Question 1

The concept of reasonable assurance indicates that the auditor is

Accepted Answer

A) not a guarantor of the correctness of the financial statements. 
B) not responsible for the fairness of the financial statements. 
C) responsible only for issuing an opinion on the financial statements. 
D) responsible for finding all misstatements. 
A) not a guarantor of the correctness of the financial statements. 
B) not responsible for the fairness of the financial statements. 
C) responsible only for issuing an opinion on the financial statements. 
D) responsible for finding all misstatements.

Question 2

Discuss the actions an auditor should take when an illegal act is identified or suspected.

Accepted Answer

When an auditor discovers or suspects no

Question 3

If a sale was for a valid shipment,but the amount of the sales invoice was calculated incorrectly,the accuracy objective was violated.

Accepted Answer

A) True 
 B)False

Question 4

Overconfidence is the tendency to put more weight on information that is consistent with the initial beliefs or preferences.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not one of the AICPA categories of assertions?

Accepted Answer

A) assertions about classes of transactions and events for the period under audit 
B) assertions about financial statements and correspondence to GAAP 
C) assertions about account balances at period end 
D) assertions about presentation and disclosure 
A) assertions about classes of transactions and events for the period under audit 
B) assertions about financial statements and correspondence to GAAP 
C) assertions about account balances at period end 
D) assertions about presentation and disclosure

Question 6

If a short-term note payable is included in the accounts payable balance on the financial statement,there is a violation of the

Accepted Answer

A) completeness assertion. 
B) existence assertion. 
C) cutoff assertion. 
D) classification assertion. 
A) completeness assertion. 
B) existence assertion. 
C) cutoff assertion. 
D) classification assertion.

Question 7

When an auditor believes that an illegal act may have occurred,the first step he or she should take is to gather additional evidence to determine the extent of the illegality and if there is a direct impact on the financial statements.

Accepted Answer

A) True 
 B)False

Question 8

When an auditor believes that an illegal act may have occurred,the auditor should first

Accepted Answer

A) obtain an understanding of the nature and circumstances of the act. 
B) consult with legal counsel or others knowledgeable about the illegal act. 
C) discuss the matter with the audit committee. 
D) withdraw from the engagement. 
A) obtain an understanding of the nature and circumstances of the act. 
B) consult with legal counsel or others knowledgeable about the illegal act. 
C) discuss the matter with the audit committee. 
D) withdraw from the engagement.

Question 9

Auditors have a higher degree of responsibility for detecting illegal acts that have a direct effect on the financial statements than illegal acts that do not have a direct effect on the financial statements.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not one of the reasons that auditors provide only reasonable assurance on the financial statements?

Accepted Answer

A) The auditor commonly examines a sample,rather than the entire population of transactions. 
B) Accounting presentations contain complex estimates which involve uncertainty. 
C) Fraudulently prepared financial statements are often difficult to detect. 
D) Auditors believe that reasonable assurance is sufficient in the vast majority of cases. 
A) The auditor commonly examines a sample,rather than the entire population of transactions. 
B) Accounting presentations contain complex estimates which involve uncertainty. 
C) Fraudulently prepared financial statements are often difficult to detect. 
D) Auditors believe that reasonable assurance is sufficient in the vast majority of cases.

Question 11

An auditor assesses the risk of material misstatement to determine the impact on the audit plan and to determine the nature,extent,and timing of the audit procedures.

Accepted Answer

A) True 
 B)False

Question 12

The transaction-related audit objective that deals with whether recorded transactions have actually occurred is the completeness objective.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not a step in the professional judgment process?

Accepted Answer

A) make the decision 
B) perform the analysis 
C) determine the type of audit opinion 
D) review and document the rationale for the conclusion 
A) make the decision 
B) perform the analysis 
C) determine the type of audit opinion 
D) review and document the rationale for the conclusion

Question 14

When examining the relationships of the five cycles and general cash,the cycles have no beginning or end except at the origin or final disposition of the company.

