Question 1

If the auditor determines that the company does not comply with relevant laws and regulations,the auditor

Accepted Answer

A) should report the noncompliance to management or those charged with governance 
B) must report the noncompliance to management or those charged with governance 
C) should determine whether he has a responsibility to report the noncompliance to outside parties 
D) should report the noncompliance to outside parties 
E) must report the noncompliance to outside parties
F)both B and C
G)both C and E
H)both D and E 
A) should report the noncompliance to management or those charged with governance 
B) must report the noncompliance to management or those charged with governance 
C) should determine whether he has a responsibility to report the noncompliance to outside parties 
D) should report the noncompliance to outside parties 
E) must report the noncompliance to outside parties
F)both B and C
G)both C and E
H)both D and E

Question 2

The FASB define related parties as

Accepted Answer

A) other parties with which the company may deal if one part or can influence the management or operating policies of the other 
B) other parties that can significantly influence the management or operating policies of the transacting parties or that has an ownership interest in one of the transacting parties and can significantly influence the other party 
C) principal owners of the company and their immediate families 
D) employees of the company and their immediate families 
E) both B and C
F)both C and D
G)both D and E 
A) other parties with which the company may deal if one part or can influence the management or operating policies of the other 
B) other parties that can significantly influence the management or operating policies of the transacting parties or that has an ownership interest in one of the transacting parties and can significantly influence the other party 
C) principal owners of the company and their immediate families 
D) employees of the company and their immediate families 
E) both B and C
F)both C and D
G)both D and E

Question 3

For laws with an indirect impact on the financial statements the auditor should perform audit procedures to identify instances on noncompliance with laws and regulations that may have a material effect on the financial statements.The auditor does this by

Accepted Answer

A) inquiring with management about the company's compliance with laws and regulations 
B) reviewing regulations of relevant licensing or regulatory bodies 
C) corresponding with relevant licensing or regulatory bodies 
D) inspecting correspondence with relevant licensing or regulatory bodies 
E) both A and B
F)both A and D
G)both C and E 
A) inquiring with management about the company's compliance with laws and regulations 
B) reviewing regulations of relevant licensing or regulatory bodies 
C) corresponding with relevant licensing or regulatory bodies 
D) inspecting correspondence with relevant licensing or regulatory bodies 
E) both A and B
F)both A and D
G)both C and E

Question 4

The auditing standards require the auditor to consider certain events that occur in the year following the year under audit,referred to as subsequent events,and to determine if any of these events require disclosure or adjustment in the financial statements under audit.

Accepted Answer

A) True 
 B)False

Question 5

Auditors of public companies are required to evaluate the consistency of the financial statements,however,the auditors of private companies are not subject to such a requirement.

Accepted Answer

A) True 
 B)False

Question 6

Auditing standards require that analytical procedures be used during the

Accepted Answer

A) testing stage 
B) completion stage 
C) planning stage 
D) engagement stage 
E) reporting stage
F)both A and B
G)both B and C
H)both D and E 
A) testing stage 
B) completion stage 
C) planning stage 
D) engagement stage 
E) reporting stage
F)both A and B
G)both B and C
H)both D and E

Question 7

Examples of contingent liabilities include

Accepted Answer

A) lawsuits requesting the company to pay damages for patent liability or product infringement 
B) product warranty claims 
C) payment of obligations of other parties 
D) liabilities for discounted notes receivable 
E) income tax extensions
F)both A and C
G)both B and D
H)both D and E 
A) lawsuits requesting the company to pay damages for patent liability or product infringement 
B) product warranty claims 
C) payment of obligations of other parties 
D) liabilities for discounted notes receivable 
E) income tax extensions
F)both A and C
G)both B and D
H)both D and E

Question 8

When a contingent liability exists,the likelihood for loss can be evaluated as probable,reasonably possible,or remote.A remote loss is

Accepted Answer

A) a loss where the chance of occurrence is slight 
B) a loss that is likely to occur 
C) a loss where the chance of occurrence is moderate 
D) falls between the chance of occurrence is slight and a loss is likely to occur 
A) a loss where the chance of occurrence is slight 
B) a loss that is likely to occur 
C) a loss where the chance of occurrence is moderate 
D) falls between the chance of occurrence is slight and a loss is likely to occur

Question 9

Which of the following audit procedures would the auditor use to identify conditions that may indicate doubt that the company will continue as a going concern for a reasonable period of time?

