Question 1

A CPA is a certified public accountant who is licensed by a state board of accountancy.

Accepted Answer

A) True 
 B)False

Question 2

The Need for Audited Financial Statements Why do financial statement users need independent assurance about information provided by management?

Accepted Answer

The need for independent assurance arise

Question 3

Auditors consider both quantitative and qualitative risk factors when making client acceptance or continuance decisions.

Accepted Answer

A) True 
 B)False

Question 4

What is the primary objective of the independent auditor's report on financial statements?

Accepted Answer

A) To report on all instances of fraud. 
B) To assist the board in evaluating management's effectiveness. 
C) To attest to the credit-worthiness of the client. 
D) To give credibility to management's prepared financial statements. 
A) To report on all instances of fraud. 
B) To assist the board in evaluating management's effectiveness. 
C) To attest to the credit-worthiness of the client. 
D) To give credibility to management's prepared financial statements.

Question 5

For which of the following engagements are members of the AICPA required to act with integrity and objectivity?

Accepted Answer

A) Tax preparation. 
B) Financial statement review services. 
C) Financial statement audits. 
D) All engagements. 
A) Tax preparation. 
B) Financial statement review services. 
C) Financial statement audits. 
D) All engagements.

Question 6

Threats to an auditor's independence may occur when the auditor has a long-standing relationship with an important person associated with the client.

Accepted Answer

A) True 
 B)False

Question 7

Who are the users of the financial statements?

Accepted Answer

A) Management. 
B) Auditors. 
C) Taxing Authorities. 
D) Both A and C. 
A) Management. 
B) Auditors. 
C) Taxing Authorities. 
D) Both A and C.

Question 8

Auditors generally need quantitative and mathematical skills more than they need communication and leadership skills.

Accepted Answer

A) True 
 B)False

Question 9

From whom should a CPA not accept a commission for recommending a product or service?

Accepted Answer

A) A tax client. 
B) An audit client. 
C) A financial-planning client. 
D) Any of the above. 
A) A tax client. 
B) An audit client. 
C) A financial-planning client. 
D) Any of the above.

Question 10

The PCAOB is a public board,appointed by Congress,to provide oversight of the firms that audit public companies registered with the SEC.

Accepted Answer

A) True 
 B)False

Question 11

Professional judgment is an attitude that includes a questioning mind and a critical evaluation of audit evidence.

Accepted Answer

A) True 
 B)False

Question 12

The overall objective of an audit is to obtain assurance whether the financial statements are free of misstatement.

Accepted Answer

A) True 
 B)False

Question 13

In which of the following situations would a CPA be considered independent?

Accepted Answer

A) A CPA has obtained an auto loan from a banking client. 
B) A CPA has obtained a 90-day signature loan from a client. 
C) A CPA has obtained a loan for investment purposes from a client. 
D) A CPA has obtained an interest-free loan from a banking client. 
A) A CPA has obtained an auto loan from a banking client. 
B) A CPA has obtained a 90-day signature loan from a client. 
C) A CPA has obtained a loan for investment purposes from a client. 
D) A CPA has obtained an interest-free loan from a banking client.

Question 14

Effective audit processes,by themselves,are sufficient to achieve audit quality.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a factor that creates a need for an independent auditor's assessment of the financial statement presentation?

Accepted Answer

A) Complexity of transactions affecting the financial statements. 
B) Lack of criteria on which to base information. 
C) Remoteness of the user from the organization. 
D) Both A and C. 
A) Complexity of transactions affecting the financial statements. 
B) Lack of criteria on which to base information. 
C) Remoteness of the user from the organization. 
D) Both A and C.

Question 16

A CPA firm may include the name of only one past owner in the firm name.

Accepted Answer

A) True 
 B)False

Question 17

A member of the AICPA must safeguard the confidentiality of client information.Which of the following is not a valid reason to disclose information to non-clients?

