chapter 3 test solutions only
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chapter 3 test solutions only

Course Number: ACCOUNTING ACCTG471, Fall 2011

College/University: Penn State

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Chapter 03 - Management Fraud and Audit Risk 1. The major emphasis in GAAS related to consideration of fraud in a financial statement audit (SAS 99) is on: B. Management fraud. 2. Management fraud generally refers to C. Intentional distortions of financial statements. 3. External auditors are responsible B. For reporting immaterial frauds to a level of management at least one level above the people involved....

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03 Chapter - Management Fraud and Audit Risk 1. The major emphasis in GAAS related to consideration of fraud in a financial statement audit (SAS 99) is on: B. Management fraud. 2. Management fraud generally refers to C. Intentional distortions of financial statements. 3. External auditors are responsible B. For reporting immaterial frauds to a level of management at least one level above the people involved. is not considered an accounting estimate? B. Credit Sales. 5. According to auditing standards, external auditors' responsibilities for indirect illegal acts do not include A. Designing audit procedures to detect illegal acts in the absence of specific information brought to the auditors' attention. 6. Certain conditions and circumstances are often present when management fraud occurs. Which of the following is not such a condition or circumstance? C. High liquidity. 7. Independent auditors who consider fraud in the course of financial statement audits are well-advised to quantify "materiality" in terms of: C. A cumulative amount of misstatement of assets or income over several years past and current that might mislead investors in relation to the latest financial statements under audit. 8. When fraud risk is significant, and management cooperation is unsatisfactory, the auditors will most likely D. Withdraw from the engagement. 9. Which of the following statements concerning illegal acts by clients is correct? A. An auditor's responsibility to detect illegal acts that have a direct and material effect on the financial statements is the same as that for errors and frauds. 3-1 Chapter 03 - Management Fraud and Audit Risk 10. Which of the following statements best describes auditors' responsibility to detect errors and frauds? A. Auditors should design an audit to provide reasonable assurance of detecting errors and frauds that are material to the financial statements. 11. The probability that an audit team will give an inappropriate opinion on financial statements best describes A. Audit risk. 12. Inherent risk is the C. Probability that material misstatements have occurred in transactions entering the accounting system used to develop financial statements. 13. If control risk increases, and all other risks in the audit risk model stay constant except the one referred to below, which of the following statements is correct? A. Detection risk will decrease. 14. Anchoring refers to B. Preconceived notions about control risk that auditors carry over from a previous audit or audits of the client. 15. Which of the following would be a step in an internal control program? C. Assess the control risk for sales and collections. 16. If fictitious credit sales were recorded, and the fictitious accounts receivable were later directly written off as bad debt expense, C. Income would not be misstated. 17. The idea of the cycle approach is to group accounts together by D. Transactions that affect all accounts in that particular group. 18. An audit team uses the assessed risk of material misstatement to D. Determine the acceptable level of detection risk for financial statement assertions. 19. Which of the following is not one of the four major cycles? C. Cash receipts and disbursements. 3-2 Chapter 03 - Management Fraud and Audit Risk 3-3 Chapter 03 - Management Fraud and Audit Risk 20. Looking at vendors' invoices for particular information is an example of C. Inspection of documents. 21. If an auditor were to use 7% of income before taxes as a basis for overall materiality, it would be an example of judgment based on B. Relative size. 22. Which of the following is not a way in which auditors use the concept of overall materiality? D. As a guide for assessing control risk. 23. The auditor looked at a bank statement received and held by the client. This would be considered what kind of audit procedure? D. Examination of documents. 24. In testing the existence assertion for an asset, an auditor ordinarily works from the C. Accounting records to the supporting evidence. 25. In determining whether transactions have been recorded, the direction of the audit testing should be from the C. Original source documents. 26. Auditors should design the written audit plan so that C. The audit procedures selected will achieve specific audit objectives. 27. An auditor assesses the risk of material misstatement because it D. Affects the level of detection risk that the auditor may accept. 