Question 1

In “auditing” financial accounting data, the primary concern is with:

Answer

determining whether recorded information properly reflects the economic events that occurred during the accounting period

determining if fraud has occurred..

determining if taxable income has been calculated correctly.

analyzing the financial information to be sure that it complies with government requirements.

Question 2

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

Answer

All companies

Privately held companies

Public companies

All public companies and privately held companies with assets greater than $500 million

Question 3

Which of the following isnotaSysTrustServices principle as defined by the AICPA?

Answer

Online privacy

Availability

Processing integrity

Operational integrity

Question 4

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

Answer

A review

An audit

Neither service provides assurance on financial statements.

Each service provides the same level of assurance on financial statements.

Question 5

An accountant:

Answer

must possess expertise in the accumulation of audit evidence.

must decide the number and types of items to test.

must have an understanding of the principles and rules that provide the basis for preparing the accounting information.

must be a CPA.

Question 6

Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called:

Answer

finance.

auditing.

accounting.

economics.

Question 7

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):

Answer

accounting and bookkeeping service.

attestation service.

assurance service.

tax service.

Question 8

The use of the Certified Public Accountant title is regulated by:

Answer

the federal government.

state law through a licensing department or agency of each state.

the American Institute of Certified Public Accountants through the licensing departments of the tax and auditing committees.

the Securities and Exchange Commission.

Question 9

The most common way for users to obtain reliable information is to:

Answer

have an internal audit.

have an independent audit.

verify all information individually.

verify the information with management.

Question 10

An examination of part of an organization’s procedures and methods for the purpose of evaluating efficiency and effectiveness is what type of audit?

Answer

Operational audit

Compliance audit

Financial statement audit

Production audit

Question 11

One objective of an operational audit is to:

Answer

determine whether the financial statements fairly present the entity’s operations.

determine if the auditee is in compliance with GAAP.

make recommendations for improving performance.

report on the entity’s relative success in attaining profit maximization.

Question 12

Which of the following is considered audit evidence?

Answer

    Oral statements 

made by management    Written

Communications    Auditor

Observation

Y    N    N

    Oral statements

made by management    Written

Communications    Auditor

Observation

N    Y    Y

    Oral statements

made by management    Written

Communications    Auditor

Observation

Y    Y    Y

    Oral statements

made by management    Written

Communications    Auditor

Observation

N    N    Y

Question 13

An audit to determine whether an entity is following specific procedures or rules set down by some higher authority is classified as a(n):

Answer

audit of financial statements.

compliance audit.

operational audit.

production audit.

Question 14

A correct relationship among the auditor, the client, and the external users is:

Answer

management of a public company hires the independent auditor.

the audit committee of a private company hires the independent auditor.

the client provides capital to the external users.

the external users can rely upon the auditor’s report to reduce information risk.

Question 15

Three common types of attestation services are:

Answer

audits of historical financial statements, reviews of historical financial statements, and audits of internal control over financial reporting.

audits of historical financial information, verifications of historical financial information, and attestations regarding internal controls.

reviews of historical financial information, verifications of future financial information, and attestations regarding internal controls.

audits of historical financial information, reviews of controls related to investments, and verifications of historical financial information.

Question 16

The methods used by a CPA firm to ensure that the firm meets is professional responsibilities to clients and others is:

Answer

continuing professional education.

compliance with generally accepted reporting standards.

quality control.

peer review.

Question 17

Hansen Corporation’s stock is listed on a national stock exchange and registered with the Securities and Exchange Commission. Hansen’s management hires a CPA to perform an independent audit of Hansen’s financial statements. The primary objective of this audit is to provide assurance to the:

Answer

investors in Hansen Corporation’s stock.

stock exchange.

Securities and Exchange Commission.

management of Hansen Corporation.

Question 18

Members of the Public Company Accounting Oversight Board are appointed and overseen by:

Answer

the U.S. Congress.

the American Institute of Certified Public Accountants.

the Auditing Standards Board

the Securities and Exchang e Commission.

Question 19

The International Standards on Auditing (ISAs):

Answer

are issued by the AICPA.

override a country’s regulations governing the audit of a company.

has many of the same standards as the Auditing Standards Board (ASB).

must be followed by companies whose stock is traded in the U.S.

Question 20

To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, the auditor must fulfill several performance responsibilities, including:

Answer

verifying that all audit work is performed by a CPA with a minimum of three years experience.

obtaining sufficient, appropriate audit evidence.

exercising professional judgment.

providing an opinion on the financial statements.

Question 21

The legal right to perform audits is granted to a CPA firm by regulation of:

Answer

each state.

the Financial Accounting Standards Board (FASB).

the American Institute of Certified Public Accountants (AICPA).

the Audit Standards Board.

Question 22

The purpose of establishing quality control policies and procedures to accept or continue a client relationship is to:

Answer

provide reasonable assurance that personnel are adequately trained to fulfill their responsibilities.

monitor the risk factors concerning misstatements that arise from the misappropriation of assets.

document objective criteria for the CPA fStrayer acc305 Final Exam Part 1,Accounting,$25.00,

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