For More Information Visit Here: http://budapp.net

1. ACC 562 Final Exam – Strayer New
ACC 562 Week 11 Final Exam Solved
Click On The Link Below To Purchase
Instant Download
http://www.budapp.net/ACC-562-Final-Exam-Strayer-New-ACC562W11E.htm
1.Developing an understanding of the client's business and industry is essential to
proficiency as discussed in the general standards of GAAS. (Points: 4)
True
False
2. Ratio analysis only involves a year-to-year comparison of account balances.
(Points: 4)
True
False
3. Control is considered to be part of corporate governance. (Points: 4)
True
False
4. When control risk is assessed at a maximum level, the auditor assumes that the
internal controls are reliable in preventing or detecting material misstatements.
(Points: 4)
True
False
5. Accounting subsystems are accounting cycles composed of one or more accounting
applications. (Points: 4)
True
False
6. Presentation and disclosure assertions imply that all transactions and balances are
properly presented, disclosures represent what actually happened, and the footnote
disclosures are appropriate and adequate. (Points: 4)
True
False

2. 7. Vouching recorded transactions involves taking a sample from the journal and
tracing them back to the source documents to ensure they occurred. (Points: 4)
True
False
8. Audit documentation serves as support for the financial statements. (Points: 4)
True
False
9. In analysis of the results of audit sampling, an auditor may determine that the
sample size must be increased. (Points: 4)
True
False
10. The revenue cycle considered by auditors includes the sales process but not
collections. (Points: 4)
True
False
11. Inventory is complex and typically considered a high-risk area in audits of service
firms. (Points: 4)
True
False
12. An auditor can utilize a cross-sectional analysis for a client operating in multiple
locations to identify areas of further inventory testing. (Points: 4)
True
False
13. Legal expenses are reviewed by auditors for possible litigation and related FAS 5
treatment. (Points: 4)
True
False
14. An imprest payroll account will never reach a zero balance. (Points: 4)
True
False
15. A turnaround document is an effective completeness control because they list
essential information for further processing of the collection on account. (Points: 4)

3. True
False
16. Auditors will perform an analysis of leases using SFAS 13 criteria and other EITF
statements to substantiate the accounting treatment. (Points: 4)
True
False
17. Contingencies are considered by the auditor in relation to the SFAS No. 5 criteria
to determine whether material contingencies exist with the client and, if so, that they
are properly accrued or disclosed. (Points: 4)
True
False
18. An example of a Type II Subsequent Event includes the settlement two months
after year-end of a liability for an amount well in excess of the amount that was
accrued at year-end. (Points: 4)
True
False
19. A report on agreed-upon procedures issued by accountants provides the lowest
form of attestation assurance. (Points: 4)
True
False
20. The need for assurance services arises for all of the following reasons EXCEPT:
(Points: 4)
potential bias in providing information.
closeness between a user and the organization.
complexity of the processing systems.
remoteness between a user and the organization.
21. Which one of the following is not part of the attest process? (Points: 4)
evaluating evidence against objective criteria
gathering evidence about assertions
proving the accuracy of the books and records
communicating the conclusions reached

4. 22. Users can reasonably expect audited financial statements to be (Points: 4)
complete and contain all important financial disclosures, be free from material
misstatements and be presented fairly.
complete and contain all-important financial disclosures, be free from material
misstatements and be presented fairly according to GAAP.
complete, be accurate and be presented fairly according to GAAP.
complete and contain all-important financial disclosures, be free from all
misstatements and be presented fairly according to the substance of GAAP.
23. Which one of the following is not a provider of assurance services? (Points: 4)
CPAs
internal auditors
governmental auditors
AICPA
24. The primary governing board that performs quality reviews on registered CPA
firms that audit public companies is the (Points: 4)
PCAOB
GAO
AICPA
FASB
25. Management of an organization has the responsibility for all of the following
except: (Points: 4)
accounting principles used in financial reporting
engagement of a qualified auditor
internal control over financial reporting
financial statements and disclosures
26. The financial statement auditor must understand the client's internal control as a
component of the fieldwork standards. The one of the reason for this understanding is
so that the auditor may (Points: 4)
provide individual comments on internal control non-compliance.
become comfortable that the client will pay its audit bills.
assess materiality.
assess the risk of possible misstatements in the financial statements.
27. For an auditor to be independent, he or she must be independent in (Points: 4)
fact.
appearance.
fact and appearance.