28. In designing written audit plans, an auditor should establish specific audit objectives that relate primarily to the D. Financial statement assertions. 29. The risk of material misstatement differs from detection risk in that it C. Exists independently of the financial statement audit. 30. The risk that an auditor's procedures will lead to the conclusion that a material misstatement does not exist in an account balance when, in fact, such misstatement actually exists is D. Detection risk. 3-4 Chapter 03 - Management Fraud and Audit Risk 31. Based on audit evidence gathered and evaluated, an auditor decides to increase the assessed level of control risk from that originally planned. To achieve an overall audit risk level that is substantially the same as the planned audit risk level, the auditor would B. Decrease detection risk. 32. The acceptable level of detection risk is inversely related to the A. Assurance provided by substantive tests. 33. The existence of audit risk is recognized by the statement in the auditor's standard report that the D. Auditor obtains reasonable assurance about whether the financial statements are free of material misstatement. 34. In considering overall materiality for planning purposes, an auditor believes that misstatements aggregating $10,000 would have a material effect on an entity's income statement, but that misstatements would have to aggregate $20,000 to materially affect the balance sheet. Ordinarily, it would be appropriate to design audit procedures that would be expected to detect misstatements that aggregate A. $10,000 35. When determining the inherent risk related to an account balance, an auditor theoretically does not explicitly consider the C. Related internal control policies and procedures. 36. An auditor who discovers that client employees have committed an illegal act that has a material effect on the client's financial statements most likely would withdraw from the engagement if B. The client does not take the remedial action that the auditor considers necessary. 37. When an auditor becomes aware of a possible illegal act by a client, the auditor should obtain an understanding of the nature of the act to A. Evaluate the effect on the financial statements. 38. Jones, CPA, is auditing the financial statements of XYZ Retailing, Inc. What assurance does Jones provide that direct effect illegal acts that are material to XYZ's financial statements, and illegal acts that have a material, but indirect effect on the financial statements will be detected? A. Direct effect illegal acts: Reasonable; Indirect effect illegal acts: None 3-5 Chapter 03 - Management Fraud and Audit Risk 39. What assurance does the auditor provide that errors, frauds, and direct effect illegal acts that are material to the financial statements will be detected? D. Errors: Reasonable; Frauds: Reasonable; Direct effect illegal acts: Reasonable 40. Experience has shown that the many large fraudulent transactions can be found in: D. Non-routine, nonsystematic journal entries. 41. Which of the following pieces of information discovered by an auditor when performing substantive tests of account balances would most likely raise red flags about the possible existence of material fraudulent financial reporting? D. The client's estimate of the allowance for doubtful accounts is lower than the auditor's independent evaluation of the allowance. 42. Inherent risk and control risk differ from detection risk in that inherent risk and control risk are D. Functions of the client and its environment whereas detection risk is not. 43. The independent auditors' audit plan prepared prior to the start of fieldwork is appropriately considered documentation of A. Planning. 44. In the preparation of an audit plan, which of the following items is not essential? B. The preparation of a budget identifying the costs of resources needed. 45. The auditor uses the assessed level of risk of material misstatement to determine the acceptable level of detection risk for financial statement assertions. As the acceptable level of detection risk decreases, the auditor may do one or more of the following except change the D. Assurances provided by substantive tests to a lower level. 46. Which of the following is an acceptable response to fraud risks related to sales that were identified in an audit? D. Perform additional substantive sales procedures on a surprise basis. 47. If tests of controls induce the auditor to change the assessed level of control risk for Property Plant & Equipment from 50% to 100%, and audit risk (6%) and inherent risk remain constant, the acceptable level of detection risk C. Would most likely change from 30% to 15%. 3-6 Chapter 03 - Management Fraud and Audit Risk 48. Which of the following is not required by SAS No. 99, "Consideration of Fraud in a Financial Statement Audit"? D. Conduct inquiries of the audit committee as to their views about the risks of fraud and their knowledge of any fraud or suspected fraud. 49. When an auditor increases the planned assessed level of control risk because certain control activities were determined to be ineffective, the auditor would most likely increase the A. Extent of substantive tests of details. 