Question 1

Tests of controls over investing activity include:

Accepted Answer

A)  tracing securities from the investment ledger to the supporting documents. 
B)  reviewing the bank statement for deposits in transit. 
C)  recalculating interest expense at the balance sheet date. 
D)  All of the above. 
A)  tracing securities from the investment ledger to the supporting documents. 
B)  reviewing the bank statement for deposits in transit. 
C)  recalculating interest expense at the balance sheet date. 
D)  All of the above.

Question 2

A debt covenant waiver:

Accepted Answer

A)  implies there is not a going concern risk. 
B)  relieves the client from making payment for the debt. 
C)  relieves the client from penalties resulting from covenant violations. 
D)  All of the above. 
A)  implies there is not a going concern risk. 
B)  relieves the client from making payment for the debt. 
C)  relieves the client from penalties resulting from covenant violations. 
D)  All of the above.

Question 3

Post-employment benefits refer to health benefits for retired employees.

Accepted Answer

A) True 
 B)False

Question 4

FASB ASC 718-10:

Accepted Answer

A)  concerns only restricted stock compensation plans. 
B)  requires use of fair value accounting for stock compensation. 
C)  requires stock compensation to be fully amortized prior to exercise. 
D)  All of the above. 
A)  concerns only restricted stock compensation plans. 
B)  requires use of fair value accounting for stock compensation. 
C)  requires stock compensation to be fully amortized prior to exercise. 
D)  All of the above.

Question 5

Defined benefit plans can be:

Accepted Answer

A)  funded by the employer. 
B)  unfunded by the employer. 
C)  funded through a trust. 
D)  All of the above. 
A)  funded by the employer. 
B)  unfunded by the employer. 
C)  funded through a trust. 
D)  All of the above.

Question 6

Pensions can be either defined-benefit or defined-contribution plans.

Accepted Answer

A) True 
 B)False

Question 7

A cash equivalent is always short-term.

Accepted Answer

A) True 
 B)False

Question 8

Equity investments:

Accepted Answer

A)  are carried at fair value on the balance sheet. 
B)  are carried at cost on the balance sheet. 
C)  are accounted for using the equity method or consolidation. 
D)  any of the above based on management's intentions. 
A)  are carried at fair value on the balance sheet. 
B)  are carried at cost on the balance sheet. 
C)  are accounted for using the equity method or consolidation. 
D)  any of the above based on management's intentions.

Question 9

Disclosures are meant to facilitate comparisons between entities that select similar measurement attributes for similar assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 10

The audit of taxes includes:

Accepted Answer

A)  only liabilities. 
B)  both liabilities and receivables. 
C)  both balance sheet and income statement accounts. 
D)  only a review of current and prior years' tax liability. 
A)  only liabilities. 
B)  both liabilities and receivables. 
C)  both balance sheet and income statement accounts. 
D)  only a review of current and prior years' tax liability.

Question 11

Adopting the fair value option:

Accepted Answer

A)  must be disclosed. 
B)  reasons for using it must be disclosed. 
C)  effects from using it must be disclosed. 
D)  All of the above. 
A)  must be disclosed. 
B)  reasons for using it must be disclosed. 
C)  effects from using it must be disclosed. 
D)  All of the above.

Question 12

Substantive analytical procedures for long-term debt include:

Accepted Answer

A)  recalculating interest expense based on overall terms of debt. 
B)  comparing interest expense with prior year amount. 
C)  calculate times interest earned ratio. 
D)  All of the above. 
A)  recalculating interest expense based on overall terms of debt. 
B)  comparing interest expense with prior year amount. 
C)  calculate times interest earned ratio. 
D)  All of the above.

Question 13

Long-term debt can be audited without testing controls.

Accepted Answer

A) True 
 B)False

Question 14

Purchasing preferred stock is an equity investment.

Accepted Answer

A) True 
 B)False

Question 15

A test of the valuation assertion for new long-term debt would be:

Accepted Answer

A)  trace the amount received from the debt issuance to the general ledger. 
B)  recalculate the amortization of premium or discount. 
C)  recalculate the interest expense. 
D)  All of the above. 
A)  trace the amount received from the debt issuance to the general ledger. 
B)  recalculate the amortization of premium or discount. 
C)  recalculate the interest expense. 
D)  All of the above.

Question 16

Disclosures focus on:

Accepted Answer

A)  comparisons across entities that use similar measurement techniques for different assets and liabilities. 
B)  comparisons within an entity that uses similar measurement techniques on different assets and liabilities. 
C)  comparisons across entities that use different measurement techniques for similar assets and liabilities. 
D)  comparisons within an entity that uses different measurement techniques for different assets and liabilities. 
A)  comparisons across entities that use similar measurement techniques for different assets and liabilities. 
B)  comparisons within an entity that uses similar measurement techniques on different assets and liabilities. 
C)  comparisons across entities that use different measurement techniques for similar assets and liabilities. 
D)  comparisons within an entity that uses different measurement techniques for different assets and liabilities.