Accepted Answer

A) True 
 B)False

Question 15

The starting point to effective professional judgment begins with

Accepted Answer

A) gathering the facts. 
B) identifying alternatives. 
C) identifying relevant literature. 
D) identifying and defining the issue. 
A) gathering the facts. 
B) identifying alternatives. 
C) identifying relevant literature. 
D) identifying and defining the issue.

Question 16

The general balance-related audit objective that deals with determining that details in the account balance agree with related master file amounts,foot to the total in the account balance,and agree with the total in the general ledger is the detail tie-in objective.

Accepted Answer

A) True 
 B)False

Question 17

Auditing standards make ________ distinction(s)between the auditor's responsibilities for searching for errors and fraud.

Accepted Answer

A) little 
B) a significant 
C) no 
D) various 
A) little 
B) a significant 
C) no 
D) various

Question 18

Which of the following would most likely be deemed a direct effect illegal act?

Accepted Answer

A) violation of federal employment laws 
B) violation of federal environmental regulations 
C) violation of federal income tax laws 
D) violation of civil rights laws 
A) violation of federal employment laws 
B) violation of federal environmental regulations 
C) violation of federal income tax laws 
D) violation of civil rights laws

Question 19

Direct,written communication with the client's customers to identify whether a receivable exists is an example of a(n)

Accepted Answer

A) substantive test of transactions. 
B) test of controls. 
C) analytical procedure. 
D) test of details of balances. 
A) substantive test of transactions. 
B) test of controls. 
C) analytical procedure. 
D) test of details of balances.

Question 20

The detail tie-in objective is not concerned that the details in the account balance

Accepted Answer

A) agree with related subsidiary ledger amounts. 
B) are properly disclosed in accordance with GAAP. 
C) foot to the total in the account balance. 
D) agree with the total in the general ledger. 
A) agree with related subsidiary ledger amounts. 
B) are properly disclosed in accordance with GAAP. 
C) foot to the total in the account balance. 
D) agree with the total in the general ledger.

Exam 6: Audit Responsibilities and Objectives

The concept of reasonable assurance indicates that the auditor is

Discuss the actions an auditor should take when an illegal act is identified or suspected.

If a sale was for a valid shipment,but the amount of the sales invoice was calculated incorrectly,the accuracy objective was violated.

Overconfidence is the tendency to put more weight on information that is consistent with the initial beliefs or preferences.

Which of the following is not one of the AICPA categories of assertions?

If a short-term note payable is included in the accounts payable balance on the financial statement,there is a violation of the

When an auditor believes that an illegal act may have occurred,the first step he or she should take is to gather additional evidence to determine the extent of the illegality and if there is a direct impact on the financial statements.

When an auditor believes that an illegal act may have occurred,the auditor should first

Auditors have a higher degree of responsibility for detecting illegal acts that have a direct effect on the financial statements than illegal acts that do not have a direct effect on the financial statements.

Which of the following is not one of the reasons that auditors provide only reasonable assurance on the financial statements?

An auditor assesses the risk of material misstatement to determine the impact on the audit plan and to determine the nature,extent,and timing of the audit procedures.

The transaction-related audit objective that deals with whether recorded transactions have actually occurred is the completeness objective.

Which of the following is not a step in the professional judgment process?

When examining the relationships of the five cycles and general cash,the cycles have no beginning or end except at the origin or final disposition of the company.

The starting point to effective professional judgment begins with

The general balance-related audit objective that deals with determining that details in the account balance agree with related master file amounts,foot to the total in the account balance,and agree with the total in the general ledger is the detail tie-in objective.

Auditing standards make ________ distinction(s)between the auditor's responsibilities for searching for errors and fraud.

Which of the following would most likely be deemed a direct effect illegal act?

Direct,written communication with the client's customers to identify whether a receivable exists is an example of a(n)

The detail tie-in objective is not concerned that the details in the account balance

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

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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