50. The likelihood that material misstatements may have entered the accounting system and not been detected and corrected by the client's internal control is referred to as D. Risk of material misstatement. 51. The risk of material misstatements is composed of which audit risk components? A. Inherent risk and control risk. 52. Auditors are not responsible for accounting estimates with respect to A. Making the estimates. 53. Auditing standards do not require auditors of financial statements to D. Report all finding of errors and frauds to police authorities. 54. The risk that the auditors' own procedures will lead to the decision that material misstatements do not exist in the financial statements when in fact such misstatements do exist is D. Detection risk. 55. Auditors are responsible for the quality of the work related to management and control of D. Detection risk. 56. The auditors assessed a combined inherent risk and control risk at 0.50 and said they wanted to achieve a 0.05 risk of failing to express a correct opinion on financial statements that were materially misstated. What detection risk do the auditors plan to use for planning the remainder of the audit work? B. 0.10. 3-7 Chapter 03 - Management Fraud and Audit Risk 57. An audit plan contains B. Specifications of procedures the auditors believe appropriate for the financial statements under audit. 58. The revenue cycle of a company generally includes which accounts? C. Cash, accounts receivable, and sales. 59. When auditing the existence assertion for an asset, auditors proceed from the C. General ledger back to the supporting original transaction documents. 60. If tests of controls induce the audit team to change the assessed level of control risk for fixed assets from 0.4 to 1.0, and audit risk (0.05) and inherent risk remain constant, the acceptable level of detection risk is most likely to C. Change from 0.25 to 0.1. 61. Which of the following is a specific procedural response to a particular fraud risk in an account balance or class of transactions? C. Performing procedures such as inventory observation and cash counts on a surprise or unannounced basis. 62. In an audit of a private company, it is acceptable under generally accepted auditing standards for an audit team to A. Assess both inherent and control risk at high and achieve an acceptably low audit risk by performing extensive detection work. 63. Confirmations of accounts receivable provide evidence primarily about which two assertions? C. Existence and rights and obligations. 64. If sales were overstated by recording a false credit sale at the end of the year, where could you find the false "dangling debit"? D. Accounts receivable. 65. One of the typical characteristics of management fraud is B. Victimization of investors through the use of materially misleading financial statements. 3-8 Chapter 03 - Management Fraud and Audit Risk 66. Under the Private Securities Litigation Reform Act, independent auditors are required to B. Report to the SEC all instances of illegal acts they believe have a material effect on financial statements if the board of directors does not first report to the SEC. 67. With respect to the concept of materiality, which one of the following statements is correct? D. Materiality is a matter of professional judgment. 68. When evaluating whether accounting estimates made by management are reasonable, the audit team would be most interested in which of the following? D. Evidence of a conservative systematic bias. 69. Which of the following circumstances would most likely cause an audit team to perform extended procedures? B. The client made several large adjustments at or near year-end. 70. An audit committee is C. Composed of members of a company's board of directors who are not involved in the dayto-day operations of the company. 71. When the audit team becomes aware of an illegal act committed by client personnel, the primary reason that the auditors should obtain a better understanding of the nature of the act is to B. Evaluate the effect of the illegal act on the financial statements. 72. Which of the following statements best describes the audit team's responsibility for detecting a client's illegal acts? C. The audit team must design tests to obtain reasonable assurance that all illegal acts with direct material statement effects are detected. 73. The major cycles that auditors typically group accounts by do not include D. Assets and liabilities. 74. Analytical procedures are used in the planning stage B. To assess the reasonableness of financial statement amounts. 75. The risk that material misstatements have occurred in transactions entering the accounting system is B. Inherent risk. 3-9 Chapter 03 - Management Fraud and Audit Risk 76. In the audit risk model, if an audit team wanted to keep audit risk at a low level, but there was a great inherent risk of material misstatement and the internal control was ineffective, then procedures would need to be designed so that A. Detection risk was at a low level. 77. Physical observation by an audit team would include C. Examination of securities certificates. 78. The concept of materiality is not used by auditors as a guide to C. Application of responsibilities principle. 