Strayer ACC403 week 2 quiz 1

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 firm's peer review.

minimize the likelihood of associating with a client whose management may lack integrity.

Question 23

The form that must be completed and filed with the Securities and Exchange Commission whenever a company experiences a significant event that is of interest to public investors is the:

Answer

Form S-1.

Form 8-K.

Form 10-K.

Form 10-Q.

Question 24

Statements on Standards for Accounting and Review Services are issued by the:

Answer

Accounting and Review Services Committee.

Professional Ethics Executive Committee.

Securities and Exchange Commission.

Financial Accounting Standards Board.

Question 25

For privately held companies who is responsible for establishing auditing standards?

Answer

Securities and Exchange Commission

Public Company Accounting Oversight Board

Auditing Standards Board

National Association of Accounting

Question 26

Standards issued by the Public Company Accounting Oversight Board must be followed by CPAs who audit:

Answer

both private and public companies.

public companies only.

private companies, public companies, and nonprofit entities.

private companies only.

Question 27

The organization that is responsible for providing oversight for auditors of public companies is called the ________.

Answer

Auditing Standards Board

American Institute of Certified Public Accountants    

Public Oversight Board

Public Company Accounting Oversight Board

Question 28

The "Principles Underlying an Audit in Accordance with Generally Accepted Auditing Principles" provides a framework to help auditors:

Answer

understand the ten GAAS standards.

obtain complete assurance that the financial statements are free from any error.

report on the financial statements.

prevent fraud.

Question 29

Historically auditing standards have been organized into three categories, including:

Answer

Standards of field work.

Purpose of an audit.

Responsibilities of the auditor.

Proper planning and supervision.

Question 30

When assessing the risk of material misstatements in the financial statements,

Answer

inadequate internal control procedures will mitigate client business risk.

GAAS specifies in detail how much and what types of evidence the auditor needs to obtain.

company management is responsible for determining materiality levels.

the auditor must have an understanding of the client's business and industry.

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