2009 A-1 Class Questions Preview
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2009 A-1 Class Questions Preview

Course Number: ACC 5654, Spring 2010

College/University: Cal Poly Pomona

Word Count: 5341

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Auditing and Attestation 1 Class Questions 1. CPA-02304 The fourth standard of reporting requires the auditor's report to contain either an expression of opinion regarding the financial statements taken as a whole or an assertion to the effect that an opinion cannot be expressed. The objective of the fourth standard is to prevent: a. An auditor from expressing different opinions on each of the basic financial...

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and Auditing Attestation 1 Class Questions 1. CPA-02304 The fourth standard of reporting requires the auditor's report to contain either an expression of opinion regarding the financial statements taken as a whole or an assertion to the effect that an opinion cannot be expressed. The objective of the fourth standard is to prevent: a. An auditor from expressing different opinions on each of the basic financial statements. b. Restrictions on the scope of the audit, whether imposed by the client or by the inability to obtain evidence. c. Misinterpretations regarding the degree of responsibility the auditor is assuming. d. An auditor from reporting on one basic financial statement and not the others. CPA-02304 Choice "c" is correct. The objective of the fourth reporting standard is to prevent any misinterpretation of the degree of responsibility the auditor assumes when his or her name is associated with financial statements. Choice "a" is incorrect. The auditor may express different opinions on each of the basic financial statements. Choice "b" is incorrect. While the fourth reporting standard may deter deliberate limitation of scope by the client, this is not its objective. Choice "d" is incorrect. An auditor may express an opinion on one financial statement, such as a balance sheet, and not on other related financial statements, as long as the auditor's procedures have not been restricted. 2. CPA-02370 The auditor's standard report should include reference to the United States as the country of origin of: I. The accounting principles used to prepare the financial statements. II. The auditing standards the auditor followed in performing the audit. a. b. c. d. I only. II only. Both I and II. Neither I nor II. CPA-02370 Choice "c" is correct. The auditor's standard report should include reference to the United States as the country of origin of both the accounting principles used to prepare the financial statements and the auditing standards the auditor followed in performing the audit. Choice "a" is incorrect, since the auditor's standard report should include reference to the country of origin of the auditing standards the auditor followed in performing the audit. Choice "b" is incorrect, since the auditor's standard report should include reference to the country of origin of the accounting principles used to prepare the financial statements. Choice "d" is incorrect, since the auditor's standard report should include reference to the country of origin of both the accounting principles used to prepare the financial statements and the auditing standards the auditor followed in performing the audit. 1 2009 DeVry/Becker Educational Development Corp. All rights reserved. Auditing and Attestation 1 Class Questions 3. CPA-02302 Harris, CPA, has been asked to audit and report on the balance sheet of Fox Co., but not on the statements of income, retained earnings, or cash flows. Harris will have access to all information underlying the basic financial statements. Under these circumstances, Harris may: a. Not accept the engagement because it would constitute a violation of the profession's ethical standards. b. Not accept the engagement because it would be tantamount to rendering a piecemeal opinion. c. Accept the engagement because such engagements merely involve limited reporting objectives. d. Accept the engagement but should disclaim an opinion because of an inability to apply the procedures considered necessary. CPA-02302 Choice "c" is correct. An auditor may express an opinion on one financial statement, such as a balance sheet, and not on other related financial statements, provided that the auditor's procedures and access to all information underlying the basic financial statements have not been restricted. This is simply an engagement with limited reporting objectives. Choice "a" is incorrect. Compliance with this request would not violate any ethical standards of the profession. Choice "b" is incorrect. A "piecemeal" opinion, which is prohibited, is one in which different opinions are issued on enough different elements in the same financial statement as to constitute a "major portion" of the financial statements. Choice "d" is incorrect. As long as the auditor's scope has not been limited, the auditor may report on only one financial statement. 4. CPA-02787 Management believes and the auditor is satisfied that a material loss probably will occur when pending litigation is resolved. Management is unable to make a reasonable estimate of the amount or range of the potential loss, but fully discloses the situation in the notes to the financial statements. If management does not make an accrual in the financial statements, the auditor should express a(an): a. b. c. d. Qualified opinion due to a scope limitation. Qualified opinion due to a departure from GAAP. Unqualified opinion with an explanatory paragraph. Unqualified opinion in a standard auditor's report. CPA-02787 Choice "d" is correct. If a contingent liability is probable, but not estimable, and it is disclosed in the footnotes, the auditor issues an unqualified audit report without an explanatory paragraph. Choice "a" is incorrect. When a contingent liability is probable, but not estimable, it should be disclosed in the footnotes. A qualified opinion due to a scope limitation would result if the sufficient audit evidence exists, but is not available to the auditor (possibly due to client imposed restrictions). Choice "b" is incorrect. A qualified opinion due to a departure from GAAP would be issued if the client did not disclose the contingent liability in the footnotes to the financial statements. Choice "c" is incorrect. If a contingent liability is probable, but not estimable, and it is disclosed in the footnotes, the auditor issues an unqualified audit report without an explanatory paragraph. 