79. Inherent is risk not a characteristic of the B. Substantive procedures. 80. Which of the following risks is entirely a quality criterion based on professional judgment? A. Audit risk 81. In general, most fraudulent companies will prepare financial statements that are materially misleading by doing all of the following except A. Understate revenues and assets. 82. An internal control program for understanding the client's inherent risk and control risk would not include the procedure D. Obtain written representation from the client concerning collectability of receivables. 83. The audit risk model includes the four risks listed below. Place the correct letter of the type of risk with the related definition below. 1. Detection risk 2. Inherent risk 3. Audit risk 4. Control risk The probability that audit procedures will fail to produce evidence of material misstatements. The probability that material misstatements have occurred in transactions entering the accounting system. The probability that an auditor will give an inappropriate opinion on financial statements. The probability that the client's internal control policies and procedures will fail to detect material misstatements if they have entered the accounting system. 3-10 1 2 3 4 Chapter 03 - Management Fraud and Audit Risk 84. For each of the following statements or phrases, indicate by letter the professional standard to which it relates: Disagreements with management on 1. SAS 57: "Auditing Accounting significant accounting and auditing Estimates" matters. 4 Investigate large and unusual 2. SAS 99: "Consideration of Fraud transactions, particularly those that occur at in a Financial Statement Audit" or near year-end. 2 Make inquiries about management's policies and procedures for compliance 3. SAS 54: "Illegal Acts by Clients" with laws and regulations. 3 4. SAS 114 "The Auditor's Communication with Those Evaluate the net realizable value of Charged with Governance" inventory. 1 85. For each of the following statements, indicate, by letter, the term it best describes or typifies. 1. Management fraud 2. Embezzlement or defalcation 3. White-collar crime 4. Embezzlement or defalcation 5. Errors A bookkeeper inadvertently recorded depreciation by transposing numbers in a journal entry. An employee in a supermarket takes home bags of fresh fruit each day without paying for them. Misdeeds done by people who steal with a pencil or computer terminal. A type of fraud involving employees or nonemployees wrongfully taking money or property entrusted to their care. The controller changed the journal entry for estimating bad debt expense to a smaller number to hide the poor results from extending credit to high risk customers. This made income materially higher than it otherwise would have been. 3-11 5 2 3 2 1 Chapter 03 - Management Fraud and Audit Risk 86. For each of the descriptions 1-9, match the correct word or words from A-L. 1. A list of audit procedures 2. Audit of details of transactions and balances 3. Proceeding forward through the accounting and control system 4. A wide range of early information-gathering activity 5. Probability that audit team will give inappropriate opinion 6. Direct correspondence with independent parties 7. Documentation prepared by independent parties and sent to the client 8. Audit procedure that provides compelling evidence of existence 9. A characteristic of the client's type of transactions External-internal evidence 7 Inherent risk 9 Audit risk 5 Tracing 3 Analytical procedures 4 Substantive procedures 2 Inspection of tangible assets 8 Confirmation 6 Audit plan 1 87. In the concept of materiality, the emphasis is on the accountants' and managers' point of view, not on the users' point of view. FALSE 88. Auditors are generally left without definitive, quantitative guidelines for determining materiality. TRUE 89. When management can exercise discretion over an accounting treatment, auditors tend to exercise more care and use a more stringent materiality criterion. TRUE 90. Auditors usually choose separate measures of materiality for each of the financial statements. FALSE 91. Frauds are unintentional misstatements or omissions of accounts or disclosures in financial statements. FALSE 92. The nature of extended procedures for fraud detection are limited to those listed in the Professional Standards and Practices for Certified Fraud Examiners. FALSE 3-12 Chapter 03 - Management Fraud and Audit Risk 93. Fraud consists of knowingly making material misrepresentation of fact, with the intent of inducing someone to believe the falsehood and suffer a loss. TRUE 94. Audit care and attention should be greater where relative and inherent risks are judged to be lower. FALSE 95. Control risk should not be assessed so low that auditors place complete reliance on controls and do not perform any other audit work. TRUE 96. Detection risk occurs when internal control activities fail to detect material misstatements. FALSE 97. The auditing profession official standard for an acceptable level of overall audit risk is 0.05 at the current level. FALSE 3-13 Chapter 03 - Management Fraud and