A true b false 50 challenging a most public companies

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Unformatted text preview: : a. defend themselves in the event of a lawsuit. b. justify the conclusions they have otherwise reached. c. satisfy the requirements of the Securities Acts of 1933 and 1934. 1-90 d. enable them to reach conclusions about the fairness of the financial statements. 4. easy b The responsibility for adopting sound accounting policies and maintaining adequate internal control rests with the: a. board of directors. b. company management. c. financial statement auditor. d. company’s internal audit department. 5. easy a The auditor’s best defense when material misstatements are not uncovered is to have conducted the audit: a. in accordance with auditing standards. b. as effectively as reasonably possible. c. in a timely manner. d. only after an adequate investigation of the management team. 6. easy a If management insists on financial statement disclosures that the auditor finds unacceptable, the auditor can: Issue an adverse audit report Issue a qualified audit report a. Yes Yes b. No No c. Yes No d. No Yes 7. easy b If management insists on financial statement disclosures that the auditor finds unacceptable, the auditor can do all but which of the following? a. Issue an adverse audit report. b. Issue a disclaimer of opinion. c. Withdraw from the engagement. d. Issue a qualified audit report. 1-91 8. easy d Which of the following is not one of the reasons that auditors provide only reasonable assurance on the financial statements? a. The auditor commonly examines a sample, rather than the entire population of transactions. b. Accounting presentations contain complex estimates which involve uncertainty. c. Fraudulently prepared financial statements are often difficult to detect. d. Auditors believe that reasonable assurance is sufficient in the vast majority of cases. 9. (Public) challenging c In certifying their annual financial statements, the CEO and CFO of a public company certify that the financial statements comply with the requirements of: a. GAAP. b. the Sarbanes-Oxley Act. c. the Securities Exchange Act of 1934. d. GAAS. 10. easy a Which of the following statements is most correct regarding errors and fraud? a. An error is unintentional, whereas fraud is intentional. b. Frauds occur more often than errors in financial statements. c. Errors are always fraud and frauds are always errors. d. Auditors have more responsibility for finding fraud than errors. 11. (SOX) easy c Which of the following statements is true of a public company’s financial statements? a. Sarbanes-Oxley requires the CEO only to certify the financial statements. b. Sarbanes-Oxley requires the CFO only to certify the financial statements. c. Sarbanes-Oxley requires the CEO and CFO to certify the financial statements. d. Sarbanes-Oxley neither requires the CEO nor the CFO to certify the financial statements. 12. easy b Which of the following is not one of the three categories of assertions? a. Assertions about classes of transactions and events for the period under audit b. Assertions about financial statements and correspondence to GAAP c. Assertions about account balances at period end d. Assertions about presentation and disclosure 13. easy d If a short-term note payable is included in the accounts payable balance on the financial statement, there is a violation of the: a. completeness assertion. b. existence assertion. c. cutoff assertion. d. classification and understandability assertion. 14. easy b Professional skepticism requires auditors to possess a(n) ______ mind. a. introspective b. questioning c. intelligent d. unbelieving 15. easy c The auditor has no responsibility to plan and perform the audit to obtain reasonable assurance that misstatements, whether caused by errors or fraud, that are not ________ are detected. a. b. c. d. important to the financial statements statistically significant to the financial statements material to the financial statements identified by the client 1-92 16. easy c Fraudulent financial reporting is most likely to be committed by whom? a. Line employees of the company. b. Outside members of the company’s board of directors. c. Company management. d. The company’s auditors. 17. easy c Which of the following would most likely be deemed a direct-effect illegal act? a. Violation of federal employment laws. b. Violation of federal environmental regulations. c. Violation of federal income tax laws. d. Violation of civil rights laws. 18. easy a The concept of reasonable assurance indicates that the auditor is: a. not an insurer of the correctness of the financial statements. b. not responsible for the fairness of the financial statements. c. responsible only for issuing an opinion on the financial statements. d. responsible for finding all misstatements. 19. easy a Tests of details of balances are specific procedures intended to: a. test for monetary errors in the financial statements. b. prove that the accounts with material balances are classified correctly. c. prove that the trial balance is in balanc...
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This note was uploaded on 02/04/2014 for the course ACCOUNTING 211 taught by Professor Alikapur during the Fall '13 term at American University of Sharjah.

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