Accepted Answer

A) net liability positions 
B) positive operating cash flows 
C) ability to pay creditors on due dates 
D) change from cash-on-delivery to credit transactions with suppliers 
E) loss of key management without replacement
F)both A and E
G)both B and C
H)both D and E 
A) net liability positions 
B) positive operating cash flows 
C) ability to pay creditors on due dates 
D) change from cash-on-delivery to credit transactions with suppliers 
E) loss of key management without replacement
F)both A and E
G)both B and C
H)both D and E

Question 10

The additional material in an annual report falls into which of the following categories?

Accepted Answer

A) information that is required by an accounting standard setter 
B) information that is recommended by an accounting standard setter 
C) information that is recommended by the auditor 
D) information that the company chooses to include in the annual report 
E) both A and B
F)both A and D
G)both C and E 
A) information that is required by an accounting standard setter 
B) information that is recommended by an accounting standard setter 
C) information that is recommended by the auditor 
D) information that the company chooses to include in the annual report 
E) both A and B
F)both A and D
G)both C and E

Question 11

The FASB define related parties as

Accepted Answer

A) customers of the company 
B) investments accounted for using the cost method of accounting for investment securities 
C) trusts for the benefit of employees,such as,pension and profit sharing trusts that are managed by management 
D) principal owners of the company and their immediate families 
E) employees of the company and their immediate families
F)both A and B
G)both B and E
H)Both C and D 
A) customers of the company 
B) investments accounted for using the cost method of accounting for investment securities 
C) trusts for the benefit of employees,such as,pension and profit sharing trusts that are managed by management 
D) principal owners of the company and their immediate families 
E) employees of the company and their immediate families
F)both A and B
G)both B and E
H)Both C and D

Question 12

The FASB define related parties as

Accepted Answer

A) customers of the company 
B) investments accounted for using the equity method of accounting for investment securities 
C) trusts for the benefit of employees,such as,pension and profit sharing trusts that are managed by union representatives 
D) principal debtors of the company and their immediate families 
E) management of the company and their immediate families
F)both A and C
G)both B and E
H)both D and E 
A) customers of the company 
B) investments accounted for using the equity method of accounting for investment securities 
C) trusts for the benefit of employees,such as,pension and profit sharing trusts that are managed by union representatives 
D) principal debtors of the company and their immediate families 
E) management of the company and their immediate families
F)both A and C
G)both B and E
H)both D and E

Question 13

What is the only document issued at the end of an audit?

Accepted Answer

A) the annual report 
B) the audit report 
C) the workpapers 
D) the management letter 
A) the annual report 
B) the audit report 
C) the workpapers 
D) the management letter

Question 14

The FASB define related parties as

Accepted Answer

A) other parties with which the company may deal if one part controls or can significantly influence the management or operating policies of the other 
B) other parties that can influence the management or operating policies of the transacting parties or that has an ownership interest in one of the transacting parties and can influence the other party 
C) trusts for the benefit of employees,such as,pension and profit sharing trusts that are managed by union representatives 
D) principal debtors of the company and their immediate families 
E) management of the company and their immediate families
F)both A and B
G)both A and E
H)both D and E 
A) other parties with which the company may deal if one part controls or can significantly influence the management or operating policies of the other 
B) other parties that can influence the management or operating policies of the transacting parties or that has an ownership interest in one of the transacting parties and can influence the other party 
C) trusts for the benefit of employees,such as,pension and profit sharing trusts that are managed by union representatives 
D) principal debtors of the company and their immediate families 
E) management of the company and their immediate families
F)both A and B
G)both A and E
H)both D and E

Question 15

When workpapers are evaluated by audit management,they will be judged against the standard of