Audit Risk 98. Audit risk (AR) is a quality criterion based on professional judgment. TRUE 99. The audit risk model assumes that elements of audit risk are independent, and therefore multiplicative. TRUE 100. Auditors usually prepare an audit plan summarizing the preliminary analytical review and the materiality assessment. FALSE 101. Auditors use two kinds of audit plans, one for obtaining evidence about control risk, and the other for obtaining evidence about dollar amounts and disclosures. TRUE 102. Audit procedures are intended to enable auditors to conduct work in accordance with the three performance principle. TRUE 103. Scanning is an "eyes-open" approach of looking for anything unusual in the accounts. TRUE 104. Generally, fraudulent financial statements show financial performance and ratios that are better than current industry experience. TRUE 105. The demographics of white-collar criminals are similar to typical bank robbers. FALSE 106. Audit plans are used as audit planning tools. FALSE 107. The evaluation of financial statement accounts by studying and comparing relationships among financial and nonfinancial data is known as _____________________________ _____________________________. analytical procedures 108. In vouching, an item of financial information is selected from an account, then the audit team goes _____________________________ through the accounting and control system to find the _____________________________ _____________________________. backward, source documentation 109. _____________________________ is a procedure that generally involves the collection of oral evidence from independent parties and client officials. Inquiry 3-14 Chapter 03 - Management Fraud and Audit Risk 110. By both fraud and aggressive _____________________________ _____________________________ companies have caused financial statements to be misleading. financial reporting 111. Management is responsible for making the accounting _____________________________, and auditors are responsible for evaluating their _____________________________. estimates, reasonableness 112. Auditing standards (specifically SAS 99) require that auditors specifically assess the risk of _____________________________ _____________________________ due to fraud for each engagement. material misstatement 113. _____________________________ _____________________________ are composed of independent, outside members of the board of directors (those not involved in the company's day-to-day operations) who can provide a buffer between the public accounting firm and management. Audit committees 114. _____________________________ _____________________________ is the probability that material misstatements have occurred in transactions entering the accounting system. Inherent risk 115. Because auditors have little control over inherent risk and control risk, the two risks are often combined and referred to as the risk of _____________________________ _____________________________. material misstatement 116. _____________________________ involving senior management are never _____________________________. Frauds, inconsequential 117. The probability that audit procedures will fail to produce evidence of material misstatements is referred to as _____________________________ _____________________________. detection risk 118. Procedures used to detect material misstatements in dollar amounts and disclosures in financial statements are known as _____________________________ _____________________________. substantive procedures 3-15 Chapter 03 - Management Fraud and Audit Risk 119. Audit risk can be expressed in the following model: Audit risk = _____________________________ _____________________________ _____________________________ _____________________________ _____________________________ _____________________________. inherent risk, control risk, detection risk 120. Auditors _____________________________ choose to rely almost exclusively on evidence produced by substantive procedures, especially when _____________________________ risk and _____________________________ risk are high. can, inherent, control 121. Planning becomes a basis for preparing the _____________________________ _____________________________. audit plan 122. A _____________________________ _____________________________ program contains specification of audit procedures for gathering direct evidence on _____________________________ _____________________________ about _____________________________ and _____________________________ in financial statements. substantive audit, management's assertions, amounts, disclosures 123. Auditors cannot place complete reliance on _____________________________ _____________________________ to the exclusion of other audit procedures. internal control 124. In an overall sense, _____________________________ _____________________________ is the probability that a public accounting firm will give an inappropriate opinion on financial statements. audit risk 125. ____________________________ _____________________________ _____________________________ _____________________________ is the term used to refer to violations of laws and regulations that are _____________________________ _____________________________ from financial statement effects. Indirect-effect illegal acts, far removed 126. Information is _____________________________ if it is likely to influence financial statement users' decisions. material 3-16 Chapter 03 - Management Fraud and Audit Risk 127. Identify the two types of audit plans and indicate the purpose of each. The two types of audit plans are: (1) the internal control program and (2) the substantive audit plan. The internal control program contains the specification of procedures for obtaining an understanding of the entity's business and environment, including its internal control, and for assessing the inherent risk and the control risk related to the financial account balances. The substantive audit plan contains the specification of substantive tests for gathering direct evidence on the assertions about dollar amounts in the account balances. 128. What are the independent auditor's responsibilities to detect and report errors and frauds? Independent auditors have the responsibility to (1) assess the risk that errors and frauds may cause a client's financial statements to be materially misstated, and (2) design the audit to provide reasonable assurance of detecting errors and frauds material to the financial statements. Extended procedures should be performed if evidence indicates that material errors or frauds might exist. 129. Can an auditor place complete reliance on internal control to the exclusion of other audit procedures? Explain your answer using the audit risk model. An auditor cannot place complete reliance on internal control to the exclusion of other audit procedures. You cannot have a condition where: AR = IR CR (= 0) DR = 0 130. Post, CPA, accepted an engagement to audit the financial statements of General Co., a new client. General is a publicly held retailing entity that recently replaced its operating management. In the course of applying audit procedures, Post discovered that General's financial statements may be materially misstated due to the existence of fraud. Required: Describe Post's responsibilities on the circumstances described above. Describe Post's responsibilities for reporting on General's financial statements and other communications if Post is precluded from applying necessary procedures in searching for frauds. Describe Post's responsibilities for reporting on General's financial statements and other communications if Post concludes that General's financial statements are materially affected by frauds. (AICPA adapted) 3-17 Chapter 03 - Management Fraud and Audit Risk (a.) If Post discovers that General's financial statements may be materially misstated due to the existence of frauds, Post should consider the implications for other aspects of the audit and discuss the matter and approach to further investigation with an appropriate level of management that is at least one level above those involved with the frauds. Post should also attempt to obtain sufficient competent evidential matter to determine whether, in fact, material frauds exist and, if so, their effect. Post may suggest that General consult with its legal counsel on matters concerning questions of law. (b.) If Post is precluded from applying necessary procedures, Post should disclaim or qualify an opinion on the financial statements and communicate these findings to General's audit committee or its board of directors. (c.) If Post concludes that General's financial statements are materially affected by frauds, Post should insist that the financial statements be revised and, if they are not, express a qualified or an adverse opinion on the financial statements, disclosing all the substantive reasons for such an opinion. Additionally, Post should adequately inform General's audit committee or its board of directors about the frauds. 131. A. Audit risks for particular accounts can be expressed in the model: Audit risk (AR) = Inherent risk (IR) x Internal control risk (CR) x Detection risk (DR). If an audit risk is set at 5 percent, the inherent risk at 80 percent, and the internal control risk at 25 percent, what would be the detection risk? B. If the audit team wanted to reduce the audit risk to 1 percent, what would be the detection risk? C. What would the audit team have to do to reduce the audit risk? A. DR = AR/(IR x CR) = .05/(.80 x .25) = .25 B. DR = AR/(IR x CR) = .01/(.80 x .25) = .05 C. The audit team would have to reduce the detection risk by increasing the amount of audit testing; for example, expand the "extent" of substantive procedures. 3-18

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Chapter10 ExternalitiesTestBNOTE:THEFOLLOWINGQUESTIONISREPEATEDFROMTHEONLINEQUIZZES.YOUR STUDENTSMAYHAVEALREADYSEENTHISQUESTIONANDITSANSWER. Externalitiesoccurwhen a. onepersonsactionsaffectthewellbeingofabystander. b. thegovernmentimposestaxes. c. incr
Penn State - ECON471 - ECON471
Chapter11 PublicGoodsandCommonResourcesTestBTwocharacteristicsofanyprivategoodare a. excludableandnonrival. b. excludableandrival. c. nonexcludableandrival. d. nonexcludableandnonrival. ANSWER:b. excludableandrival. TYPE:MKEY1:DSECTION:1OBJECTIVE:1RANDO
