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2010-03-13_045254_mskge65_Accounting_questions - 1 Ratio...

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1. Ratio analysis only involves a year-to-year comparison of account balances. (Points: 4) True False 2. Control is considered to be part of corporate governance. (Points: 4) True False (if referring to internal controls) 3. When control risk is assessed at a maximum level, the auditor assumes that the internal controls are reliable in preventing or detecting material misstatements. (Points: 4) True False 4. Accounting subsystems are accounting cycles composed of one or more accounting applications. (Points: 4) True False 5. Presentation and disclosure assertions imply that all transactions and balances are properly presented, disclosures represent what actually happened, and the footnote disclosures are appropriate and adequate. (Points: 4) True False 6. Vouching recorded transactions involves taking a sample from the journal and tracing them back to the source documents to ensure they occurred. (Points: 4) True False 7. Audit documentation serves as support for the financial statements. (Points: 4) True False 8. In analysis of the results of audit sampling, an auditor may determine that the sample size must be increased. (Points: 4) True False 9. The revenue cycle considered by auditors includes the sales process but not collections. (Points: 4) True False 10. An auditor can utilize a cross-sectional analysis for a client operating in multiple locations to identify areas of further inventory testing. (Points: 4) True False 11. Legal expenses are reviewed by auditors for possible litigation and related FAS 5 treatment. (Points: 4) True False 12. An imprest payroll account will never reach a zero balance. (Points: 4) True False 13. Strong internal control over the cash account requires that the same person who is responsible for making the bank deposit not post the increase to cash in the accounting system. (Points: 4) True False 14. A turnaround document is an effective completeness control because they list essential information for further processing of the collection on account. (Points: 4) True False 15. Auditors will perform an analysis of leases using SFAS 13 criteria and other EITF statements to substantiate the accounting treatment. (Points: 4) True False 16. Contingencies are considered by the auditor in relation to the SFAS No. 5 criteria to determine whether material contingencies exist with the client and, if so, that they are properly accrued or disclosed. (Points: 4) True False
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17. An example of a Type II Subsequent Event includes the settlement two months after year- end of a liability for an amount well in excess of the amount that was accrued at year-end. (Points: 4) True False 18. A report on agreed-upon procedures issued by accountants provides the lowest form of attestation assurance. (Points: 4) True False (there is no attestation) 19. The need for assurance services arises for all of the following reasons EXCEPT: (Points: 4) potential bias in providing information. closeness between a user and the organization .
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2010-03-13_045254_mskge65_Accounting_questions - 1 Ratio...

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