Question 17

If debt covenants are violated, then an auditor must:

Accepted Answer

A)  issue a going concern opinion. 
B)  obtain evidence that the company will continue in operations. 
C)  be certain that this fact is disclosed in the financial statements. 
D)  All of the above. 
A)  issue a going concern opinion. 
B)  obtain evidence that the company will continue in operations. 
C)  be certain that this fact is disclosed in the financial statements. 
D)  All of the above.

Question 18

Disclosures provide users the means to understand how changes in fair values affect cash flows.

Accepted Answer

A) True 
 B)False

Question 19

Comprehensive income is the sum of all nonowner-related changes in equity.

Accepted Answer

A) True 
 B)False

Question 20

Commercial paper is considered a debt investment.

Accepted Answer

A) True 
 B)False

Tests of controls over investing activity include:

A debt covenant waiver:

Post-employment benefits refer to health benefits for retired employees.

FASB ASC 718-10:

Defined benefit plans can be:

Pensions can be either defined-benefit or defined-contribution plans.

A cash equivalent is always short-term.

Equity investments:

Disclosures are meant to facilitate comparisons between entities that select similar measurement attributes for similar assets and liabilities.

The audit of taxes includes:

Adopting the fair value option:

Substantive analytical procedures for long-term debt include:

Long-term debt can be audited without testing controls.

Purchasing preferred stock is an equity investment.

A test of the valuation assertion for new long-term debt would be:

Disclosures focus on:

If debt covenants are violated, then an auditor must:

Disclosures provide users the means to understand how changes in fair values affect cash flows.

Comprehensive income is the sum of all nonowner-related changes in equity.

Commercial paper is considered a debt investment.

An Introduction to Auditing

Overview of an Integrated Audit

The Auditors Role in Society

Legal Environment Affecting Audits Pt Iii Executing an Integrated Audit

Client Acceptance and Continuance and Preliminary Engagement Procedures

Audit Planning and Risk Assessment

Internal Control, Understanding the Clients Internal Control Over Financial Reporting and Auditing Design Effectiveness

Planning and Testing Operating Effectiveness of Internal Control Over Financial Reporting

Substantive Procedures and the Financial Statement Audit

Auditing Revenue Process: Sales, Billing and Collection in the Health-Care Provider and Retailing Industries

Completing the Integrated Audit and Reporting

The Acquisition and Payments Cycle and Related Accounts: Purchases, Cash Disbursements and Other Related Activities in the Automotive Industry

Auditing Human Resources Cycle Process: Personnel and Payroll in Service Industries

Auditing Inventory Processes: Tracking and Costing Products in the Land Development and Home Building Industry

Topics Beyond the Integrated Audit

Filters

Exam 15: Assets, Liabilities and Equity Related to the Financing Cycle

Tests of controls over investing activity include:

A debt covenant waiver:

Post-employment benefits refer to health benefits for retired employees.

FASB ASC 718-10:

Defined benefit plans can be:

Pensions can be either defined-benefit or defined-contribution plans.

A cash equivalent is always short-term.

Equity investments:

Disclosures are meant to facilitate comparisons between entities that select similar measurement attributes for similar assets and liabilities.

The audit of taxes includes:

Adopting the fair value option:

Substantive analytical procedures for long-term debt include:

Long-term debt can be audited without testing controls.

Purchasing preferred stock is an equity investment.

A test of the valuation assertion for new long-term debt would be:

Disclosures focus on:

If debt covenants are violated, then an auditor must:

Disclosures provide users the means to understand how changes in fair values affect cash flows.

Comprehensive income is the sum of all nonowner-related changes in equity.

Commercial paper is considered a debt investment.

An Introduction to Auditing

Overview of an Integrated Audit

The Auditors Role in Society

Legal Environment Affecting Audits Pt Iii Executing an Integrated Audit

Client Acceptance and Continuance and Preliminary Engagement Procedures

Audit Planning and Risk Assessment

Internal Control, Understanding the Clients Internal Control Over Financial Reporting and Auditing Design Effectiveness

Planning and Testing Operating Effectiveness of Internal Control Over Financial Reporting

Substantive Procedures and the Financial Statement Audit

Auditing Revenue Process: Sales, Billing and Collection in the Health-Care Provider and Retailing Industries

Completing the Integrated Audit and Reporting

The Acquisition and Payments Cycle and Related Accounts: Purchases, Cash Disbursements and Other Related Activities in the Automotive Industry

Auditing Human Resources Cycle Process: Personnel and Payroll in Service Industries

Auditing Inventory Processes: Tracking and Costing Products in the Land Development and Home Building Industry

Topics Beyond the Integrated Audit

Filters