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Chapter12 TheDesignoftheTaxSystemTestAIndesigningataxsystem,policymakershavetwoobjectives: a. equityandrevenue. b. revenueanddebtreduction. c. equityandefficiency. d. revenueandexpenditure. ANSWER:c. equityandefficiency. TYPE:MKEY1:CSECTION:2OBJECTIVE:2
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Chapter12 TheDesignoftheTaxSystemTestBNOTE:THEFOLLOWINGQUESTIONISREPEATEDFROMTHEONLINEQUIZZES.YOUR STUDENTSMAYHAVEALREADYSEENTHISQUESTIONANDITSANSWER. Whichofthefollowingstatementsiscorrect? a. Since1980,governmentrevenueasapercentofGDPhasdeclinedintheU
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Chapter16 OligopolyTestAMarketswithonlyafewsellers,eachofferingaproductsimilaroridenticaltotheothers,aretypicallyreferred toas a. monopolymarkets. b. perfectlycompetitivemarkets. c. monopolisticallycompetitivemarkets. d. oligopolymarkets. ANSWER:d. olig
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Chapter18 TheMarketsfortheFactorsofProductionTestAFactorsofproductionarebestdefinedasthe a. wagespaidtotheworkforce. b. goodsandservicessoldinthemarket. c. outputproducedfromrawmaterials. d. inputsusedtoproducegoodsandservices. ANSWER:d. inputsusedtopro
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Chapter19 EarningsandDiscriminationTestAWhenwagedifferentialsareobservedincompetitivelabormarkets,theneoclassicaltheoryoflabormarkets wouldpredict a. marketdiscrimination. b. thatwagedifferencesreflectsocialstatus. c. thatwageswillconvergeovertime. d. a
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Chapter20 IncomeInequalityandPovertyTestBThreefourthsoftotalincomeintheU.S.economycomesfrom a. rentalincome. b. laborearnings. c. returnstocapital. d. corporateprofit. ANSWER:b. laborearnings. TYPE:MKEY1:DSECTION:1OBJECTIVE:1RANDOM:Y1.Onewaytodescrib
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Chapter 21 The Theory of Consumer ChoiceTest A1.The theory of consumer choice examines a. The determination of output in competitive markets. b. The determination of prices in competitive markets. c. The tradeoffs inherent in decisions made by consume
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Chapter23 MeasuringtheCostofLivingTestAWhentheconsumerpriceindexrises,atypicalfamily a. canspendfewerdollarstomaintainthesamestandardofliving. b. findsthatitsstandardoflivingisnotaffected. c. hastospendmoredollarstomaintainthesamestandardofliving. d. No
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Chapter23 MeasuringtheCostofLivingTestBYear 1100 11011Priceof Parchment 20denerie 20deneriePriceofRobes 20denerie 30denerieSupposethatthebasketofgoodsintheCPIconsistedof3rolesofparchmentand2robes.Basedonthe informationinthetable,whatistheconsumerpri
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Chapter25 Saving,Investment,andtheFinancialSystemTestAWhenacountrysavesasmallerportionofitsGDP,itwillhave a. moreinvestment,andsohavemorecapitalandhigherproductivity. b. moreinvestment,andsohavelesscapitalandlowerproductivity. c. lessinvestment,andsohav
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Chapter25 Saving,Investment,andtheFinancialSystemTestBIfMicrosoftsellsabondtheyare a. borrowingdirectlyfromthepublic. b. borrowingindirectlyfromthepublic. c. lendingdirectlytothepublic. d. lendingindirectlytothepublic. ANSWER:a. borrowingdirectlyfromthe
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Chapter26 UnemploymentandItsNaturalRateTestAThenaturalrateofunemploymentis a. zeropercent. b. therateassociatedwiththehighestpossiblelevelofGDP. c. createdprimarilybyshortrunfluctuationsinrealGDP. d. theamountofunemploymentthattheeconomynormallyexperien
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Chapter27 TheMonetarySystemTestABarter a. ismoreefficientthanmoney. b. makestradingeasierthanmoney. c. allowsgreaterspecializationthanmoney. d. Noneoftheaboveiscorrect. ANSWER:d. Noneoftheaboveiscorrect. TYPE:MKEY1:DOBJECTIVE:1RANDOM:Y1.Whichofthefol
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Chapter27 TheMonetarySystemTestBNOTE:THEFOLLOWINGQUESTIONISREPEATEDFROMTHEONLINEQUIZZES.YOUR STUDENTSMAYHAVEALREADYSEENTHISQUESTIONANDITSANSWER. Givingupadollarbilltopurchaseanicecreamconebestillustratesmoneysfunctionasa a. storeofwealth. b. unitofaccou
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Chapter29 OpenEconomyMacroeconomics:Basic ConceptsTestAWhoisworseoffwhencountriestrade? a. boththeexportingandimportingcounty b. onlytheexportingcountry c. onlytheimportingcountry d. neithertheexportingnorimportingcountry ANSWER:d. neithertheexportingno
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Chapter29 OpenEconomyMacroeconomics:Basic ConceptsTestBIn1999Moroccoexported$5.9billionofgoodsandservicesandimported$8.4billion.Moroccohadatrade balanceofabout a. $14.3billion. b. $2.5billion. c. $0. d. $2.5billion. ANSWER:d. $2.5billion. TYPE:MKEY1:DSE
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Chapter30 AMacroeconomicTheoryoftheOpen EconomyTestAOverthepastdecade,theUnitedStateshas a. usuallybeenveryneartoatradebalance. b. persistentlyhadatradedeficit. c. persistentlyhadatradesurplus. d. hadtradedeficitsaboutasoftenastradesurpluses. ANSWER:b.
