Audit Study Guide
Auditing
Exam 1
Spring 2014
In-Class Exam Review
Name __________________________________.
Multiple Choice (5 points total, 30 minutes). Read each question carefully. Choose the one best available answer. Unless otherwise indicated, questions relate to external financial statement audits.
1. What is the purpose of a financial statement audit?
a. To confirm the accuracy of management’s financial statements.
b. To provide assurance that the audited entity is financially sound.
c. To express an opinion on the fairness of the financial statements.
d. To provide assurance that fraudulent activities have not occurred.
2. Information risk arises from which of the following situations?
a. Adverse selection threats.
b. Audit risk, inherent risk, control risk, and detection risk.
c. Potential for a company to fail to meet its business objectives.
d. Potential conflict of interest between financial statement providers and users
3. Which of the following educational achievements best describes the minimum education required to satisfy the educational requirements to sit for the CPA examination in Montana?
a. A graduate degree in accounting
b. A bachelor’s degree in accounting
c. 24 hours each of upper level accounting and business courses
d. 150 hours of education, subject to accounting course requirements
4. Which of the following entities prepares and administers the CPA exam?
a. State Boards of Accountancy.
b. Auditing Standards Board of the AICPA.
c. Public Company Accounting Oversight Board.
d. American Institute of Certified Public Accountants.
5. Which of the following types of engagements would provide assurance about various sorts of financial information (projections, pro forma financial statements, etc.)?
a. Audit.
b. Attestation.
c. Assurance.
d. Compilation. 6. An auditor determines that a client purposefully did not record several legitimate accounts payable as of year end so that the balance sheet would
Exam 1
Spring 2014
In-Class Exam Review
Name __________________________________.
Multiple Choice (5 points total, 30 minutes). Read each question carefully. Choose the one best available answer. Unless otherwise indicated, questions relate to external financial statement audits.
1. What is the purpose of a financial statement audit?
a. To confirm the accuracy of management’s financial statements.
b. To provide assurance that the audited entity is financially sound.
c. To express an opinion on the fairness of the financial statements.
d. To provide assurance that fraudulent activities have not occurred.
2. Information risk arises from which of the following situations?
a. Adverse selection threats.
b. Audit risk, inherent risk, control risk, and detection risk.
c. Potential for a company to fail to meet its business objectives.
d. Potential conflict of interest between financial statement providers and users
3. Which of the following educational achievements best describes the minimum education required to satisfy the educational requirements to sit for the CPA examination in Montana?
a. A graduate degree in accounting
b. A bachelor’s degree in accounting
c. 24 hours each of upper level accounting and business courses
d. 150 hours of education, subject to accounting course requirements
4. Which of the following entities prepares and administers the CPA exam?
a. State Boards of Accountancy.
b. Auditing Standards Board of the AICPA.
c. Public Company Accounting Oversight Board.
d. American Institute of Certified Public Accountants.
5. Which of the following types of engagements would provide assurance about various sorts of financial information (projections, pro forma financial statements, etc.)?
a. Audit.
b. Attestation.
c. Assurance.
d. Compilation. 6. An auditor determines that a client purposefully did not record several legitimate accounts payable as of year end so that the balance sheet would