Audit Exam #1 - Chapter 1 Multiple-Choice Questions 1. easy...

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Chapter 1 Multiple-Choice Questions 1. easy Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called: c a. finance. b. auditing. c. accounting. d. economics. 2. E In the audit of historical financial statements, which of the following accounting bases is the most common? c a. Regulatory accounting principles. b. Cash basis of accounting. c. Generally accepted accounting principles. d. Liquidation basis of accounting. 3. easy Any service that requires a CPA firm to issue a report about the reliability of an assertion that is made by another party is a(n): b a. accounting and bookkeeping service. b. attestation service. c. assurance service. d. tax service. 4. Three common types of attestation services are: easy a. audits, reviews, and “other” attestation services. a b. audits, verifications, and “other” attestation services. c. reviews, verifications, and “other” attestation services. d. audits, reviews, and verifications. 5. Easy The organization that is responsible for providing oversight for auditors of public companies is called the ________. D a. Auditing Standards Board. b. American Institute of Certified Public Accountants. c. Public Oversight Board. d. Public Company Accounting Oversight Board. 6. The Sarbanes-Oxley Act applies to which of the following companies? easy a. All companies. C b. Privately held companies. c. Public companies. d. All public companies and privately held companies with assets greater than $500 million. 7. Med Providing quantitative information that management and others can use to make decisions is the function of: D a. management information systems. b. auditing. c. finance. d. accounting. 8. An audit of historical financial statements most commonly includes the: MED a. balance sheet, the income statement, and the statement of cash flows. D b. income statement, the statement of cash flows, and the statement of net working capital. c. statement of cash flows, the balance sheet, and the retained earnings statement. d. balance sheet, the income statement, and the statement of cash flows. 9. MED The ___________ rate may be defined as approximately the rate a bank could earn by investing in U.S. treasury notes for the same length as the length of a business loan. c a. nominal b. stated c. risk-free d. prevailing 10. The use of the Certified Public Accountant title is regulated by: MED a. the federal government. b b. state law through a licensing department or agency of each state. c. the American Institute of Certified Public Accountants through the licensing departments of the tax and auditing committees. d.
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