2 2009 DeVry/Becker Educational Development Corp. All rights reserved. Auditing and Attestation 1 Class Questions 5. CPA-02483 The introductory paragraph of an auditor's report contains the following sentences: We did not audit the financial statements of EZ Inc., a wholly-owned subsidiary, which statements reflect total assets and revenues constituting 27 percent and 29 percent, respectively, of the related consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for EZ Inc., is based solely on the report of the other auditors. These sentences: a. b. c. d. Indicate a division of responsibility. Assume responsibility for the other auditor. Require a departure from an unqualified opinion. Are an improper form of reporting. CPA-02483 Choice "a" is correct. The paragraph presented is the proper form of disclosure when another auditor performs a substantial portion of the audit. When the principal auditor makes reference to the audit of another auditor, the report should indicate clearly (in all three paragraphs) the division of responsibility between the portion of the financial statements covered by each audit. Choice "b" is incorrect. By making the disclosure that another auditor performed part of the audit, the auditor explicitly does not assume responsibility for the other auditor's work. If the disclosure is omitted, then the auditor implicitly does assume responsibility for the other auditor's work. Choice "c" is incorrect. Reference in the report of the principal auditor to the fact that part of the audit was performed by another auditor is not a qualification of the opinion. It is simply an indication of the divided responsibility between the auditors who conducted the audits of various components of the overall financial statements. Choice "d" is incorrect. The paragraph presented is the proper form of disclosure when another auditor performs a substantial portion of the audit. 3 2009 DeVry/Becker Educational Development Corp. All rights reserved. Auditing and Attestation 1 Class Questions 6. CPA-02544 A principal auditor decides not to refer to the audit of another CPA who audited a subsidiary of the principal auditor's client. After making inquiries about the other CPA's professional reputation and independence, the principal auditor most likely would: a. Add an explanatory paragraph to the auditor's report indicating that the subsidiary's financial statements are not material to the consolidated financial statements. b. Document in the engagement letter that the principal auditor assumes no responsibility for the other CPA's work and opinion. c. Obtain written permission from the other CPA to omit the reference in the principal auditor's report. d. Contact the other CPA and review the audit programs and audit documentation pertaining to the subsidiary. CPA-02544 Choice "d" is correct. When the principal auditor decides not to make reference to the audit of the other auditor, in addition to satisfying himself or herself as to the other auditor's professional reputation and independence, he or she should visit the other auditor, discuss the audit procedures, and/or review the audit programs and audit documentation of the other auditor. Choice "a" is incorrect. The principal auditor may decide not to make reference to the other auditor even when the portion of the financial statements audited by the other auditor is material. When the auditor takes this position, he or she should not state in his report that part of the audit was made by another auditor. Choice "b" is incorrect. The principal auditor's decision not to assume responsibility for the other auditor's work need not be included in the engagement letter. Choice "c" is incorrect. The principal auditor does not need permission from the other auditor to assume responsibility. Permission is needed only if the principal auditor decides to divide responsibility and would like to refer to the other auditor by name. 7. CPA-02764 When financial statements contain a departure from GAAP because, due to unusual circumstances, the statements would otherwise be misleading, the auditor should explain the unusual circumstances in a separate paragraph and express an opinion that is: a. b. c. d. Unqualified. Qualified. Adverse. Qualified or adverse, depending on materiality. CPA-02764 Choice "a" is correct. When circumstances indicate that financial presentation in accordance with GAAP would be misleading, a departure from GAAP is permissible. In such cases, the auditor should disclose the departure in an explanatory paragraph, but may issue an unqualified opinion on the financial statements. Choices "b", "c", and "d" are incorrect. The auditor's opinion need not be qualified or adverse since the financial statements are presented fairly. 4 2009 DeVry/Becker Educational Development Corp. All rights reserved. Auditing and Attestation 1 Class Questions 8. CPA-02389 An auditor concludes that there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time. If the entity's financial statements adequately disclose its financial difficulties, the auditor's report is required to include an explanatory paragraph that specifically uses the phrase(s): "Reasonable period of time, not to exceed one year" Yes Yes No No a. b. c. d. "Going concern" Yes No Yes No CPA-02389 Choice "c" is correct. The auditor has a responsibility to evaluate whether there is substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time, not to exceed one year. If the auditor concludes that there is substantial doubt, the auditor should include an explanatory paragraph following the opinion paragraph and should include the terms, "substantial doubt" and "going concern." The time period is not mentioned in the audit report. Choices "a", "b", and "d" are incorrect, as explained above. 9. CPA-02417 For which of the following events would an auditor issue a report that omits any reference to consistency? a. A change in the method of accounting for inventories. b. A change from an accounting principle that is not generally accepted to one that is generally accepted. c. A change in the useful life used to calculate the provision for depreciation expense. d. Management's lack of reasonable justification for a change in accounting principle. CPA-02417 Choice "c" is correct. A change in accounting estimate (such as a change in the useful life of a depreciable asset) is accounted for prospectively and does not affect the comparability of financial statements between periods. Since the auditor's standard report implies that consistency exists, no modification to the report is necessary. Choices "a", "b", and "d" are incorrect. Assuming their effects are material, changes in accounting principle result in the addition of an explanatory paragraph (following the opinion paragraph) in the auditor's report. Such a consistency modification is required even if the previous accounting principle was not GAAP and even if management lacks reasonable justification for the change. (Note: A lack of reasonable justification for the change may also give rise to a report modification based on a departure from GAAP.) 5 2009 DeVry/Becker Educational Development Corp. All rights reserved. Auditing and Attestation 1 Class Questions 10. CPA-02469 Which of the following phrases would an auditor most likely include in the auditor's report when expressing a qualified opinion because of inadequate disclosure? a. b. c. d. Subject to the departure from generally accepted accounting principles, as described above. With the foregoing explanation of these omitted disclosures. Except for the omission of the information discussed in the preceding paragraph. Does not present fairly in all material respects. CPA-02469 Choice "c" is correct. The only phrase acceptable in a qualified opinion is "except for." In the presence of inadequate disclosure, the auditor's opinion would state "In our opinion, except for the omission of the information discussed in the preceding paragraph,..." Choice "a" is incorrect. "Subject to" opinions are not used. Choice "b" is incorrect. In the presence of inadequate disclosure, the auditor's opinion would state "except for..." The phrase "with the foregoing explanation" is expressly prohibited. Choice "d" is incorrect. The statement, "does not present fairly," would be used for an adverse opinion, not for a qualified opinion. 