Accepted Answer

A) professional judgment 
B) due care 
C) legal liability 
D) due diligence 
A) professional judgment 
B) due care 
C) legal liability 
D) due diligence

Question 16

Examples of contingent liabilities include

Accepted Answer

A) lawsuits requesting the company to pay damages for product liability or patent infringement 
B) product warranty expenses 
C) guarantees of obligations of other parties 
D) liabilities for discounted accounts receivable 
E) income tax extensions
F)both A and C
G)both B and E
H)both D and E 
A) lawsuits requesting the company to pay damages for product liability or patent infringement 
B) product warranty expenses 
C) guarantees of obligations of other parties 
D) liabilities for discounted accounts receivable 
E) income tax extensions
F)both A and C
G)both B and E
H)both D and E

Question 17

The auditing standards require the auditor to design audit procedures and plan the audit to identify litigation,claims,and assessments involving the company that may increase the risk of material misstatement.The auditor does this by

Accepted Answer

A) asking management and others in the company,including the in-house legal counsel about legal liabilities 
B) reviewing minutes of meetings of those charged with governance and correspondence between the company and its external counsel 
C) reviewing the expense accounts related to legal expense 
D) reviewing tax returns 
E) investigating customer complaints
F)both A and B
G)both A and D
H)Both B and C 
A) asking management and others in the company,including the in-house legal counsel about legal liabilities 
B) reviewing minutes of meetings of those charged with governance and correspondence between the company and its external counsel 
C) reviewing the expense accounts related to legal expense 
D) reviewing tax returns 
E) investigating customer complaints
F)both A and B
G)both A and D
H)Both B and C

Question 18

The auditor is concerned about the client's compliance with laws and regulations that have an indirect impact on the financial statements.Because of the inherent limitations of an audit,there is an unavoidable risk that some material misstatements in the financial statements may be undetected.This risk is greater related to potential violations of laws and regulations for which of the following reasons?

Accepted Answer

A) many government contracts refer to a specific set of regulations 
B) many government programs are subject to state and federal laws 
C) many laws and regulations do not affect the financial statements 
D) noncompliance may involve conduct designed to conceal the noncompliance 
E) whether an action constitutes noncompliance is a matter for determination by the board of directors
F)both A and B
G)both C and D
H)both D and E 
A) many government contracts refer to a specific set of regulations 
B) many government programs are subject to state and federal laws 
C) many laws and regulations do not affect the financial statements 
D) noncompliance may involve conduct designed to conceal the noncompliance 
E) whether an action constitutes noncompliance is a matter for determination by the board of directors
F)both A and B
G)both C and D
H)both D and E

Question 19

Which of the following procedures should the search for subsequent events involve?

Accepted Answer

A) Gain an understanding of the procedures used by management to ensure that subsequent events are identified 
B) Inquire of management about whether there had been any events that have occurred before the date of the financial statements that might affect the financial statements 
C) Read the minutes of meetings of shareholders,directors,and management and inquire about matters discussed at such meetings for which minutes are not yet available 
D) Read the interim financial records 
E) Review the subsequent event expense account
F)both A and C
G)both B and D
H)both D and E 
A) Gain an understanding of the procedures used by management to ensure that subsequent events are identified 
B) Inquire of management about whether there had been any events that have occurred before the date of the financial statements that might affect the financial statements 
C) Read the minutes of meetings of shareholders,directors,and management and inquire about matters discussed at such meetings for which minutes are not yet available 
D) Read the interim financial records 
E) Review the subsequent event expense account
F)both A and C
G)both B and D
H)both D and E

Question 20

The issues that may lead to inconsistent financial statements include

Accepted Answer

A) a change in accounting estimate 
B) a change in accounting procedure 
C) adjustment to correct a misstatement in the current financial statements 
D) a change in accounting principle 
E) adjustment to correct a misstatement in previously issued financial statements
F)both A and B
G)both C and E
H)Both D and E 
A) a change in accounting estimate 
B) a change in accounting procedure 
C) adjustment to correct a misstatement in the current financial statements 
D) a change in accounting principle 
E) adjustment to correct a misstatement in previously issued financial statements
F)both A and B
G)both C and E
H)Both D and E

If the auditor determines that the company does not comply with relevant laws and regulations,the auditor

The FASB define related parties as

For laws with an indirect impact on the financial statements the auditor should perform audit procedures to identify instances on noncompliance with laws and regulations that may have a material effect on the financial statements.The auditor does this by

The auditing standards require the auditor to consider certain events that occur in the year following the year under audit,referred to as subsequent events,and to determine if any of these events require disclosure or adjustment in the financial statements under audit.

