

A) True 
 B)False

Question 3

Define a management representation letter.

Accepted Answer

A) A letter from management to the auditor acknowledging management's responsibility for the preparation of the financial statements and details of any verbal representations made by management during the course of the audit. 
B) A written statement by management provided to the auditor to confirm certain matters or to support other audit evidence. 
C) A letter from auditor informing management about concerns. 
D) A written statement containing details of any verbal representations made by management during the course of the audit. 
A) A letter from management to the auditor acknowledging management's responsibility for the preparation of the financial statements and details of any verbal representations made by management during the course of the audit. 
B) A written statement by management provided to the auditor to confirm certain matters or to support other audit evidence. 
C) A letter from auditor informing management about concerns. 
D) A written statement containing details of any verbal representations made by management during the course of the audit.

Question 4

Define what is meant by the term "subsequent event".In addition, identify the two types of subsequent events and indicate how auditors should modify the engagement for the discovery of subsequent events.

Accepted Answer

A subsequent event is an event that occu

Question 5

Auditors should be alert to subsequent events _______.

Accepted Answer

A) that may occur between the date of the financial statements and the date of the auditor's report 
B) that may occur between the date of the auditor's report and the next balance sheet date 
C) and report all immaterial findings to the Securities and Exchange Commission 
D) as they are particularly important to the year-end closing process 
A) that may occur between the date of the financial statements and the date of the auditor's report 
B) that may occur between the date of the auditor's report and the next balance sheet date 
C) and report all immaterial findings to the Securities and Exchange Commission 
D) as they are particularly important to the year-end closing process

Question 6

If management determines the loss contingency is probable and an amount can be reasonably estimated, then the company _______.

Accepted Answer

A) must record a liability and a related expense or loss, and disclose the relevant details of the event in the notes to the financial statements 
B) must record an asset and a related expense or loss, and disclose the relevant details of the event in the notes to the financial statements 
C) must record a liability and a related depreciation expense or loss, and disclose the relevant details of the event in the notes to the financial statements 
D) should include a note in the notes to the financial statements but need not record an entry in accounting journals 
A) must record a liability and a related expense or loss, and disclose the relevant details of the event in the notes to the financial statements 
B) must record an asset and a related expense or loss, and disclose the relevant details of the event in the notes to the financial statements 
C) must record a liability and a related depreciation expense or loss, and disclose the relevant details of the event in the notes to the financial statements 
D) should include a note in the notes to the financial statements but need not record an entry in accounting journals

Question 7

If management determines there is substantial doubt about continuing as a going concern, _______.

Accepted Answer

A) then management must make a note disclosure about the circumstances, including any plans management may have to mitigate the situation. 
B) then management must make list an estimated loss contingency in the financial statements about the circumstances, including any plans management may have to mitigate the situation. 
C) nothing should be disclosed in the notes to the financial statements until management is reasonably certain it will be an issue 
D) then future debt issues will likely enjoy lower interest rates 
A) then management must make a note disclosure about the circumstances, including any plans management may have to mitigate the situation. 
B) then management must make list an estimated loss contingency in the financial statements about the circumstances, including any plans management may have to mitigate the situation. 
C) nothing should be disclosed in the notes to the financial statements until management is reasonably certain it will be an issue 
D) then future debt issues will likely enjoy lower interest rates

Question 8

The actual analytical procedures performed at the end of an audit _______.

Accepted Answer

A) should always be the same for every client in order to increase uniformity of audits 
B) will depend on senior managements preferences 
C) will depend on auditor judgment and may vary by client 
D) will depend on auditor judgment but should be the same for each client 
A) should always be the same for every client in order to increase uniformity of audits 
B) will depend on senior managements preferences 
C) will depend on auditor judgment and may vary by client 
D) will depend on auditor judgment but should be the same for each client

Which of the following characteristics exist in critical accounting communications?

An example of a Type II subsequent event would be the bankruptcy of a client's customer after year-end as a result of poor financial condition that existed as of the balance sheet date.

Define a management representation letter.

Define what is meant by the term "subsequent event".In addition, identify the two types of subsequent events and indicate how auditors should modify the engagement for the discovery of subsequent events.

Auditors should be alert to subsequent events _______.

If management determines the loss contingency is probable and an amount can be reasonably estimated, then the company _______.

If management determines there is substantial doubt about continuing as a going concern, _______.

The actual analytical procedures performed at the end of an audit _______.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Reporting on the Audit

Filters

Exam 14: Completing the Audit

Which of the following characteristics exist in critical accounting communications?

An example of a Type II subsequent event would be the bankruptcy of a client's customer after year-end as a result of poor financial condition that existed as of the balance sheet date.

Define a management representation letter.

Define what is meant by the term "subsequent event".In addition, identify the two types of subsequent events and indicate how auditors should modify the engagement for the discovery of subsequent events.

Auditors should be alert to subsequent events _______.

If management determines the loss contingency is probable and an amount can be reasonably estimated, then the company _______.

If management determines there is substantial doubt about continuing as a going concern, _______.

The actual analytical procedures performed at the end of an audit _______.

Introduction and Overview of Audit and Assurance

Professionalism, Ethics and Legal Liability

Risk Assessment Part Iaudit Risk and Audit Strategy

Risk Assessment Part Iiunderstanding the Client

Audit Evidence

Understanding of the Clients System of Internal Controls

Data Analyticsoverview and Application

Risk Responseperforming Tests of Controls

Risk Responseperforming Substantive Procedures

Risk Responseaudit Sampling for Substantive Testing

Auditing the Revenue Cycle

Auditing the Purchases Cycle and Payroll Cycle

Auditing Cash, Inventory, Investing and Financing Activities

Reporting on the Audit

Filters