CPA EXAM MULTIPLE CHOICE QUESTIONS - Introduction to Auditing 1. Auditing standards differ from auditing procedures in that procedures relate to a) Measure of performance. b) Audit principles. c) Acts to be performed. d) Audit judgments. 2. The independent auditor of 1900 differs from the auditor of today in that the 1900 auditor was more concerned with the a) Validity of the income statement. b) Determination of fair presentation of financial statements. c) Improvement of accounting systems. d) Detection of irregularities. 3. The first general standard of generally accepted auditing standards which states, in part, that the examination is to be performed by a person or persons having adequate technical training, requires that an auditor have a) Education and experience in the field of auditing. b) Ability in the planning and supervision of the audit work. c) Proficiency in business and financial matters. d) Knowledge in the areas of financial accounting. 4. The first standard of field work, which states that the work is to be adequately planned, and assistants, if any, are to be properly supervised, recognizes that a) Early appointment of the auditor is advantageous to the auditor and the client. b) Acceptance of an audit engagement after the close of the client's fiscal year is generally not permissible. c) Appointment of the auditor subsequent to the physical count of inventories requires a disclaimer of opinion. d) Performance of substantial parts of the examination is necessary at interim dates. 5. An independent audit aids in the communication of economic data because the audit a) Assures the reader of financial statements that any fraudulent activity has been corrected. b) Confirms the accuracy of management's financial representations. c) Lends credibility to the financial statements. d) Guarantees that financial data are fairly presented. 6. A CPA is most likely to refer to one or more of the three general auditing standards in determining a) Whether the CPA should undertake an audit engagement.
b) The nature of the CPA's report qualification. c) The scope of the CPA's auditing procedures. d) Requirements for the review of internal control. 7. The first standard of field work recognizes that early appointment of the independent auditor has many advantages to the auditor and the client. Which of the following advantages is least likely to occur as a result of early appointment of the auditor? a) The auditor will be able to complete the audit work in less time. b) The auditor will be able to perform the examination more efficiently. c) The auditor will be able to better plan for the observation of the physical inventories. d) The auditor will be able to plan the audit work so that it may be done expeditiously. 8. Which of the following best describes the reason why an independent auditor reports on financial statements? a) A management fraud may exist and is more likely to be detected by independent auditors. b) Different interests may exist between the company preparing the statements and the persons using the statements. c) A misstatement of account balances may exist and is generally corrected as the result of the independent auditor's work. d) Poorly designed internal control may exist. 9. What is the general character of the three generally accepted auditing standard classified as general standards? a) Criteria for content of the F/S and the auditor's report. b) Criteria of audit planning and supervision and evidence gathering. c) The need to maintain an independence in mental attitude in all matters relating to the assignments. d) Criteria for competence, independence and professional care of individuals performing the audit. 10. A CPA, while performing an audit, strives to achieve independence in appearance in order to a) Reduce risk and liability. b) Comply with the generally accepted standards of field work. c) Become independent in fact. d) Maintain public confidence in the profession. 11. The...
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