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Chapter32 TheInfluenceofMonetaryandFiscalPolicy onAggregateDemandTestAShockstotheeconomysuchaschangesinthevalueofthestockmarket a. affectaggregatedemand,butchangesintaxesandgovernmentexpendituresdonot. b. andchangesintaxesandgovernmentexpendituresaffect
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Chapter33 TheShortRunTradeoffBetweenInflation andUnemploymentTestBPrice Level B A Inflation Rate 3 1 4 2 unemploymentQuantity of Output1Theshortruneffectsofanincreaseingovernmentexpendituresareshowninthegraphas a. amovementfromAtoBand1to2. b. amoveme
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Chapter34 FiveDebatesoverMacroeconomicPolicyTestBIfhouseholdsandfirmsbecamemoreoptimisticaboutthefuturerealGDP a. andunemploymentwouldincrease. b. wouldincreaseandunemploymentwoulddecrease. c. woulddecreaseandunemploymentwouldincrease. d. andunemploymen
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Name _ Course Section #:_ Instructor, click here to type your name Click here to type course title and/or exam number, etc. EXAM INSTRUCTIONSDate _In each question there is only one correct answer. Select the answer you believe to be most correct.Harco
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Instructions for using the Word Test Bank 1. Open the test you want to pull questions from and empty test.doc. 2. From the question file, highlight the first question you want to use by clicking the mouse in front of the question number and dragging to th
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Alternate Test Bankto accompany Principles of Economics, Second Edition N. Gregory Mankiw Harvard UniversityPrepared by Bryce Kanago University of Northern Iowa and Penny Kugler Central Missouri State UniversityPrefaceThis test bank supplements Mankiw
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Chapter1 Introduction:ThemesintheStudyofLife Multiple-ChoiceQuestions1) Whichofthefollowingpropertiesorprocessesdoweassociatewithlivingthings? A) evolutionaryadaptations B) energyprocessing C) respondingtotheenvironments D) growthandreproduction E) allof
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Chapter 2 The Chemical Context of Life Multiple-Choice Questions1) About 25 of the 92 natural elements are known to be essential to life. Which four of these 25 elements make up approximately 96% of living matter? A) carbon, sodium, chlorine, nitrogen B)
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Chapter 3 Water and the Fitness of the Environment Multiple-Choice Questions1) In a single molecule of water, two hydrogen atoms are bonded to a single oxygen atom by A) hydrogen bonds. B) nonpolar covalent bonds. C) polar covalent bonds. D) ionic bonds.
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Chapter 4 Carbon and the Molecular Diversity of Life Multiple-Choice Questions1) Organic chemistry is a science based on the study of A) functional groups. B) vital forces interacting with matter. C) carbon compounds. D) water and its interaction with ot
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Chapter 5 The Structure and Function of Large Biological Molecules Multiple-Choice Questions1) For this pair of items, choose the option that best describes their relationship. (A) The number of alpha glucose 1-4 linkages in cellulose (B) The number of a
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Chapter 6 A Tour of the Cell Multiple-Choice Questions1) When biologists wish to study the internal ultrastructure of cells, they most likely would use A) a light microscope. B) a scanning electron microscope. C) a transmission electronic microscope. D)
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Chapter 7 Membrane Structure and Function Multiple-Choice Questions1) Who was/were the first to propose that cell membranes are phospholipid bilayers? A) H. Davson and J. Danielli B) I. Langmuir C) C. Overton D) S. Singer and G. Nicolson E) E. Gorter and
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Chapter 8 An Introduction to Metabolism Multiple-Choice Questions1) Which term most precisely describes the cellular process of breaking down large molecules into smaller ones? A) catalysis B) metabolism C) anabolism D) dehydration E) catabolism Answer:
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Chapter 9 Cellular Respiration: Harvesting Chemical Energy Multiple-Choice Questions1) What is the term for metabolic pathways that release stored energy by breaking down complex molecules? A) anabolic pathways B) catabolic pathways C) fermentation pathw
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Chapter 10 Photosynthesis Multiple-Choice Questions1) If photosynthesizing green algae are provided with CO 2 synthesized with heavy oxygen ( 18O), later analysis will show that all but one of the following compounds produced by the algae contain the 18O
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Chapter11 CellCommunication Multiple-ChoiceQuestions1) Intheyeastsignaltransductionpathway,afterbothtypesofmatingcellshavereleasedthematingfactorsand thefactorshaveboundtospecificreceptorsonthecorrectcells, A) bindinginduceschangesinthecellsthatleadtocel
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Chapter 12 The Cell Cycle Multiple-Choice Questions1) The centromere is a region in which A) chromatids remain attached to one another until anaphase. B) metaphase chromosomes become aligned at the metaphase plate. C) chromosomes are grouped during telop