11. CPA-02539 An auditor concludes that a client's illegal act, which has a material effect on the financial statements, has not been properly accounted for or disclosed. Depending on the materiality of the effect on the financial statements, the auditor should express either a(an): a. b. c. d. Adverse opinion or a disclaimer of opinion. Qualified opinion or an adverse opinion. Disclaimer of opinion or an unqualified opinion with a separate explanatory paragraph. Unqualified opinion with a separate explanatory paragraph or a qualified opinion. CPA-02539 Choice "b" is correct. If the financial statements, including accompanying notes, fail to disclose information that is required by generally accepted accounting principles, the auditor should express a qualified or adverse opinion. Choice "a" is incorrect. A disclaimer of opinion is not an appropriate report for inadequate disclosure or a GAAP departure. Choice "c" is incorrect. A disclaimer of opinion or an unqualified opinion with an explanatory paragraph are not appropriate for a client with a material undisclosed item or GAAP departure. Choice "d" is incorrect. An unqualified opinion with an explanatory paragraph is not appropriate for a client with a material undisclosed item or GAAP departure. 6 2009 DeVry/Becker Educational Development Corp. All rights reserved. Auditing and Attestation 1 Class Questions 12. CPA-02376 A scope limitation sufficient to preclude an unqualified opinion always will result when management: a. b. c. d. Prevents the auditor from reviewing the audit documentation of the predecessor auditor. Engages the auditor after the year-end physical inventory is completed. Requests that certain material accounts receivable not be confirmed. Refuses to acknowledge its responsibility for the fair presentation of the financial statements in conformity with GAAP. CPA-02376 Choice "d" is correct. The introductory paragraph of the standard unqualified report includes a statement that the financial statements are the responsibility of the company's management. Management's refusal to accept responsibility for the fair presentation of the financial statements therefore precludes issuance of this standard report. Choices "a", "b", and "c" are incorrect, as there are generally alternative procedures the auditor can perform to accomplish his or her goals. 13. CPA-02834 When qualifying an opinion because of an insufficiency of audit evidence, an auditor should refer to the situation in the: Opening (introductory) paragraph No Yes Yes No Scope paragraph No No Yes Yes a. b. c. d. CPA-02834 Choice "d" is correct. When a qualified opinion results from a lack of audit evidence, the situation should be described in an explanatory paragraph preceding the opinion paragraph, and referred to in both the scope and opinion paragraphs. Choices "a", "b", and "c" are incorrect, per the above explanation. 7 DeVry/Becker 2009 Educational Development Corp. All rights reserved. Auditing and Attestation 1 Class Questions 14. CPA-02452 Under which of the following circumstances would a disclaimer of opinion not be appropriate? a. The auditor is unable to determine the amounts associated with an employee fraud scheme. b. Management does not provide reasonable justification for a change in accounting principles. c. The client refuses to permit the auditor to confirm certain accounts receivable or apply alternative procedures to verify their balances. d. The chief executive officer is unwilling to sign the management representation letter. CPA-02452 Choice "b" is correct. A disclaimer of opinion means that the auditor was unable to obtain sufficient appropriate audit evidence to provide a reasonable basis for an opinion, thus, NO opinion is expressed. An unjustified accounting change is a GAAP departure that may result in a qualified or adverse opinion, not a disclaimer. Choice "a" is incorrect. Inability to determine amounts associated with an employee fraud scheme is a scope limitation that may result in a disclaimer of opinion. Choice "c" is incorrect. Refusal by the client to permit the auditor to confirm accounts receivable is a scope limitation and may result in a disclaimer of opinion. Choice "d" is incorrect. Refusal of management to sign a management representation letter casts doubt on the audit evidence gathered and automatically constitutes a limit on scope that would likely result in a disclaimer of opinion. 15. CPA-03040 When reporting on comparative financial statements, an auditor ordinarily should change the previously issued opinion on the prior-year's financial statements if the: a. Prior year's financial statements are restated to conform with generally accepted accounting principles. b. Auditor is a predecessor auditor who has been requested by a former client to reissue the previously issued report. c. Prior year's opinion was unqualified and the opinion on the current year's financial statements is modified due to a lack of consistency. d. Prior year's financial statements are restated following a pooling of interests in the current year. CPA-03040 Choice "a" is correct. If, during the current audit, auditors become aware of circumstances or events that affect the financial statements of a prior period, they should consider such matters when updating the report on the financial statements of the prior period. For example, if auditors have previously qualified their opinion or expressed an adverse opinion on financial statements of a prior period because of a departure from generally accepted accounting principles, and the prior period financial statements are restated in the current period to conform with generally accepted accounting principles, the auditor's updated report on the financial statements of the prior period should indicate that the statements have been restated and should express an unqualified opinion with respect to the restated financial statements. Choice "b" is incorrect. The predecessor auditor generally would not change a previously issued opinion when reissuing the audit report. Choice "c" is incorrect. A difference of opinions between periods would not result in the auditor changing the opinion on a previously issued audit report. Choice "d" is incorrect. Restatement of financial statements following a pooling of interests affects comparability of the financial statements, but would not result in a change in opinion from the audit report previously issued. 