Accepted Answer

A) To discuss information relating to inadequate disclosure in an audit report. 
B) To comply with a validly issued and enforceable subpoena or summons. 
C) To accommodate the review of client audit work papers under AICPA,PCAOB,or State Board of Accountancy authority. 
D) To explain to shareholders the likelihood that the company will not meet its earnings projections. 
A) To discuss information relating to inadequate disclosure in an audit report. 
B) To comply with a validly issued and enforceable subpoena or summons. 
C) To accommodate the review of client audit work papers under AICPA,PCAOB,or State Board of Accountancy authority. 
D) To explain to shareholders the likelihood that the company will not meet its earnings projections.

Question 18

What is the first phase in an audit?

Accepted Answer

A) Client acceptance or client continuance. 
B) Understanding the client. 
C) Understanding internal controls. 
D) Testing of account balances. 
A) Client acceptance or client continuance. 
B) Understanding the client. 
C) Understanding internal controls. 
D) Testing of account balances.

Question 19

A bank using Milton Company's financial statements to evaluate Milton's loan application is an example of a user's need for unbiased reporting.

Accepted Answer

A) True 
 B)False

Question 20

Audit quality is driven,in part,by the skills and personal qualities of audit partners and staff.

Accepted Answer

A) True 
 B)False

A CPA is a certified public accountant who is licensed by a state board of accountancy.

The Need for Audited Financial Statements Why do financial statement users need independent assurance about information provided by management?

Auditors consider both quantitative and qualitative risk factors when making client acceptance or continuance decisions.

What is the primary objective of the independent auditor's report on financial statements?

For which of the following engagements are members of the AICPA required to act with integrity and objectivity?

Threats to an auditor's independence may occur when the auditor has a long-standing relationship with an important person associated with the client.

Who are the users of the financial statements?

Auditors generally need quantitative and mathematical skills more than they need communication and leadership skills.

From whom should a CPA not accept a commission for recommending a product or service?

The PCAOB is a public board,appointed by Congress,to provide oversight of the firms that audit public companies registered with the SEC.

Professional judgment is an attitude that includes a questioning mind and a critical evaluation of audit evidence.

The overall objective of an audit is to obtain assurance whether the financial statements are free of misstatement.

In which of the following situations would a CPA be considered independent?

Effective audit processes,by themselves,are sufficient to achieve audit quality.

Which of the following is a factor that creates a need for an independent auditor's assessment of the financial statement presentation?

A CPA firm may include the name of only one past owner in the firm name.

A member of the AICPA must safeguard the confidentiality of client information.Which of the following is not a valid reason to disclose information to non-clients?

What is the first phase in an audit?

A bank using Milton Company's financial statements to evaluate Milton's loan application is an example of a user's need for unbiased reporting.

Audit quality is driven,in part,by the skills and personal qualities of audit partners and staff.

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Audit Reports

Filters

Exam 1: Quality Auditing: Why It Matters

A CPA is a certified public accountant who is licensed by a state board of accountancy.

The Need for Audited Financial Statements Why do financial statement users need independent assurance about information provided by management?

Auditors consider both quantitative and qualitative risk factors when making client acceptance or continuance decisions.

What is the primary objective of the independent auditor's report on financial statements?

For which of the following engagements are members of the AICPA required to act with integrity and objectivity?

Threats to an auditor's independence may occur when the auditor has a long-standing relationship with an important person associated with the client.

Who are the users of the financial statements?

Auditors generally need quantitative and mathematical skills more than they need communication and leadership skills.

From whom should a CPA not accept a commission for recommending a product or service?

The PCAOB is a public board,appointed by Congress,to provide oversight of the firms that audit public companies registered with the SEC.

Professional judgment is an attitude that includes a questioning mind and a critical evaluation of audit evidence.

The overall objective of an audit is to obtain assurance whether the financial statements are free of misstatement.

In which of the following situations would a CPA be considered independent?

Effective audit processes,by themselves,are sufficient to achieve audit quality.

Which of the following is a factor that creates a need for an independent auditor's assessment of the financial statement presentation?

A CPA firm may include the name of only one past owner in the firm name.

A member of the AICPA must safeguard the confidentiality of client information.Which of the following is not a valid reason to disclose information to non-clients?

What is the first phase in an audit?

A bank using Milton Company's financial statements to evaluate Milton's loan application is an example of a user's need for unbiased reporting.

Audit quality is driven,in part,by the skills and personal qualities of audit partners and staff.

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Audit Reports

Filters