WHICH OF THE FOLLOWING STATEMENTS IS NOT TRUE WHEN CONSIDERING THE LIQUIDITY TRAP AND CONSUMERS?

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1. Which one of the following is not one of the three general standards?
A Proper planning and supervision.
B Due professional care.
C Adequate training and proficiency.
D Independence of mental attitude.
2. Which one of the following is not a fieldwork standard?
A Sufficient appropriate audit evidence.
B Due professional care.
C Understanding the entity and its environment including internal control.
D Adequate planning and supervision
3. The auditor's judgment concerning the overall fairness of the presentation of financial position,
results of
operations, and changes in cash flow is applied within the framework of:
A Generally accepted accounting principles.
B The auditor's evaluation of the audited company's internal control.

2. C Generally accepted auditing standards.
D Generally accepted standards of quality control.
4. Which one of the following is not included as one of the assurance services that CPAs
provide?
A. Audits, which include financial audits, compliance audits, and performance audits
B. Reviews of financial information, which provide less assurance than audits
C. Attestation engagements, in which the auditor expresses a written conclusion about the
reliability of another
party's written assertion
D. Compilation
5. Auditing as a profession include the following characteristics:
A. Formal recognition of professional status by means of a license issued by a government body
after admission
standards have been meet.
B. A body of specialized knowledge, usually acquired through formal education.
C. A code of ethics to provide standards of conduct, and a means of enforcing compliance with
the code.
D. All of the above
6. In assessing control risk, an auditor selects from a variety of techniques, including

3. A. Inquiry and recalculation.
B. Reperformance and observation
C. Comparison and confirmation
D. Inspection and verification
7. Good internal controls include upon receiving checks from customers by mail, a responsible
employee should
A. Add the checks to the daily cash summary
B. Verify that check is supported by prenumbered sales invoices
C. Prepare a duplicate listing of checks received
D. Record the checks in the cash receipts journal
8. An auditor would analyze inventory turnover rates to obtain evidence regarding management
assertions about
A. Existence
B. Rights
C. Presentation
D. Valuation
9. In auditing accounts receivable, the negative form of confirmations request is used when
A. Response rate to positive confirmation request were low

4. B. The total amount of account receivable is immaterial to the financial statement taken as a
whole
C. Recipients are likely to return positive confirmation without verifying the information
D. The combined assessed level of both inherent risk and control risk relative to account
receivable is low
10. The refusal of a client’s attorney to provide information requested in an inquiry letter is
considered
A. Reasons for adverse opinion
B. A limitation on the scope of the audit
C. Grounds to withdraw from the engagement
D. Equal to a significant deficiency
11. Who is the audit report address to?
A. Audit Committee
B. Board of Directors
C. President of the company
D. All of the above
12. A general purpose framework is designed to meet the common financial information
objectives of a wide

5. range of users, except:
A. GAAP
B. IFRS
C. OCBOA
D. GASB
13. The engagement partner in a SSARS engagement is responsible for the overall quality of the
engagement
except:
A. Client and engagement acceptance or continuance
B. Reliable information to complete the engagement will be available
C. Ascertaining that the engagement team has the necessary qualifications to perform the
engagement completely
D. Engagement documentation
14. Before accepting or continuing an engagement or a relationship with a client, the accountant
should ascertain
that:
A. All ethical requirements will be satisfied
B. Reliable information to complete the engagement will be available
C. The financial reporting framework selected by management is acceptable

6. D. All of the above
15. The accountant’s documentation for compilation engagement is required to include all
following, except:
A. The engagement letter
B. A copy of the financial statements
C. A copy of the accountant’s compilation report
D. Responsibility of management
16. In performing a financial statement audit in accordance with Government Auditing Standards,
an auditor is
required to report on the entity’s compliance with laws and regulations. This report should:
A. Describe the laws and regulations that the entity must comply with.
B. Provide an opinion with on overall compliance with laws and regulations.
C. State that the auditor does not possess legal skills and cannot make legal judgement.
D. None of the above
17. When an auditor tests a computerized accounting system, which of the following is not true of
the test data
approach?
A. Several transactions of each type must be tested.
B. Test data must consist of all valid and invalid conditions.

7. C. The program tested is different from the program used throughout the year
D. All of the above
18. Which of the following is a good reason for maintaining an audit trail for a computer system?
A. Deterrent to fraud
B. Monitoring purposes
C. Analytical procedures
D. Query answering
19. Other attestation engagements include but are not limited to:
A. Financial Forecasts and Projections
B. Pro Forma Financial Information
C. Management’s Discussion and Analysis
D. All of the above
20. Comfort letters are signed by the client’s
A. Audit committee
B. Senior management
C. Independent auditor
D. Underwriter of securities

8. 21. Write an unmodified audit report
22. Write a POCAB unqualified audit report
23. What is the difference between the two reports?