5. either fact or appearance.
28. An auditor is concerned with materiality for which of the following reasons?
(Points: 4)
to assess internal control
to comply with the quality assurance standards of GAAS
to determine the effects of misstatements on the users of financial information
to cut down on audit procedures and testing
29. A proper system of corporate governance is one that demands (Points: 4)
decision making by auditors in place of management.
internal audit representation on the board of directors.
audit planning to obtain competent and sufficient audit evidence.
accountability back through the system to the shareholders.
30. In determining the types of activities, engagements and interactions an auditor
should have with a client, the CPA and the audit firm must (select the best answer)
(Points: 4)
follow the rules exactly as they are written.
assess all of their relationships with every client to ensure that independence is
intact.
focus on client satisfaction above all other considerations
realize that ethics are only guidelines and a matter of personal judgment.
31. The AICPA Principles of Professional Conduct include (Points: 4)
due professional care and supervision.
scope and nature of services and adequate training.
integrity and independence
public interest, integrity and objectivity.
32. A public client is required to report material changes in internal control (Points: 4)
monthly.
quarterly.
annually.
never.
33. Programs written to accomplish specific processing tasks, such as computing
payroll, are (Points: 4)

6. application programs.
operating system programs.
Java scripts.
access control programs.
34. The combination of which functions in an information technology environment
are not necessarily a control weakness? (Points: 4)
user and programming functions
database administrator and data input functions
programmers and authorization of changes
users and certain data access
35. Backup controls, used to prevent data and software loss would include procedures
to: (Points: 4)
load balance in the event of heavy traffic across the network.
constantly monitor the network for intrusion and attack.
provide an alternate form of electricity to the corporate facilities.
fail-over to a mirrored storage device in the event of interruption or loss.
36. Which one of the following is an example of an edit test for limits? (Points: 4)
Only numbers are allowed to be input into the social security number field and
dashes are pre-formatted.
Each sales order is given an identifier that is also tagged to the receipt of goods
record, the customer invoice record and the cash receipts record
The purchasing department may order materials up to $5,000 in total before a
second electronic authorization is required.
Supplies may not be purchased from any vendor not authorized and existing in
the vendor table.
37. The control totals used to ensure the completeness of processing in a batch
processing environment include (Points: 4)
record count.
control totals.
hash totals.
all of the above.
38. The type of test used to check that no hourly employee is paid more than $400.00
in one week is: (Points: 4)
an edit test.
a batch control test.
an output control test.
none of the above.

7. 39. Tagging and tracing might best be used to test which of the following? (Points: 4)
The number of confirmations returned compared to the number of confirmations
sent out.
The corporate credit card is only being used for business transactions.
All customer orders shipped were also invoiced and that cash was received.
Quantities of product F411029 have been accurately counted in the warehouse.
40. Which one of the following would be the least persuasive type of evidence?
(Points: 4)
Confirmations returned by bank directly to the auditor.
Letters of communication from the Securities Exchange Commission.
Physical examination of perpetual inventory.
General ledger in a newly developed information system.
41. The primary support of an audit is (are) (Points: 4)
the financial statements.
the audit working papers.
the audit report.
the confirmation documentation.
42. The primary assertion that is satisfied by physically observing the client's count of
inventory is (Points: 4)
existence.
rights.
valuation.
completeness.
43. The audit team asks the client to pull a sample vendor files and examines the
invoices supporting the purchases of inventory items during the year. What is the
most probable reason for the use of this evidence? (Points: 4)
Confirmation of vendors supplying inventory for existence.
Analytical procedures to determine completeness of inventory.
Testing for the valuation of inventory using the FIFO cost flow assumption.
Reading the terms of the arrangements with vendors for disclosure.
44. The extent of procedures is affected mostly by: (Points: 4)
the sheer volume of procedures to be applied by the auditor.
the time of year in which the client takes a physical inventory in the warehouse.
the auditor's judgment that misstatements are probable in certain balances.
the availability of the client's staff at or near the balance sheet date.
45. An audit program is created to specify: (Points: 4)
the type of audit opinion to be rendered based upon procedures performed.
the audit procedures that will be performed each year for the client.