8 2009 DeVry/Becker Educational Development Corp. All rights reserved. Auditing and Attestation 1 Class Questions 16. CPA-04614 Comparative financial statements include the prior year's statements that were audited by a predecessor auditor whose report is not presented. If the predecessor's report was unqualified, the successor should: a. Add an explanatory paragraph that expresses only limited assurance concerning the fair presentation of the prior year's financial statements. b. Express an opinion only on the current year's financial statements and make no reference to the prior year's financial statements. c. Indicate in the auditor's report that the predecessor auditor expressed an unqualified opinion on the prior year's financial statements. d. Obtain a letter of representations from the predecessor auditor concerning any matters that might affect the successor's opinion. CPA-04614 Choice "c" is correct. When a successor auditor does not present the predecessor auditor's report, the successor should indicate in the introductory paragraph that the predecessor auditor expressed an unqualified opinion on the prior year's financial statements. Choice "a" is incorrect. No assurance is provided regarding the fair presentation of the prior year's financial statements. Choice "b" is incorrect. The auditor does make reference to the prior year's financial statements, indicating in the introductory paragraph that the predecessor auditor expressed an unqualified opinion on the prior year's financial statements. Choice "d" is incorrect. There is no requirement that the successor obtain a letter of representation from the predecessor auditor, although the reverse may be true (the predecessor should obtain a letter of representation from the successor if the previous report is to be reissued.) 17. CPA-04612 As of August 13, a CPA had obtained sufficient appropriate audit evidence with respect to fieldwork on an engagement to audit financial statements for the year ended June 30. On August 27, an event came to the CPA's attention that should be disclosed in the notes to the financial statements. The event was properly disclosed by the entity, but the CPA decided not to dual date the auditor's report and dated the report August 27. Under these circumstances, the CPA was taking responsibility for: a. All subsequent events that occurred through August 27. b. Only the specific subsequent event disclosed by the entity. c. All subsequent events that occurred through August 13 and the specific subsequent event disclosed by the entity. d. Only the subsequent events that occurred through August 13. CPA-04612 Choice "a" is correct. If the auditor chooses to use the later date for the report, this extends his/her responsibility for all subsequent events to this later date. Choice "b" is incorrect. Dating the report August 27 means that the auditor is taking responsibility for all subsequent events through August 27. Choice "c" is incorrect. Dating the report August 27 means that the auditor is taking responsibility for all subsequent events through August 27. If the auditor wishes to be responsible for all subsequent events through August 13 and only the one specific event after that date, he/she would need to dual date the report. Choice "d" is incorrect. Dating the report August 27 means that the auditor is taking responsibility for all subsequent events through August 27. 9 2009 DeVry/Becker Educational Development Corp. All rights reserved. Auditing and Attestation 1 Class Questions 18. CPA-03107 On February 25, a CPA issued an auditor's report expressing an unqualified opinion on financial statements for the year ended January 31. On March 2, the CPA learned that on February 11, the entity incurred a material loss on an uncollectible trade receivable as a result of the deteriorating financial condition of the entity's principal customer that led to the customer's bankruptcy. Management then refused to adjust the financial statements for this subsequent event. The CPA determined that the information is reliable and that there are creditors currently relying on the financial statements. The CPA's next course of action most likely would be to: a. Notify the entity's creditors that the financial statements and the related auditor's report should no longer be relied on. b. Notify each member of the entity's board of directors about management's refusal to adjust the financial statements. c. Issue revised financial statements and distribute them to each creditor known to be relying on the financial statements. d. Issue a revised auditor's report and distribute it to each creditor known to be relying on the financial statements. CPA-03107 Choice "b" is correct. Since the material loss affects the audit report and there are creditors relying on the financial statements, the client properly should adjust the financial statements. Since they are refusing to do so, the auditor would most likely notify the board of directors of the situation in an attempt to encourage the adjustment. Choice "a" is incorrect. The auditor would only notify the creditors if the board of directors was unable to facilitate the proper adjustment. Choice "c" is incorrect. The auditor cannot issue revised financial statements; only the client can do that. Choice "d" is incorrect. If the board of directors is unable to facilitate the proper adjustment, the auditor would no longer allow the audit report to be associated with the financial statements, but the auditor would not issue a revised report. 10 2009 DeVry/Becker Educational Development Corp. All rights reserved. Auditing and Attestation 1 Class Questions 19. CPA-04611 An auditor concludes that a substantive auditing procedure considered necessary during the prior year's audit was omitted and there are persons currently relying on the auditor's report. The auditor most likely would promptly apply the omitted procedure if: a. A substantive approach to identified risks at the relevant level was used. b. The auditor's working papers will be subject to postissuance review in connection with a peer review program. c. The results of other procedures that were applied tend to compensate for the one omitted. d. The omission of the procedure impairs the auditor's present ability to support the previously expressed opinion. CPA-04611 Choice "d" is correct. If the omitted audit procedures impair the auditor's ability to support the previously issued opinion, the auditor should promptly undertake to apply the omitted procedures (or alternative procedures). Choice "a" is incorrect. The auditor's specific approach to identified risks at the relevant assertion level is not relevant in evaluating whether an omitted audit procedure should be applied. This determination should be based on whether the omission of the procedure impairs the auditor's ability to support the opinion. Choice "b" is incorrect. Whether or not the working papers are subject to postissuance review in connection with a peer review program is not relevant in evaluating whether an omitted audit procedure should be applied. Sufficient evidence to support the opinion is necessary regardless of whether or not there will be a peer review. Choice "c" is incorrect. If the results of other procedures that were applied tended to compensate for the one omitted, there would be adequate support for the audit opinion, and the omitted procedure would not need to be applied. 