ACC 460 Final Exam

Topics: Auditing, Audit, Financial audit Pages: 11 (2807 words) Published: September 4, 2014
ACC 460 Final Exam

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1) Determining whether amounts are in conformity with generally accepted accounting principles addresses the proper measurement of assets, liabilities, revenues, and expenses, which includes all of the following EXCEPT the A. consistency in applying accounting principles.

B. reasonableness of management’s accounting estimates.
C. proper application of valuation principles, such as cost, net reliable value, market value, and present value. D. reasonableness of management’s accounting policies.

2) The completeness assertion would be violated if
A. unbilled shipments occurred during the period.
B. fictitious sales transactions were included in accounts receivable. C. the allowance for doubtful accounts was understated.
D. disclosure in the statements of pledged receivables was inadequate.

3) The concept of materiality is defined by the Financial Accounting Standards Board (FASB) in terms of the judgment of the A. FASB members.
B. auditor.
C. preparer.
D. users.

4) Section 11 of the Securities Act of 1933 uses the term material fact to limit the amount of information required. Under the Act, the standard used to determine an item’s materiality A. may be found in FASB pronouncements.

B. is the auditor’s professional judgment.
C. has been established by the SEC as a percent of net income or of total assets. D. is the average prudent investor.

5) Anyone identified to the auditor by name prior to the audit who is the principal recipient of the auditor’s report is a A. primary beneficiary.
B. third party.
C. foreseen beneficiary.
D. foreseeable party.

6) Individuals or entities the auditor knew or should have known and would rely on the audit report in making business and investment decisions are A. primary beneficiaries.
B. foreseeable parties.
C. foreseen beneficiaries.
D. third parties.

7) Statements on auditing standards (SAS) are interpretations of what? A. Generally accepted accounting policies
B. Generally accepted auditing services
C. Generally accepted accounting principles
D. Generally accepted auditing standards

8) What level of assurance does the reader of a private company financial statement receive on the company’s system of internal controls? A. Negative
B. None
C. Reasonable
D. Positive

9) Which of the following best describes the relationship that should exist between the external auditor and the management of the client company? A. Advocacy of management’s position
B. Mutual caution and suspicion
C. Mutual trust and respect
D. Adversarial relationship

10) Statement on Quality Control Standards No. 2 identifies certain quality control elements that should be considered when performing which types of services? A. Accounting, tax, and review services

B. Auditing, accounting, and tax services
C. Auditing, tax, and review services
D. Auditing, accounting, and review services

11) Internal auditors are primarily involved with
A. compliance audits and operational audits.
B. financial statement audits.
C. operational audits.
D. compliance audits.

12) When providing audit services, the certified public accountant (CPA) is expected to be A. an advocate for the general public.
B. indifferent to the effect of the financial statements and the audit report. C. an advocate for the client.
D. independent of the client.

13) With respect to audit objectives, the term validity relates to which of the assertions below? A. Valuation or allocation
B. Presentation and disclosure
C. Completeness
D. Existence and occurrence

14) The five management assertions outlined in generally accepted auditing standards include all of the following EXCEPT A. existence and occurrence.
B. presentation and disclosure.
C. materiality.
D. rights and obligations.

15) Specific audit objectives are normally
A. derived from the categories of...
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