8. how an auditor should think while performing audit procedures.
objectives and procedures to be followed during the audit process.
46. Which one of the following is primary reason for documenting audit work?
(Points: 4)
to prevent litigation by other parties that question the audit performance.
to provide a stand-alone medium that gives audit conclusions and supports the
opinion.
to supply a point of reference for all auditors performing the work subsequently.
to supply a point of reference for all auditors performing the work subsequently.
47. Which of the following would most likely be considered intentional
misapplication of accounting principles on financial statements? (Points: 4)
A capital lease is presented as periodic rent expense rather than interest and
depreciation.
A deferred tax asset is reduced to zero with a valuation allowance.
A stock option is expensed even though the fair value of the underlying stock on
the date of grant was the same as the option's exercise price.
Revenues for up-front fees are deferred rather than recognized immediately.
48. The audit of financial statements includes the initial approach of addressing fraud.
How must an auditor address fraud in the planning stage? (Points: 4)
The auditor must test for fraud in the planning stage by sampling accounts.
The auditor must consider the likelihood of fraud existing in the company in the
planning stage.
The auditor must realize that most people are honest and not automatically
assume that fraud exists when planning the audit.
The auditor must not be aggressive in its initial approach to fraud as trust may be
lost by the client.
49. Which of the following creates an opportunity for fraud to be committed in an
organization? (Points: 4)
Management demands financial success.
Poor internal control.
Commitments tied to debt covenants.
Management is aggressive in its application of accounting rules.
50. Sam Jones, controller of Mitnikco, spends three days researching the accounting
statements to find loopholes in the "rules" and to make a case for recognizing revenue
earlier, rather than in later years. In the end, Sam and the other members of
management determine that they will reduce the company's deferred revenue accounts
and begin accounting for all revenues as agreements are signed. What are the
motivations of Mitnikco management based solely on the information above? (Points:
4)
Pressures

9. Opportunity
Rationalization
Skepticism
51. Sampling risk is the risk that (Points: 4)
the sample will not contain characteristics representative of the population such
that inferences made about that population will be incorrect.
the population will not contain characteristics representative of the sample such
that inferences made about that sample will be incorrect.
Neither A nor B is correct.
Both A and B are correct.
52. The sample size varies directly with (Points: 4)
the expected failure rate.
the tolerable error rate.
the allowable risk of assessing control risk too low.
the nonsampling risk
53. The steps used in sampling during substantive testing includes the determination
of each of the following except (Points: 4)
the audit objective.
the method of selecting a sample.
expected misstatement conditions
control failure risk.
54. The design of a PPS sample requires the auditor to determine all of the following
except (Points: 4)
detection risk.
inherent risk.
tolerable misstatement.
expected misstatement in the account balance.
55. Which of the following is the best example of the control objective in the revenue
cycle that all transactions are recorded accurately? (Points: 4)
Sales are recorded at the invoice price expected to be collected from customers.
Sales orders have sequential numbering.
Recorded sales transactions are evidenced by valid invoices and shipping
documents.
Credits to customer accounts are classified as liabilities.
56. In an audit of financial statements, the risk of the high rate of return of products
sold includes that of (Points: 4)
sales that are recorded improperly.
an estimate of accrued returns that reduces net income.

