Strayer ACC403 week 2 quiz 1

Question 1In “auditing” financial accounting data, the primary concern is with:Answerdetermining whether recorded information properly reflects the economic events that occurred during the accounting perioddetermining 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 2The Sarbanes-Oxley Act applies to which of the following companies?AnswerAll companiesPrivately held companiesPublic companiesAll public companies and privately held companies with assets greater than $500 millionQuestion 3Which of the following isnotaSysTrustServices principle as defined by the AICPA?AnswerOnline privacyAvailabilityProcessing integrityOperational integrityQuestion 4Which of the following services provides the lowest level of assurance on a financial statement?AnswerA reviewAn auditNeither service provides assurance on financial statements.Each service provides the same level of assurance on financial statements.Question 5An accountant:Answermust 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 6Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called:Answerfinance.auditing.accounting.economics.Question 7Any 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):Answeraccounting and bookkeeping service.attestation service.assurance service.tax service.Question 8The use of the Certified Public Accountant title is regulated by:Answerthe 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 9The most common way for users to obtain reliable information is to:Answerhave an internal audit.have an independent audit.verify all information individually.verify the information with management.Question 10An examination of part of an organization’s procedures and methods for the purpose of evaluating efficiency and effectiveness is what type of audit?AnswerOperational auditCompliance auditFinancial statement auditProduction auditQuestion 11One objective of an operational audit is to:Answerdetermine 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 12Which of the following is considered audit evidence?Answer    Oral statements made by management    WrittenCommunications    AuditorObservationY    N    N
    Oral statementsmade by management    WrittenCommunications    AuditorObservationN    Y    Y
    Oral statementsmade by management    WrittenCommunications    AuditorObservationY    Y    Y
    Oral statementsmade by management    WrittenCommunications    AuditorObservationN    N    Y
Question 13An audit to determine whether an entity is following specific procedures or rules set down by some higher authority is classified as a(n):Answeraudit of financial statements.compliance audit.operational audit.production audit.Question 14A correct relationship among the auditor, the client, and the external users is:Answermanagement 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 15Three common types of attestation services are:Answeraudits 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 16The methods used by a CPA firm to ensure that the firm meets is professional responsibilities to clients and others is:Answercontinuing professional education.compliance with generally accepted reporting standards.quality control.peer review.Question 17Hansen 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:Answerinvestors in Hansen Corporation’s stock.stock exchange.Securities and Exchange Commission.management of Hansen Corporation.Question 18Members of the Public Company Accounting Oversight Board are appointed and overseen by:Answerthe U.S. Congress.the American Institute of Certified Public Accountants.the Auditing Standards Boardthe Securities and Exchang e Commission.Question 19The International Standards on Auditing (ISAs):Answerare 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 20To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, the auditor must fulfill several performance responsibilities, including:Answerverifying 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 21The legal right to perform audits is granted to a CPA firm by regulation of:Answereach state.the Financial Accounting Standards Board (FASB).the American Institute of Certified Public Accountants (AICPA).the Audit Standards Board.Question 22The purpose of establishing quality control policies and procedures to accept or continue a client relationship is to:Answerprovide 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 23The 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:AnswerForm S-1.Form 8-K.Form 10-K.Form 10-Q.Question 24Statements on Standards for Accounting and Review Services are issued by the:AnswerAccounting and Review Services Committee.Professional Ethics Executive Committee.Securities and Exchange Commission.Financial Accounting Standards Board.Question 25For privately held companies who is responsible for establishing auditing standards?AnswerSecurities and Exchange CommissionPublic Company Accounting Oversight BoardAuditing Standards BoardNational Association of AccountingQuestion 26Standards issued by the Public Company Accounting Oversight Board must be followed by CPAs who audit:Answerboth private and public companies.public companies only.private companies, public companies, and nonprofit entities.private companies only.Question 27The organization that is responsible for providing oversight for auditors of public companies is called the ________.AnswerAuditing Standards BoardAmerican Institute of Certified Public Accountants    Public Oversight BoardPublic Company Accounting Oversight BoardQuestion 28The “Principles Underlying an Audit in Accordance with Generally Accepted Auditing Principles” provides a framework to help auditors:Answerunderstand the ten GAAS standards.obtain complete assurance that the financial statements are free from any error.report on the financial statements.prevent fraud.Question 29Historically auditing standards have been organized into three categories, including:AnswerStandards of field work.Purpose of an audit.Responsibilities of the auditor.Proper planning and supervision.Question 30When assessing the risk of material misstatements in the financial statements,Answerinadequate 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.