11 2009 DeVry/Becker Educational Development Corp. All rights reserved. Auditing and Attestation 1 Class Questions 20. CPA-04617 What is an auditor's responsibility for supplementary information, such as the disclosure of pension information, which is outside the basic financial statements but required by the GASB? a. The auditor should apply substantive tests of transactions to the supplementary information and verify its conformity with the GASB requirement. b. The auditor should apply certain limited procedures to the supplementary information and report deficiencies in, or omissions of, such information. c. The auditor's only responsibility for the supplementary information is to determine that such information has not been omitted. d. The auditor has no responsibility for such supplementary information as long as it is outside the basic financial statements. CPA-04617 Choice "b" is correct. The auditor should perform limited procedures on supplementary information accompanying the financial statements. In addition, the auditor's report on the financial statements should be expanded if required supplementary information is omitted or is not presented in compliance with the applicable requirements. Choice "a" is incorrect. The auditor is not required to audit supplementary information. Choice "c" is incorrect. The auditor is required to perform certain limited procedures with respect to supplementary information. Choice "d" is incorrect. The auditor is responsible for performing certain limited procedures on supplementary information and for expanding his/her report if such information is omitted or is not presented in compliance with the applicable requirements. 21. CPA-03173 What is an auditor's reporting responsibility concerning information accompanying the basic financial statements in an auditor-submitted document? a. The auditor should report on all the accompanying information included in the document. b. The auditor should report on the accompanying information only if the auditor participated in its preparation. c. The auditor should report on the accompanying information only if the auditor did not participate in its preparation. d. The auditor should report on the accompanying information only if it contains obvious material misstatements. CPA-03173 Choice "a" is correct. When the auditor submits a document containing audited financial statements to a client or others, the auditor has a responsibility to report on all the information included in the document. Choice "b" is incorrect. If the auditor submits the document, the auditor has a responsibility to report on all the information included therein, regardless of whether or not the auditor participated in its preparation. Choice "c" is incorrect. If the auditor submits the document, the auditor has a responsibility to report on all the information included therein, regardless of whether or not the auditor participated in its preparation. Choice "d" is incorrect. If the auditor submits the document, the auditor has a responsibility to report on all the information included therein, regardless of whether or not the document contains obvious material misstatements. 12 2009 DeVry/Becker Educational Development Corp. All rights reserved. Auditing and Attestation 1 Class Questions 22. CPA-02714 In connection with a proposal to obtain a new audit client, a CPA in public practice is asked to prepare a report on the application of accounting principles to a specific transaction. The CPA's report should include a statement that: a. The engagement was performed in accordance with Statements on Standards for Accounting and Review Services. b. Responsibility for the proper accounting treatment rests with the preparers of the financial statements. c. The evaluation of the application of accounting principles is hypothetical and may not be used for opinion-shopping. d. The guidance is provided for management's use only and may not be communicated to the prior or continuing auditor. CPA-02714 Choice "b" is correct. When reporting on the application of accounting principles to a specific transaction, the CPA should include in his or her report a statement that the preparers of the financial statements, who should consult with their continuing accountants, bear the ultimate responsibility for proper accounting treatment. Choice "a" is incorrect. The report should state that the engagement was performed in accordance with "AICPA Standards," not SSARS. Choice "c" is incorrect. The report does not make reference to "opinion-shopping," nor does it state that the evaluation is hypothetical. Choice "d" is incorrect. The report's use is restricted to "specified parties," which may include parties other than management (e.g., the board of directors). Also, the preparers of the financial statements and the reporting accountant should consult with the entity's continuing accountant. 23. CPA-04630 A U.S. entity prepares its financial statements in conformity with accounting principles generally accepted in another country. These financial statements will be included in the consolidated financial statements of its non-U.S. parent. Before reporting on the financial statements of the U.S. entity, the auditor practicing in the U.S. should: a. Notify management of the U.S. entity that the auditor is required to disclaim an opinion on the financial statements. b. Receive a waiver to report on the U.S. entity from the appropriate accountancy authority in the other country. c. Obtain written representations from management of the U.S. entity regarding the purpose and uses of the financial statements. d. Communicate with the auditor of the non-U.S. parent regarding the level of assurance to be provided. CPA-04630 Choice "c" is correct. The report options for financial statements prepared for use in a foreign country depend upon the intended distribution. The auditor should therefore obtain written representations from management regarding the purpose and uses of the financial statements. Choice "a" is incorrect. The auditor need not disclaim an opinion, but would either use a modified U.S. style report (distributed outside the U.S. only) or a standard U.S. report modified for a GAAP departure (distributed within the U.S.) Choice "b" is incorrect. The auditor is not required to receive a waiver from the other country. Choice "d" is incorrect. The auditor is not required to communicate with the auditor of the non-U.S. parent. 13 2009 DeVry/Becker Educational Development Corp. All rights reserved.

