Acctg 408 Question

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Accounting 408Review Questions
Test 1

1.Independent CPAs perform audits on the financial statements of public companies. This type of auditing can best be described as
a.an activity whose purpose is to search for irregularities.
b.a discipline that attests to financial information presented by management. c.a professional activity that measures and communicates financial and business data. d.a regulatory function that prevents the issuance of improper financial information.

2.The authoritative body designated to promulgate standards concerning an accountant's association with unaudited financial statements of an entity that is not required to file financial statements with an agency regulating the issuance of the entity's securities is the a.Financial Accounting Standards Board.

b.General Accounting Office.
c.Accounting and Review Services Committee.
d.Auditing Standards Board.

3.Each state has the power to

Issue CPASuspend CPARevoke CPA
CertificatesCertificatesCertificates
a.NoNoNo
b.YesYesYes
c.NoYesYes
d.YesNoNo

4.Generally accepted auditing standards are established by which of the following?

I.The Auditing Standards Board
II.The SEC
III.The Institute of Internal Auditors

a.I only.
b.II only.
c.I and II.
d.I, II, and III.

5.Which of the following best describes what is meant by generally accepted auditing standards (GAAS)?
a.Pronouncements issued by the Financial Accounting Standards Board (FASB). b.Rules acknowledged by the accounting profession because of their universal application.
c.Procedures to be used to gather evidence to support financial statements.
d.Measures of the quality of the auditor's performance.

6.In deciding to undertake an audit engagement, the CPA would most likely consider which generally accepted auditing standard(s)?
a.The four reporting standards.
b.The three field work standards.
c.The second field work standard requiring consideration of the internal control structure.
d.The three general standards.

7.Which statement is not one of the generally accepted auditing standards of reporting? a.The report shall state whether the financial statements are presented in accordance with GAAP. b.The report shall state whether the audit was conducted in accordance with GAAS. c.Informative disclosures in the financial statements are to be regarded as reasonably adequate unless otherwise stated in the report. d.The report shall contain either an expression of opinion regarding the financial statements taken as a whole or an assertion to the effect that an opinion cannot be expressed.

8.GAAS consist of general standards, standards of field work, and standards of reporting. The standards of field work include which one of the following? a.The audit is to be performed by a person or persons having adequate technical training and proficiency. b.In all matters relating to the assignment, an independence in mental attitude is essential. c.The work is to be adequately planned and assistants, if any, are to be properly supervised. d.Due professional care is to be exercised in the performance of the audit and preparation of the audit report.

9.Jordan is the executive partner of Cain & Jordan, CPAs. One of its clients is a large nonprofit charitable organization. The organization has asked Jordan to be on its board of directors, which consists of a large number of the community's leaders. For Cain & Jordan to be considered independent, which of the following requirements must be met?

Board ParticipationAudit Participation
Purely Honoraryby Jordan Prohibited
a.YesYes
b.NoYes
c.NoNo
d.Yes...
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