Test%20Questions%20Chapter%20190

Test%20Questions%20Chapter%20190 - Chapter 19 Additional...

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Chapter 19 Additional Assurance Services: Historical Financial Information True/False Questions 1. An audit opinion on cash basis financial statements is an example of a special report. Answer: True Difficulty: Easy 2. The balance sheet for an individual may be titled a Statement of Financial Condition . Answer: True Difficulty: Medium 3. The auditors should take exception to assets presented at their estimate current values in personal financial statements. Answer: False Difficulty: Medium 4. Personal financial statements may be compiled or reviewed, but they should not be audited. Answer: False Difficulty: Easy 5. A compilation of financial statement provides limited assurance regarding the financial statements. Answer: False Difficulty: Medium 6. Compiled financial statements may omit note disclosures. Answer: True Difficulty: Medium 7. The auditors must issue a compilation report if they prepare a client's financial statements and submit them to a client who intends to use them for external purposes. Answer: True Difficulty: Hard 8. In a compilation report on a prescribed form, the accountants should take exception to all departures from generally accepted accounting principles. Answer: False Difficulty: Medium 9. Letters to underwriters should not contain negative assurances. Answer: False Difficulty: Medium Whittington, Principles of Auditing, Fifteenth Edition 37
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Chapter 19 Additional Assurance Services: Historical Financial Information 10. When a U.S.-based organization prepares financial statements which are for use in another country, a U.S. report, modified to reflect the accounting principles of the other country, may be issued. Answer: True Difficulty: Medium Multiple Choice Questions 11. Which of the following is correct relating to compiled financial statements when third party reliance upon those statements is anticipated? A) A compilation report must be issued. B) Omission of note disclosures is unacceptable. C) A written engagement letter is required. D) Each page of the financial statements should have a restriction such as "Restricted for Management's Use Only". Answer: A Difficulty: Medium 12. Which communication option(s) may be used when an accountant submits compiled financial statements to be used only by management? Compilation Report Written Engagement Letter A) Yes Yes B) Yes No C) No Yes D) No No Answer: A Difficulty: Hard 13. A compilation report is not required when compiled financial statements are expected to be used by: A) Management only. B) Management and third parties. C) Third parties only. D) A compilation report is required whenever financial statements are compiled. Answer: A Difficulty: Medium 38 Whittington, Principles of Auditing, Fifteenth Edition
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Chapter 19 Additional Assurance Services: Historical Financial Information 14. It is the end of his client's first quarter and Bill Smith, CPA is performing a compilation of his client's interim financial statements. He has discovered that the client does not
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Test%20Questions%20Chapter%20190 - Chapter 19 Additional...

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