Question 1

An accountant

Accepted Answer

A) must possess expertise in the accumulation of audit evidence. 
B) must decide the number and types of items to test. 
C) must have an understanding of the principles and rules that provide the basis for preparing the accounting information. 
D) must be a CPA. 
A) must possess expertise in the accumulation of audit evidence. 
B) must decide the number and types of items to test. 
C) must have an understanding of the principles and rules that provide the basis for preparing the accounting information. 
D) must be a CPA.

Question 2

Results of compliance audits are typically reported to the company's management rather than to a broad spectrum of outside users.

Accepted Answer

A) True 
 B)False

Question 3

An auditor must be competent and have an independent mental attitude.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is an accurate statement regarding assurance services?

Accepted Answer

A) Assurance services must be performed by a CPA. 
B) An attestation service is not a type of assurance service. 
C) Assurance services improve the quality of information for decision makers. 
D) Assurance services can only be performed on financial data. 
A) Assurance services must be performed by a CPA. 
B) An attestation service is not a type of assurance service. 
C) Assurance services improve the quality of information for decision makers. 
D) Assurance services can only be performed on financial data.

Question 5

An integrated approach to auditing considers both the risk of misstatements and operating controls intended to prevent misstatements.

Accepted Answer

A) True 
 B)False

Question 6

Discuss the similarities and differences between financial statement audits,operational audits,and compliance audits.Give an example of each type.

Accepted Answer

Financial statement audits,operational a

Question 7

CPA firms perform numerous services that generally fall outside the scope of assurance services.Give three examples of such services.

Accepted Answer

Three specific examples of services perf

Question 8

Which of the following is considered audit evidence?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 9

An audit to determine whether an entity is following specific procedures or rules set down by some higher authority is classified as a(n)

Accepted Answer

A) audit of financial statements. 
B) compliance audit. 
C) operational audit. 
D) production audit. 
A) audit of financial statements. 
B) compliance audit. 
C) operational audit. 
D) production audit.

Question 10

In a financial statement audit,the auditor

Accepted Answer

A) gathers evidence to determine whether the statements contain material errors or other misstatements. 
B) must have a thorough understanding of the entity and its environment. 
C) determines whether the financial statements are stated in accordance with specified criteria. 
D) all of the above. 
A) gathers evidence to determine whether the statements contain material errors or other misstatements. 
B) must have a thorough understanding of the entity and its environment. 
C) determines whether the financial statements are stated in accordance with specified criteria. 
D) all of the above.

Question 11

Most public companies' audited financial statements are available on the SEC's EDGAR database.

Accepted Answer

A) True 
 B)False

Question 12

Two types of attestation services provided by CPA firms are audits and reviews.Discuss the similarities and differences between these two types of attestation services.Which type provides the least assurance?

Accepted Answer

In both the review and audit of the hist

Question 13

Any service that requires a CPA firm to issue a report about the reliability of an assertion that is made by another party is a(n)

Accepted Answer

A) accounting and bookkeeping service. 
B) attestation service. 
C) assurance service. 
D) tax service. 
A) accounting and bookkeeping service. 
B) attestation service. 
C) assurance service. 
D) tax service.

Question 14

Management is required by GAAP to reduce information risk,even if the costs outweigh the benefits.

Accepted Answer

A) True 
 B)False

Question 15

As society becomes more complex,decision makers are more likely to receive reliable information.

Accepted Answer

A) True 
 B)False

Question 16

Audits

Accepted Answer

A) are an assurance service,but not an attestation service. 
B) are designed to provide absolute assurance that the financial statements are free of material misstatement. 
C) are required for publicly traded companies in the United States. 
D) do not require the auditor to express their opinion in a written report. 
A) are an assurance service,but not an attestation service. 
B) are designed to provide absolute assurance that the financial statements are free of material misstatement. 
C) are required for publicly traded companies in the United States. 
D) do not require the auditor to express their opinion in a written report.

Question 17

One objective of an operational audit is to

Accepted Answer

A) determine whether the financial statements fairly present the entity's operations. 
B) determine if the auditee is in compliance with GAAP. 
C) make recommendations for improving performance. 
D) report on the entity's relative success in attaining profit maximization. 
A) determine whether the financial statements fairly present the entity's operations. 
B) determine if the auditee is in compliance with GAAP. 
C) make recommendations for improving performance. 
D) report on the entity's relative success in attaining profit maximization.

Question 18

The primary purpose of a compliance audit is to determine whether the financial statements are prepared in compliance with generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 19

Explain what is meant by information risk,and list the four causes of this risk.

Accepted Answer

Information risk reflects the possibilit

Question 20

Which of the following are required to have a written report regarding the assertion of another party?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Exam 1: The Demand for Audit and Other Assurance Services

An accountant

Results of compliance audits are typically reported to the company's management rather than to a broad spectrum of outside users.

An auditor must be competent and have an independent mental attitude.

Which of the following is an accurate statement regarding assurance services?

An integrated approach to auditing considers both the risk of misstatements and operating controls intended to prevent misstatements.

Discuss the similarities and differences between financial statement audits,operational audits,and compliance audits.Give an example of each type.

CPA firms perform numerous services that generally fall outside the scope of assurance services.Give three examples of such services.

Which of the following is considered audit evidence?

An audit to determine whether an entity is following specific procedures or rules set down by some higher authority is classified as a(n)

In a financial statement audit,the auditor

Most public companies' audited financial statements are available on the SEC's EDGAR database.

Two types of attestation services provided by CPA firms are audits and reviews.Discuss the similarities and differences between these two types of attestation services.Which type provides the least assurance?

Any service that requires a CPA firm to issue a report about the reliability of an assertion that is made by another party is a(n)

Management is required by GAAP to reduce information risk,even if the costs outweigh the benefits.

As society becomes more complex,decision makers are more likely to receive reliable information.

Audits

One objective of an operational audit is to

The primary purpose of a compliance audit is to determine whether the financial statements are prepared in compliance with generally accepted accounting principles.

Explain what is meant by information risk,and list the four causes of this risk.

Which of the following are required to have a written report regarding the assertion of another party?

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

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 of Balances

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

Completing the Tests in the Acquisition and Payment Cycle:

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 and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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