Question 1

List and discuss the three primary requirements to become a CPA.

Accepted Answer

The three primary requirements for becom

Question 2

Which of the following is considered audit evidence?

Accepted Answer

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

Question 3

The Sarbanes-Oxley Act establishes standards related to the audits of privately held companies.

Accepted Answer

A) True 
 B)False

Question 4

The criteria used by an external auditor to evaluate published financial statements are known as generally accepted auditing standards.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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

Accepted Answer

Information risk reflects the possibilit

Question 7

What are the five categories of attestation services?

Accepted Answer

The five categories of attestation servi

Question 8

The criteria by which an auditor evaluates the information under audit may vary with the information being audited.

Accepted Answer

A) True 
 B)False

Question 9

The Sarbanes-Oxley Act prohibits a CPA firm that audits a public company from providing which of the following types of services to that company?

Accepted Answer

A) Reviews of quarterly financial statements 
B) Preparation of corporate tax returns 
C) Most consulting services 
D) Tax services 
A) Reviews of quarterly financial statements 
B) Preparation of corporate tax returns 
C) Most consulting services 
D) Tax services

Question 10

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 11

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

Question 12

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 13

CPA firms are never allowed to provide bookkeeping services for clients.

Accepted Answer

A) True 
 B)False

Question 14

The Sarbanes-Oxley Act applies to which of the following companies?

Accepted Answer

A) All companies 
B) Privately held companies 
C) Public companies 
D) All public companies and privately held companies with assets greater than $500 million 
A) All companies 
B) Privately held companies 
C) Public companies 
D) All public companies and privately held companies with assets greater than $500 million

Question 15

Which of the following audits can be regarded as generally being a compliance audit?

Accepted Answer

A) IRS agents' examinations of taxpayer returns 
B) GAO auditor's evaluation of the computer operations of governmental units 
C) An internal auditor's review of a company's payroll authorization procedures 
D) A CPA firm's audit of a public company 
A) IRS agents' examinations of taxpayer returns 
B) GAO auditor's evaluation of the computer operations of governmental units 
C) An internal auditor's review of a company's payroll authorization procedures 
D) A CPA firm's audit of a public company

Question 16

Which one of the following is more difficult to evaluate objectively?

Accepted Answer

A) Presentation of financial statements in accordance with generally accepted accounting principles 
B) Compliance with government regulations 
C) Efficiency and effectiveness of operations 
D) All three of the above are equally difficult. 
A) Presentation of financial statements in accordance with generally accepted accounting principles 
B) Compliance with government regulations 
C) Efficiency and effectiveness of operations 
D) All three of the above are equally difficult.

Question 17

The three requirements for becoming a CPA include all but which of the following?

Accepted Answer

A) Uniform CPA examination requirement 
B) Educational requirements 
C) Character requirements 
D) Experience requirement 
A) Uniform CPA examination requirement 
B) Educational requirements 
C) Character requirements 
D) Experience requirement

Question 18

The trait that distinguishes auditors from accountants is the:

Accepted Answer

A) auditor's ability to interpret accounting principles generally accepted in the United States. 
B) auditor's education beyond the Bachelor's degree. 
C) auditor's ability to interpret FASB Statements. 
D) auditor's accumulation and interpretation of evidence related to a company's financial statements. 
A) auditor's ability to interpret accounting principles generally accepted in the United States. 
B) auditor's education beyond the Bachelor's degree. 
C) auditor's ability to interpret FASB Statements. 
D) auditor's accumulation and interpretation of evidence related to a company's financial statements.

Question 19

Attestation services on information technology include WebTrust services and SysTrust services.Which of the following statements most accurately describes SysTrust services?

Accepted Answer

A) SysTrust services provide assurance on business processes, transaction integrity and information processes. 
B) SysTrust services provide assurance on system reliability in critical areas such as security and data integrity. 
C) SysTrust services provide assurance on internal control over financial reporting. 
D) SysTrust services provide assurance as to whether accounting personnel are following procedures prescribed by the company controller. 
A) SysTrust services provide assurance on business processes, transaction integrity and information processes. 
B) SysTrust services provide assurance on system reliability in critical areas such as security and data integrity. 
C) SysTrust services provide assurance on internal control over financial reporting. 
D) SysTrust services provide assurance as to whether accounting personnel are following procedures prescribed by the company controller.

Question 20

Which of the following services provides the lowest level of assurance on a financial statement?

Accepted Answer

A) A review 
B) An audit 
C) Neither service provides assurance on financial statements. 
D) Each service provides the same level of assurance on financial statements. 
A) A review 
B) An audit 
C) Neither service provides assurance on financial statements. 
D) Each service provides the same level of assurance on financial statements.

Exam 1: The Demand for Audit and Other Assurance Services

List and discuss the three primary requirements to become a CPA.

Which of the following is considered audit evidence?

The Sarbanes-Oxley Act establishes standards related to the audits of privately held companies.

The criteria used by an external auditor to evaluate published financial statements are known as generally accepted auditing standards.

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

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

What are the five categories of attestation services?

The criteria by which an auditor evaluates the information under audit may vary with the information being audited.

The Sarbanes-Oxley Act prohibits a CPA firm that audits a public company from providing which of the following types of services to that company?

One objective of an operational audit is to:

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

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):

CPA firms are never allowed to provide bookkeeping services for clients.

The Sarbanes-Oxley Act applies to which of the following companies?

Which of the following audits can be regarded as generally being a compliance audit?

Which one of the following is more difficult to evaluate objectively?

The three requirements for becoming a CPA include all but which of the following?

The trait that distinguishes auditors from accountants is the:

Attestation services on information technology include WebTrust services and SysTrust services.Which of the following statements most accurately describes SysTrust services?

Which of the following services provides the lowest level of assurance on a financial statement?

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

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, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

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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