Final Exam, Spring 2016
There are 100 multiple choice questions, make sure you answer all of them. Use the scantron provided to
indicate the answer you think is correct. The completed scantron is due by NOON, Thursday, 28 April
2016. If I am in m
Completeness. Completeness deals with whether all amounts that should be included in the financial
statements have actually been included.
Accuracy. Accuracy deals with amounts being included in the financial statements at the correct arithmetic
In describing the cycle approach to segmenting an audit, which of the following statements is not
a. All general ledger accounts and journals are included at least once.
b. Some journals and general ledger accounts are included in
b. bankruptcies would be reduced to a very small number.
c. audits would be much easier to complete.
d. audits would not be economically feasible.
The auditors best defense when existing material misstatements in the financial statements are no
Which of the following is not a proper match of auditors objective with managements assertion?
a. Ownership matches with rights and obligations.
b. Existence matches with existence/occurrence.
c. Classification matches with presentation/discl
Completeness. All transactions and accounts that should be presented in the financial statements are
Valuation or allocation. Assets, liabilities, equities, revenues, and expenses have been included in the
financial statements at appropr
The primary difference between errors and irregularities is that errors are unintentional
misstatements of the financial statements, whereas fraud is an intentional misstatement.
Illegal acts are violations of laws or government regulations, other
a. plan and perform the engagement with an attitude of professional skepticism.
b. not depend on internal accounting control features that are designed to prevent or detect errors
c. design audit tests to detect unrecorded transaction
b. Failure to include an account receivable from a customer in the accounts receivable trial balance when a
receivable exists violates the completeness objective.
c. The accounts receivable listing should include one total for all receivables from custome
The auditors evaluation of the likelihood of material employee fraud is normally done initially as
a part of
a. tests of controls.
b. tests of transactions.
c. understanding the entitys internal control.
d. the assessment of whether to a
a. Generally, the auditor is under no obligation to notify parties other than personnel within the
b. Generally, the auditor is under an obligation to see that stockholders are notified.
c. Generally, the auditor is obligated to di
If the auditor has obtained a reasonable level of assurance about the fair presentation of the
financial statements through understanding internal control, assessing control risk, testing
controls, substantive tests of transactions, and analy
d. very high.
When planning the audit, if the auditor has no reason to believe that illegal acts exist, the auditor
a. include audit procedures which have a strong probability of detecting illegal acts
Which of the following statements is true?
a. It is usually easier for the auditor to uncover fraud than errors.
b. It is usually easier for the auditor to uncover errors than fraud.
c. It is usually equally difficult for the auditor to uncov
Which of the following is most likely to be 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.
The responsibility for the preparation of the financial statements and the accompanying footnotes belongs
a. the auditor.
c. both management and the auditor equally.
d. management for the statements and the auditor for the n
Which of the following general transaction-related audit objectives is not part of the valuation or
If a short-term note payable is included on an accounts payable
d. Auditors believe that reasonable assurance is sufficient in the vast majority of cases.
Which of the following is not one of the five broad categories of management assertions, as
classified in SAS 31?
a. General or specific transaction objec
The objective of the ordinary examination by the independent auditor is the expression of an
a. the fairness of the financial statements.
b. the accuracy of the financial statements.
c. the accuracy of the an