The notes are considered part of the basic financial statements. Because management has the primary
responsibility for the financial statements, it also has the primary responsibility for the fairness of information
included in notes.
One of the shortcomings in evaluating the allowance for uncollectible accounts by reviewing individual
noncurrent balances on the aged trial balance is:
I. it is difficult to compare the results of the current year with those of the previous yea
the auditor decides not to confirm accounts receivable, the auditor should:
A) always use alternative procedures to audit the accounts receivable.
B) include copies of customer statements in the audit files.
C) document the reasons for such a de
A type of positive confirmation known as a blank confirmation:
A) requests the recipient to fill in the amount of the balance.
B) is considered less reliable than the regular positive confirmation.
C) generates as high a response rate as the reg
Which of the following most likely would be detected by a review of a client's sales cutoff?
A) Excessive sales discounts
B) Unrecorded sales for the year
C) Unauthorized goods returned for credit
D) Lapping of year-end accounts receivable
Which of the following audit procedures would not likely detect a client's decision to pledge or factor accounts
A) A review of the minutes of the board of directors' meetings
B) Discussions with the client
C) Confirmation of receiva
Which of the following is a correct statement regarding analytical procedures?
A) If an auditor identifies a possible misstatement in sales using analytical procedures, accounts payable will be
the likely offsetting misstatement.
B) Auditors sho
Because of its central role in auditing of accounts receivable, which of the following would normally be one of
the first items tested?
A) Accounts receivable master file
B) Customer file
C) Aged trial balance
D) Sales register
Audit procedures designed to uncover credit sales made after the client's fiscal year end that relate to the
current year being audited provide evidence for which of the following audit objective?
A) Realizable value
The two primary classes of transactions in the sales and collection cycle are:
A) sales and sales discounts.
B) sales and cash receipts.
C) sales and sales returns.
D) sales and accounts receivable.
The appropriate and sufficient evidence to be obtained
Which type of fund is not included in the Government-Wide Financial Statements?
A. Governmental Funds
B. Proprietary Funds
C. Fiduciary Funds
D. Debt Service Funds
E. Special Revenue Funds
C. Fiduciary Funds
A city received a grant of $5,000,000
Proprietary funds are
A. Funds used to account for the activities of a government that are carried out primarily to provide services
B. Funds used to account for a government's ongoing organizations and activities that are similar t
Jones College, a public institution of higher education, must prepare financial statements
A. As if the college was an enterprise fund.
B. Following the same rules as state and local governments.
C. According to GAAP.
D. As if the college was a
A city starts a solid waste landfill during 2012. When the landfill was opened the city
estimated that it would fill to capacity within 5 years and that the cost to cover the facility would be $1.5
million which will not be paid until the facili
Which of the following is a financial statement of a proprietary fund?
A. Balance sheet.
B. Statement of Operations.
C. Statement of Changes in Cash Flows.
D. Statement of Net Assets.
E. Statement of Revenues, Expenditures, and Changes in Fund B
What is the appropriate account to debit when reducing net patient service revenue as a
result of arrangements with third party payors?
a. Contractual Adjustments.
b. Allowance for uncollectible and reduced accounts.
c. Patient Service Revenues.
On a statement of functional expenses for a voluntary health and welfare organization, how are expenses
A. health services expenses and operating expenses
B. program services expenses and administrative services expenses
C. program s
When a city holds pension monies for city employees, the monies should be recorded in
A. the General Fund.
B. an Expendable Trust Fund.
C. a Fiduciary Fund.
D. an Agency Fund.
E. a Special Revenue Fund.
C. a Fiduciary Fund
A city operates a cent
Which of the following is a fiduciary fund?
A. Pension trust fund.
B. Debt service fund.
C. Permanent fund.
D. Enterprise fund.
E. Capital projects fund.
A. Pension trust fund
Which of the following statements is true regarding fund-based financ
Which group of governmental financial statements report all revenues and all costs of providing services each
A. GAAP-based financial statements
B. Fund financial statements
C. Cost-based financial statements
D. Government-wide financial s