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Cal Poly Pomona - ACC - 5654
Auditing & Attestation 2 Class Questions 1. CPA-02432 Which of the following is an element of a CPA firm's quality control system that should be considered in establishing its quality control policies and procedures? a. b. c. d. Complying with laws and re
Cal Poly Pomona - ACC - 5654
Auditing and Attestation 3 Class Questions1. CPA-04620 A successor auditor should request the new client to authorize the predecessor auditor to allow a review of the predecessor's: a. b. c. d. Engagement letter Yes Yes No No Working papers Yes No Yes No
Cal Poly Pomona - ACC - 5654
Auditing and Attestation 5 Class Questions 1. CPA-02588 For which of the following audit tests would an auditor most likely use attribute sampling? a. b. c. d. Selecting accounts receivable for confirmation of account balances. Inspecting employee time ca
Cal Poly Pomona - ACC - 5654
Business Environment & Concepts 1 Class Questions 1. CPA-02971 A joint venture is a (an): a. b. c. d. Association limited to no more than two persons in business for profit. Enterprise of numerous co-owners in a nonprofit undertaking. Corporate enterprise
Cal Poly Pomona - ACC - 5654
Business Environment & Concepts 2 Class Questions 1. CPA-03291 Which of the following is not likely to cause a rightward shift in the aggregate demand curve? a. b. c. d. An increase in wealth. An increase in the level of real interest rates. An increase i
Cal Poly Pomona - ACC - 5654
Business Environment & Concepts 3 Class Questions 1. CPA-05605 During 1994, Deet Corp. experienced the following power outages: Number of outages per month 0 1 2 3 Number of months 3 2 4 3 12Each power outage results in out-of-pocket costs of $400. For $
Cal Poly Pomona - ACC - 5654
Business Environment & Concepts 4 Class Questions 1. CPA-03476 Place the following sequence of events in an AIS in the proper logical order: I. II. III. IV. V. VI. a. b. c. d. Trial balances are prepared. The transaction data from source documents is ente
Cal Poly Pomona - ACC - 5654
Business Environment & Concepts 5 Class Questions 1. CPA-03477 A processing department produces joint products Ajac and Bjac, each of which incurs separable production costs after split-off. Information concerning a batch produced at a $60,000 joint cost
Cal Poly Pomona - ACC - 5654
Financial Accounting & Reporting 1 Class Questions 1. CPA-00005 What is the underlying concept governing the generally accepted accounting principles pertaining to recording gain contingencies? a. b. c. d. Conservatism. Relevance. Consistency. Reliability
Cal Poly Pomona - ACC - 5654
Financial Accounting & Reporting 2 Class Questions 1. CPA-00555 Hudson Hotel collects 15% in city sales taxes on room rentals, in addition to a $2 per room, per night, occupancy tax. Sales taxes for each month are due at the end of the following month, an
Cal Poly Pomona - ACC - 5654
Financial Accounting & Reporting 3(A) Class Questions 1. CPA-00265 A company has adopted Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities (as amended by SFAS 130). It should report the m
Cal Poly Pomona - ACC - 5654
Financial Accounting & Reporting 3(B) Class Questions 1. CPA-00265 A company has adopted Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities (as amended by SFAS 130). It should report the m
Cal Poly Pomona - ACC - 5654
Financial Accounting & Reporting 4 Class Questions 1. CPA-00067 On Merf's April 30, 1993, balance sheet a note receivable was reported as a noncurrent asset and its accrued interest for eight months was reported as a current asset. Which of the following
Cal Poly Pomona - ACC - 5654
Financial Accounting & Reporting 8 Class Questions 1. CPA-00888 Which of the following lead(s) to the use of fund accounting by a governmental organization? a. b. c. d. Financial Control Yes Yes No No Legal Restrictions Yes No No YesCPA-00888Explanation
Cal Poly Pomona - ACC - 5654
Regulation 3 Class Questions 1. CPA-02030 Lind and Post organized Ace Corp., which issued voting common stock with a fair market value of $120,000. They each transferred property in exchange for stock as follows: Adjusted basis $40,000 $5,000 Fair market
Cal Poly Pomona - ACC - 5654
Regulation 5 Class Questions1. CPA-01351 On June 15, Peters orally offered to sell a used lawn mower to Mason for $125. Peters specified that Mason had until June 20 to accept the offer. On June 16, Peters received an offer to purchase the lawn mower for
Cal Poly Pomona - ACC - 5654
Regulation 7 Class Questions 1. CPA-01311 Trent was retained, in writing, to act as Post's agent for the sale of Post's memorabilia collection. Which of the following statements is correct? I. To be an agent, Trent must be at least 21 years of age. II. Po
McGill - COMS - COMS 361
Midterm Study Guide.
