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Which of the following assertions is NOT made by management in placing an item in the financial statements?

Which of the following assertions is NOT made by management in placing an item in the financial statements?

A. Direct controls
B. Presentation and disclosure
C. Rights and obligations
D. Existence or occurrence



2) The completeness assertion would be violated if

A. the allowance for doubtful accounts was understated.
B. disclosure in the statements of pledged receivables was inadequate.
C. unbilled shipments occurred during the period.
D. fictitious sales transactions were included in accounts receivable.



3) The rights and obligations assertion applies to

A. revenue and expense items only.
B. balance sheet items only.
C. income statement and balance sheet items.
D. current liability items only.



4) Section 11 of the Securities Act of 1933 uses the term material fact to limit the amount of information required. Under the Act, the standard used to determine an item’s materiality

A. has been established by the SEC as a percent of net income or of total assets.
B. is the average prudent investor.
C. may be found in FASB pronouncements.
D. is the auditor’s professional judgment.



5) Individuals or entities the auditor knew or should have known and would rely on the audit report in making business and investment decisions are

A. foreseen beneficiaries.
B. foreseeable parties.
C. primary beneficiaries.
D. third parties.



6) Auditor liability under the Securities Act of 1933 extends to the

A. auditor’s report date.
B. effective date of the registration statement.
C. filing date of the registration statement.
D. financial statement date.



7) Statements on auditing standards (SAS) are interpretations of what?

A. Generally accepted auditing standards
B. Generally accepted accounting policies
C. Generally accepted auditing services
D. Generally accepted accounting principles



8) Auditing is based on the assumption that financial data are verifiable. Data are verifiable when two or more qualified individuals,

A. working together, prove, beyond doubt, the data’s accuracy.
B. working independently, prove, beyond doubt, the data’s truthfulness.
C. working together, agree upon the data’s accuracy.
D. working independently, reach similar conclusions.



9) There are several paragraphs in the auditor’s standard report in internal control over financial reporting. Which paragraph defines internal control over financial reporting?

A. Introductory
B. Inherent limitations
C. Definition
D. Scope



10) Statement on Quality Control Standards No. 2 identifies certain quality control elements that should be considered when performing which types of services?

A. Auditing, accounting, and review services
B. Accounting, tax, and review services
C. Auditing, accounting, and tax services
D. Auditing, tax, and review services



11) When providing audit services, the certified public accountant (CPA) is expected to be

A. independent of the client.
B. an advocate for the general public.
C. indifferent to the effect of the financial statements and the audit report.
D. an advocate for the client.



12) Which of the following is the service in which the CPA firm issues a written communication that expresses a conclusion about the reliability of a written assertion that is another party’s responsibility?

A. Consulting service
B. Accounting service
C. Compilation service
D. Attest service


Which of the following assertions is NOT made by management in placing an item in the financial statements?

A. Direct controls
B. Presentation and disclosure
C. Rights and obligations
D. Existence or occurrence



2) The completeness assertion would be violated if

A. the allowance for doubtful accounts was understated.
B. disclosure in the statements of pledged receivables was inadequate.
C. unbilled shipments occurred during the period.
D. fictitious sales transactions were included in accounts receivable.



3) The rights and obligations assertion applies to

A. revenue and expense items only.
B. balance sheet items only.
C. income statement and balance sheet items.
D. current liability items only.



4) Section 11 of the Securities Act of 1933 uses the term material fact to limit the amount of information required. Under the Act, the standard used to determine an item’s materiality

A. has been established by the SEC as a percent of net income or of total assets.
B. is the average prudent investor.
C. may be found in FASB pronouncements.
D. is the auditor’s professional judgment.



5) Individuals or entities the auditor knew or should have known and would rely on the audit report in making business and investment decisions are

A. foreseen beneficiaries.
B. foreseeable parties.
C. primary beneficiaries.
D. third parties.



6) Auditor liability under the Securities Act of 1933 extends to the

A. auditor’s report date.
B. effective date of the registration statement.
C. filing date of the registration statement.
D. financial statement date.



7) Statements on auditing standards (SAS) are interpretations of what?

A. Generally accepted auditing standards
B. Generally accepted accounting policies
C. Generally accepted auditing services
D. Generally accepted accounting principles



8) Auditing is based on the assumption that financial data are verifiable. Data are verifiable when two or more qualified individuals,

A. working together, prove, beyond doubt, the data’s accuracy.
B. working independently, prove, beyond doubt, the data’s truthfulness.
C. working together, agree upon the data’s accuracy.
D. working independently, reach similar conclusions.



9) There are several paragraphs in the auditor’s standard report in internal control over financial reporting. Which paragraph defines internal control over financial reporting?

A. Introductory
B. Inherent limitations
C. Definition
D. Scope



10) Statement on Quality Control Standards No. 2 identifies certain quality control elements that should be considered when performing which types of services?

A. Auditing, accounting, and review services
B. Accounting, tax, and review services
C. Auditing, accounting, and tax services
D. Auditing, tax, and review services



11) When providing audit services, the certified public accountant (CPA) is expected to be

A. independent of the client.
B. an advocate for the general public.
C. indifferent to the effect of the financial statements and the audit report.
D. an advocate for the client.



12) Which of the following is the service in which the CPA firm issues a written communication that expresses a conclusion about the reliability of a written assertion that is another party’s responsibility?

A. Consulting service
B. Accounting service
C. Compilation service
D. Attest service






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