10. a reduction of net sales for an increase to the sales returns and allowance
account.
consignment goods that are returned and forwarded to third parties.
57. Confirmations that are sent to select customers asking them to review the current
balance due the client as shown on the client's statement and return the letters directly
to the auditor indicating whether they agree with the indicated balance, are known as
(Points: 4)
direct confirmations.
indirect confirmations.
positive confirmations.
negative confirmations.
58. Which of the following is an example of the type of analytics that an auditor
would use for inventory? (Points: 4)
Number of day's sales in receivables compared to industry averages.
Inventory turnover for the previous five years.
Number of obsolete units this period compared to last.
Salaries of marketing personnel as a percent of total inventory.
59. Which one of the following accounts would an auditor most likely test by
performing analytical procedures? (Points: 4)
Sales commissions expense.
Legal expenses.
Repairs and maintenance expense.
Travel expense.
60. Operational audits of cash management seek to identify areas in which cash
management may be improved to contribute to the overall profitability and
effectiveness of the organization. The internal auditor would use which of the
following procedures on an operational audit of cash? (Points: 4)
determine the compliance of treasury activities with company policy
review procedures for identifying and investing excess funds
review procedures for handling cash receipts
all of the above
61. Which represents the most significant risk associated with restructuring liabilities
on the financial statements? (Points: 4)
Future smoothing of income by releasing the reserves.
Related party transactions that are not recorded at arms-length.
Understatement of assets in the period of recording the liabilities.
Payroll liabilities that are not disclosed in the notes.
62. All of the following are significant issues for consideration when auditing for the
impairment of goodwill, except (Points: 4)

11. timing of the assessment by management.
amortization in years of the goodwill.
clear objective evidence supporting the assessment.
understanding the client's business and its risks.
63. Simco's shaving products division was acquired over ten years ago in a purchase
transaction by BlizzardCraft. The related goodwill was amortized until 2002 and $4.5
million remained on the books thereafter. In 2008, Simco's production machinery was
assessed for impairment as a long-lived asset because of obsolescence issues. What
relationship will the auditors most likely make between the facts stated above?
(Points: 4)
BlizzardCraft erroneously treated the acquisition of Simco as a purchase
transaction when it should have been a pooling of interests.
Simco should not have amortized goodwill previous to 2002.
Simco's goodwill should have been written off when purchased by BlizzardCraft
in a one-time transaction.
The goodwill related to Simco may have been impaired during 2008.
64. All of the following represent a related entity to an organization except (Points: 4)
the president's son.
an affiliate with common ownership.
customers.
primary owners.
65. All of the following represent equity issuance requiring prominent accounting,
presentation and disclosure treatment, except (Points: 4)
stock with beneficial conversion features.
Warrants issued to a consultant for services performed.
Preferred stock that is cumulative and par value is $0.50 per share.
Dividends have not been paid on common stock since inception.
66. The auditor will examine proceeds and trace them to recorded amounts of the par
value of common stock to determine that (Points: 4)
shares exist and have valid stock certificates.
proceeds have been properly distributed between common stock and additional
paid-in capital.
dividends have been issued in accordance with the stock indenture agreement as
approved by the board.
shareholders actually have the rights to shares issued by the company in
exchange for subscribed funds.
67. Which of the following is a tool that is best used by the audit team to determine if
the client has included all disclosures? (Points: 4)

12. Management representation letter.
GAAS.
Inquiry of the CFO.
Checklists.
68. The auditor is responsible for evaluating the likelihood of a client continuing as a
going concern for a reasonable period of time. A reasonable period of time is (Points:
4)
one year from the audit report date.
one year from the last day of field work.
one year from the balance sheet date.
two years from the balance sheet date.
69. Rock School, Inc. has a matter of material litigation that is threatened, but that has
not gone to trial. The auditor's consideration of such a matter will most likely include
all of the following except (Points: 4)
sending a letter to the client's attorneys for more information
discussions of the matter with the client and the client's insurance adjuster.
confirmation with the harmed party regarding the amount that will be claimed.
assessment of proper accrual or disclosure by the client in accordance with SFAS
No. 5.
70. When the financial statements contain a material departure from GAAP that the
auditor believes is justified, justification (Points: 4)
should appear in a footnote.
should appear in a paragraph added before the scope paragraph.
should appear in the opening paragraph.
should appear in a paragraph added before the opinion paragraph.