Cornell - CHEM - 2160
Baker KS - STATISTICS - MBA 542
MBA 542 "Business Statistics and Analysis" Instructor: Doug Copeland KEYQuiz #1(Chapters 1-2) NAME:_KEY_DATE:_1. The process of using sample statistics to draw conclusions about true population parameters is called a) statistical inference. b) the scie
Baker KS - STATISTICS - MBA 542
MBA 542Statistics -Individual Assignment-MOULE ONE KEY 1.21Based on the article: "Do Debates Affect Presidential Contests?" dated October 5, 2004: (a) Categorical variable: The answer to the question "Do debates affect presidential contests?" (b) Numeri
Baker KS - STATISTICS - MBA 542
MBA 542-Statistics KEY-TEAM EXERCISES-MODULE ONE1.22 (a) The American Housing Survey (AHS) collects data on the Nation's housing, including apartments, single-family homes, mobile homes, vacant housing units, household characteristics, income, housing an
Baker KS - STATISTICS - MBA 542
110Chapter 1: Introduction and Data CollectionCHAPTER 11.1 1.2 (a) (b) The types of beverages sold yield categorical or "qualitative" responses. The types of beverages sold yield distinct categories in which no ordering is implied.Three sizes of soft
Baker KS - STATISTICS - MBA 542
Solutions to End-of-Section and Chapter Review Problems113CHAPTER 22.1(a)Category A B C The Bar ChartAFrequency 13 28 9Percentage 26% 56 18(b)26%B56%C18%0%10%20%30% 40% Percentage of Category50%60%(c) The Pie ChartA 26% C 18%B 56%1
Aarhus Universitet - ACCOUNTING - acct 4360
Chapter 8ActivityBased Costing: A Tool to Aid Decision MakingSolutions to Questions The McGrawHill Companies, Inc., 2008. All rights reserved. Solutions Manual, Chapter 8 181 Activitybased costing differs from traditional costing systems in a number o
Abu Dhabi University - ACCOUNTING - 1234
88 In traditional cost systems, productlevel costs are indiscriminately spread across all products using direct laborhours or some other allocation base related to volume. As a consequence, highvolume products are assigned the bulk of such costs. If a pro
Acadia - ACT - 312
89 Activity rates tell managers the average cost of resources consumed to carry out a particular activity such as processing purchase orders. An activity whose average cost is high may be a good candidate for process improvements. Benchmarking can be used
Acadia - ACCA - 310
810 The activitybased costing approach described in the chapter is probably unacceptable for external activitybased product costs, as financial reports for two reasons. First, described in this chapter, exclude some manufacturing costs and include some no
Acadia - ACCA - 310
811 While the reports in Exhibits 810 and 811 can yield insights, they should not be used for decision making. These reports give no indication of what costs can actually be adjusted nor is there any indication of who would be responsible for adjusting th
Acadia - ACCA - 310
Exercise 82 (15 minutes)Pickup and Travel Driver and guard wages. Vehicle operating expense. Vehicle depreciation. Customer representative salaries and expenses. Office expenses. Administrative expenses. Total cost. 0 0 0 $643,500 0 10,000 17,000 $433,50
Acadia - ACCA - 310
Exercise 83 (10 minutes)Esti mate d Over head Cost $77, Caring for lawn Caring for garden beds low maintenance Caring for garden beds high maintenance Travel to jobs Customer billing and service 400 $30, 000 $57, 600 $4,2 00 $8,7 00 30 customers 15,000 m
Acadia - ACCA - 310
Exercise 84 (10 minutes) J78Activity Cost Pool Supporting direct labor. Machine processing. Machine setups. Production orders. Shipments. Product sustaining. Total overhead cost. Activity Rate $7 $3 $40 $160 $120 $800 per direct labor-hour per machine-ho
Acadia - ACCA - 310
Exercise 85 (15 minutes)Sales ($1,650 per standard model glider 10 standard model gliders+ $2,300 per custom designed glider 2 custom designed gliders). Costs: Direct materials ($462 per standard model glider 10 standard model gliders + $576 per custom
Acadia - ACCA - 310
Exercise 86 (20 minutes)Sales (80 clubs $48 per club). Green costs: Direct materials (80 clubs $25.40 per club). Green margin. Yellow costs: Direct labor (80 clubs 0.3 hour per club $21.50 per hour). Indirect labor. Marketing expenses. Yellow margin. Red
Acadia - ACCA - 310
Exercise 87 (45 minutes) 1. The predetermined overhead rate is computed as follows:The unit product costs under the company's traditional costing system are computed as follows:Deluxe Direct materials. Direct labor. Manufacturing overhead (0.8 DLH $5.80
Acadia - ACCA - 310
Exercise 88 (10 minutes)Activity Classification Batch-levelActivity a. Materials are moved from the receiving dock to the assembly area by a material-handling crew Direct labor workers assemble various products Diversity training is provided to all empl
Acadia - ACCA - 310
Exercise 810 (10 minutes)Teller wages. Assistant branch manager salary. Branch manager salary.$150,000 $70,000 $85,000Distribution of Resource Consumption Across Activities Opening Accounts Processing Deposits and Withdrawals Processing Other Customer
Acadia - ACCA - 310
Exercise 811 (20 minutes) 1. Computation of activity rates:Activity Cost Pools Opening accounts. Processing deposits and withdrawals. Processing other customer transactions. (a) Total Cost (b) Total Activity (a) (b) Activity Rate$7,000 $123,000 $57,000
Acadia - ACCA - 310
Exercise 812 (10 minutes)Activity Cost Pool Order size. Customer orders. Product testing. Selling. Total. (a) Activity Rate (b) ActivityR 17.60 per direct laborhour R 360.00 per customer order R 79.00 per product testing hour R 1,494.00 per sales call1
Acadia - ACCA - 310
Exercise 813 (30 minutes) 1.Order Size Total activity for the order Customer Orders Pro duc t Tes ting Selling150 direct laborhours1 customer order18 pro duct testi ng hou rs3 sales callsManufacturing overhead:Indirect labor Factory depreciation Fa
Acadia - ACCA - 310
Exercise 814 (10 minutes)Activity Levela. b. c. d. e. f. g. h. i. j. k. l.The purchasing department orders the specific color of paint specified by the customer from the company's supplier. A steering wheel is installed in a golf cart. An outside attor
Acadia - ACCA - 310
Exercise 815 (15 minutes)Customer Margin-ABC Analysis Sales (2,400 seats $137.95 per seat). Costs: Direct materials ($112 per seat 2,400 seats). Direct labor ($14.40 per seat 2,400 seats). Supporting direct labor ($12 per DLH 0.8 DLH per seat 2,400 seats
Acadia - ACCA - 310
Exercise 816 (30 minutes)O r d e r P r o c e s s i n gCustomer ServiceSupporting Direct Labor Total activity for the orderBatch Processing1,920 direct laborhours*4 batchesManufacturing overhead:1 o r d e r $ 1 8 0 2 8 111customerIndirect labor
Acadia - ACCA - 310
Exercise 817 (15 minutes) 1. & 2.Activity a. Preventive maintenance is performed on general-purpose production equipment. Products are assembled by hand. Reminder notices are sent to customers who are late in making payments. Purchase orders are issued f
Acadia - ACCA - 310
Exercise 818 (30 minutes) 1. Firststage allocations of overhead costs to the activity cost pools:Distribution of Resource Consumption Across Activity Cost Pools Direct Labor Support Wages and salaries. Other overhead costs. Order Processing Customer Supp
Acadia - ACCA - 310
Exercise 819 (60 minutes) 1. Firststage allocations of overhead costs to the activity cost pools:Distribution of Resource Consumption Across Activity Cost Pools Direct Labor Support Wages and salaries. Other overhead costs. Order Processing Customer Supp
Acadia - ACCA - 310
Exercise 820 (45 minutes) 1. The unit product costs under the company's conventional costing system would be computed as follows:Mercon Number of units produced (a). Direct labor-hours per unit (b). Total direct labor-hours (a) (b). Wurcon Total10,000 0
UC Davis - ARE - 32510
Finance Homework 1ARE 171AWinter 2010A. HavennerTen problems on two pages. Show your work. Box your answers prominently.Problems: 1. Compute the present value of a. $174,312 paid 3 years from now discounted at 3% annually PV= ~ = 159520.17 1.03 3 b.