Auditors of public companies are required to evaluate the consistency of the financial statements,however,the auditors of private companies are not subject to such a requirement.

Auditing standards require that analytical procedures be used during the

Examples of contingent liabilities include

When a contingent liability exists,the likelihood for loss can be evaluated as probable,reasonably possible,or remote.A remote loss is

Which of the following audit procedures would the auditor use to identify conditions that may indicate doubt that the company will continue as a going concern for a reasonable period of time?

The additional material in an annual report falls into which of the following categories?

The FASB define related parties as

The FASB define related parties as

What is the only document issued at the end of an audit?

The FASB define related parties as

When workpapers are evaluated by audit management,they will be judged against the standard of

Examples of contingent liabilities include

The auditing standards require the auditor to design audit procedures and plan the audit to identify litigation,claims,and assessments involving the company that may increase the risk of material misstatement.The auditor does this by

Which of the following procedures should the search for subsequent events involve?

The issues that may lead to inconsistent financial statements include

What Is Auditing

The Audit Planning Process: Understanding the Risk of Material Misstatement

Internal Controls

Auditing the Revenue Business Process

Audit Evidence and the Auditors Responsibility for Fraud Detection

Auditing the Acquisition and Expenditure Business Process

Auditing the Inventory Business Process

Audit Sampling: Tests of Internal Controls

Audit Sampling: Substantive Tests of Details

Cash and Investment Business Processes

Long-Term Debt and Owners Equity Business Process

Audit Reports

The Auditing Profession Glossary

Filters

Exam 12: Completing the Audit

If the auditor determines that the company does not comply with relevant laws and regulations,the auditor

The FASB define related parties as

For laws with an indirect impact on the financial statements the auditor should perform audit procedures to identify instances on noncompliance with laws and regulations that may have a material effect on the financial statements.The auditor does this by

The auditing standards require the auditor to consider certain events that occur in the year following the year under audit,referred to as subsequent events,and to determine if any of these events require disclosure or adjustment in the financial statements under audit.

Auditors of public companies are required to evaluate the consistency of the financial statements,however,the auditors of private companies are not subject to such a requirement.

Auditing standards require that analytical procedures be used during the

Examples of contingent liabilities include

When a contingent liability exists,the likelihood for loss can be evaluated as probable,reasonably possible,or remote.A remote loss is

Which of the following audit procedures would the auditor use to identify conditions that may indicate doubt that the company will continue as a going concern for a reasonable period of time?

The additional material in an annual report falls into which of the following categories?

The FASB define related parties as

The FASB define related parties as

What is the only document issued at the end of an audit?

The FASB define related parties as

When workpapers are evaluated by audit management,they will be judged against the standard of

Examples of contingent liabilities include

The auditing standards require the auditor to design audit procedures and plan the audit to identify litigation,claims,and assessments involving the company that may increase the risk of material misstatement.The auditor does this by

Which of the following procedures should the search for subsequent events involve?

The issues that may lead to inconsistent financial statements include

What Is Auditing

The Audit Planning Process: Understanding the Risk of Material Misstatement

Internal Controls

Auditing the Revenue Business Process

Audit Evidence and the Auditors Responsibility for Fraud Detection

Auditing the Acquisition and Expenditure Business Process

Auditing the Inventory Business Process

Audit Sampling: Tests of Internal Controls

Audit Sampling: Substantive Tests of Details

Cash and Investment Business Processes

Long-Term Debt and Owners Equity Business Process

Audit Reports

The Auditing Profession Glossary

Filters