The quoted statement is not accurate. In their work on cash, auditors are primarily
concerned with the risk of an overstatement of the cash balance. The listing of a
non-existent or fictitious check on the outstanding list would have the effect of
CPA EXAM MULTIPLE CHOICE QUESTIONS - Introduction to Auditing
1. Auditing standards differ from auditing procedures in that procedures relate to
a) Measure of performance.
b) Audit principles.
c) Acts to be performed.
d) Audit judgments.
2. The independen
Chapter 8Subsidiary Equity Transactions; Indirect and Mutual Holdings
1. A parent company owns a 100% interest in a subsidiary. Recently, the subsidiary paid a 10% stock dividend. The dividend should be recorded on the books of the parent
REVIEW 105 DAY 30
1. Which of the following is not an objective of using present value in accounting
a. To capture the value of an asset or a liability in the context of a particular entity.
b. To estimate fair value.
c. To capture the e
b. Subsequent decreases of the fair value of availablefor- sale securities that have been
previously written down as impaired.
c. Decreases in the fair value of held-to-maturity securities.
d. None of the above.
1. Jersey, Inc. is a retailer of home a
Chapter 3Consolidated Statements: Subsequent to Acquisition
Pedro purchased 100% of the common stock of the Sanburn Company on January 1, 20X1, for
$500,000. On that date, the stockholders' equity of Sanburn Company was $380,0
1. According to the FASB conceptual framework, which of the following situations violates the concept of reliability?
a. Data on segments having the same expected risks and growth rates are reported to analysts estimating future profits.
REVIEW 105 DAY 26
Items 1 and 2 are based on the following: On January 2, 2003, Emme Co. sold
equipment with a carrying amount of $480,000 in exchange for a $600,000
noninterest-bearing note due January 2, 2006. There was no
established exchange price
REVIEW 105 DAY 28
1. Rapp Co. leased a new machine to Lake Co. on January 1, 2003. The lease is an
operating lease and expires on January 1, 2008. The annual rental is $90,000.
Additionally, on January 1, 2003, Lake paid $50,000 to Rapp as a lease bonu
REVIEW 105 DAY 27
1. On July 2, 2003, Wynn, Inc., purchased as a short-term investment a $1,000,000
face value Kean Co. 8% bond for $910,000 plus accrued interest to yield 10%. The
bonds mature on January 1, 2010, pay interest annually on January 1, an
REVIEW 105 DAY 23
A company has included in its consolidated financial statements
this year a subsidiary acquired several years ago that was appropriately
excluded from consolidation last year. This results in
a. Accounting change that should be re
REVIEW 105 DAY 24
1. An enterprise should prepare a cash flow statement and should present it
a. Integral part of the enterprises basic financial statements.
b. Supporting schedule for the amount appearing as cash and cash equivalent.
c. Note to fi
REVIEW 105 DAY 25
1. Lewis Companys usual sales terms are net sixty days, FOB shipping point. Sales,
net of returns and allowances, totaled $2,300,000 for the year ended December 31,
2003, before year-end adjustments. Additional data are as follows:
REVIEW 105 DAY 22
b. Fair value
c. The notes to financial statements should be presented in what order?
I. Statement of compliance with PFRS
II. Summary of significant accounting policies
III. Supporting computations for items presented on t
REVIEW 105 DAY 18
1. When the federal government imposes health and safety regulations on certain
products, one of the most likely results is
a. Greater consumption of the product.
b. Lower prices for the product.
c. Greater tax revenues for the feder
REVIEW 105 DAY 21
1. A deferred tax liability is computed using
a. The current tax law, regardless of the enacted future tax law
b. Expected future tax law, regardless of whether this expected law has been
c. Current tax law, unless enacted fu
REVIEW 105 DAY 20
1. The minimum lease payments under a finance lease include all of the following,
a. Contingent rent and executory costs
b. Periodic rentals over the lease term
c. Any amount guaranteed by the lessee or by a party related to t
REVIEW 105 DAY 19
1. Which of the following statements is incorrect regarding internal use
a. The application and development costs of internal-use software should be
amortized on the straight line basis unless another systematic and rationa