UC Davis - ARE - 32510
UC Davis - ARE - 32510
Question 1 and 2 Year FMLTD AA FM-diff AA-dif 2000 0.0464 0.0598 -0.05024 -0.0419 2001 0.108 0.1274 0.01136 0.02574 2002 0.0888 0.091 -0.00784 -0.0107 2003 0.1032 0.0988 0.00656 -0.0029 2004 0.0936 0.0611 -0.00304 -0.0406 2005 0.108 0.1456 0.01136 0.04394
UC Davis - ECN - 60112
Economics 151a Spring 2008 Homework 1 2-2. What is the effect of an increase in the price of market goods on a worker's reservation wage, probability of entering the labor force, and hours of work? 2-4. Tom earns $15 per hour for up to 40 hours of work ea
UC Davis - ECN - 60112
University of California, Davis Department of EconomicsEconomics 151ADr. Janine L.F. Wilson Spring 2008ECONOMICS OF THE LABOR MARKETTuesdays and Thursdays 3:10-4:30 PM 1322 Storer CONTACT INFORMATION DISCUSSION SECTIONS Office: 1102 Social Sciences an
UC Davis - ECN - 60112
Study Sheet for the Final Exam Economics 151AThe final exam will be held on Monday, December 9th from 10:30am to 12:30pm and will cover the material presented so far in the lecture and in discussion section. Below is a list of possible topics that could
UC Davis - ECN - 60112
Fall 2009Economics 121B: Industrial Organization MIDTERM 2 Answer KeysPart I Short Answer Questions (Total 40 points) (Please write your answers in 2-4 sentences.) 1. (10 points) The U.S. DOJ and FTC issued the current Merger Guidelines in 1992. Accordi
UC Davis - ECN - 60112
Fall 2009Economics 121B: Industrial Organization PRACTICE MIDTERM 1 Answer KeysOctober XX, 2009 (9:00-9:50 a.m.) Part I Short Answer Questions (Total 40 points) (Please write your answers in 3-5 sentences.) 1. (10 points) When we want to measure economi
UC Davis - ECN - 60112
Fall 2009 Economics 121B: Industrial OrganizationJoonsuk Lee epflee@ucdavis.eduProblem Set #2Due: October 26, Monday, 9 a.m. Part I Short Answer 1. What is the four-firm concentration ratio (CR4)? What do you think is a fundamental problem with CR4? Br
UC Davis - ECN - 60112
Fall 2009 Economics 121B: Industrial OrganizationJoonsuk Lee epflee@ucdavis.eduProblem Set #1 Answer KeysDue: October 14, Wednesday, 9 a.m. Part I Short Answer 1. What is the compensation principle? Compare it with the Pareto criterion.Answer: Compens
UC Davis - ECN - 60112
Fall 2009Economics 121B: Industrial Organization PRACTICE MIDTERM 2 Answer KeysNovember XX, 2009 (9:00-9:50 a.m.) Part I Short Answer Questions (Total 40 points) (Please write your answers in 2-4 sentences.) 1. (10 points) Among two approaches for ident
UC Davis - ECN - 60112
AnnouncementEconomics 121B Industrial OrganizationFall 2009 Joonsuk Lee epflee@ucdavis.edu!Problem Set 3 is due: November 4, Wednesday!Problem Set 4 will be available at MyUCDavis by Nov 4! ! !Practice Midterm 2 is available at the course website
UC Davis - ECN - 60112
AnnouncementEconomics 121B Industrial OrganizationFall 2009 Joonsuk Lee epflee@ucdavis.edu! !Problem Set 2 is due: October 26, Monday, 9 am Problem Set 3 is available at the course website!Due: November 4, Wednesday, 9 am!Reading! ! !Week 5: Hor
UC Davis - ECN - 60112
AnnouncementEconomics 121B Industrial OrganizationFall 2009 Joonsuk Lee epflee@ucdavis.edu!Midterm Exam 1: October 21, Wednesday at 9:00 am! !Up to Week 2 Slides (Week 3 slides not included) Please bring a calculator (Note: You may not use your cell