Posted: June 22nd, 2023

SEC and IRS, 42 Multiple Choices Questions, accounting homework help

Question description

42 Multiple Choices Questions. Please highlight the correct answers in red. 1Which of the following are independent private-sector standard-setting bodies?SEC and IRSNational Association of State Boards of Accountancy and the American Accounting AssociationAICPA and IIAFASB and the Governmental Accounting Standards Board2. When providing audit services, the certified public accountant (CPA) is expected to be?an advocate for the general public.independent of the client.indifferent to the effect of the financial statements and the audit report.an advocate for the client.3. Public Company Accounting Oversight Board (PCAOB) standards require the auditor to evaluate the effectiveness of the audit committee as part of understanding the control environment and monitoring. Which of the following is NOT a factor the auditor should consider in making this evaluation?Compensation practices with respect to members of the audit committeeThe audit committee’s responsiveness to issues raised by the auditorThe clarity with which the audit committee’s responsibilities are articulatedThe independence of the audit committee from management4. What level of assurance does the reader of a private company financial statement receive on the company’s system of internal controls?NegativeNoneReasonablePositive5) Section 18 liability is relatively narrow in scope because it relates to a false or misleading statement in documents filed with the?Internal Revenue Service (IRS).FASB.American Institute of Certified Public Accountants (AICPA).Securities and Exchanges Commission (SEC).6. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated isaudit risk.control risk.tests of details risk.analytical procedures risk.7. Which of the following management responsibilities is NOT established under PCAOB standards?To perform cost-benefit analysis with respect to internal controls relating to assertions having a material effect on the financial statementsTo present a written assessment of the effectiveness of the company’s internal control over financial reporting as of the end of the company’s most recent fiscal yearTo evaluate the effectiveness of the company’s internal control over financial reporting using suitable criteriaTo accept responsibility for the effectiveness of the company’s internal control over financial reporting8. The third phase of the audit involves performing audit tests. The primary purpose of this step is to obtain evidence about the?integrity of management.effectiveness of management.effectiveness of the internal control structure and fairness of the financial statements.effectiveness of the internal control structure.9. Which of the following assertions is NOT made by management in placing an item in the financial statements?Rights and obligationsPresentation and disclosureDirect controlsExistence or occurrence10. When evaluating the planned level of substantive tests for each significant financial statement assertion, the auditor will consider the evidence obtained from all of the following EXCEPTassessing inherent risk.assessing detection risk.evidence of effectiveness of computer control procedures and related follow-up.procedures to understand the business and industry, and related completed analytical procedures.evidence about the effectiveness of internal controls gained while obtaining an understanding of internal controls.11. Probability-proportional-to-size (PPS) sampling should NOT be used whenthe number of units in the population is unknown at the start of sampling.book values for sampling units are not available.the variability of the population is unknown.transactions and balances are tested for overstatement.12. Specific audit objectives are normallyderived from the categories of management’s financial statement assertions.the same as the categories of management’s financial statement assertions.developed for each item in the financial statements and derived from the categories of management’s financial statement assertions.developed for each item in the financial statements.13. When setting the level of materiality on a particular engagement, the auditor must considerboth the unique circumstances pertaining to the entity and the users’ information needs.the users’ information needs.neither the unique circumstances pertaining to the entity nor the users’ information needs.the unique circumstances pertaining to the entity.14. The completeness assertion would be violated ifunbilled shipments occurred during the period.disclosure in the statements of pledged receivables was inadequate.the allowance for doubtful accounts was understated.fictitious sales transactions were included in accounts receivable.15. The risk that a material misstatement that could occur in an assertion will NOT be prevented or detected on a timely basis by the entity’s internal controls isaudit risk.inherent risk.control risk.rejection risk.16. Before accepting an engagement, the auditor should evaluate whether other conditions exist that raise questions as to the prospective client’s auditability. Which of the following factors would be least likely to cause concern about an entity’s auditability?Important evidence available only in electronic formRelated party transactionsLack of audit trailDisregard of responsibility to maintain adequate internal controls17. In the audit risk model, audit sampling applies todetection risk.control risk and detection risk.inherent risk and control risk.inherent risk and detection risk.18. An inaccurate form of the audit risk model would show thatdetection risk may be determined from audit risk, inherent risk, and control risk.increases in control risk will cause decreases in detection risk.detection risk is inversely related to inherent risk.detection risk is inversely related to audit risk.audit risk is directly related to all other risks in the model.19. There are several paragraphs in the auditor’s standard report in internal control over financial reporting. Which paragraph defines internal control over financial reporting?Inherent limitationsDefinitionIntroductoryScope20. If reported sales for 2010 erroneously include sales that occur in 2011, the assertion violated on the 2010 statements would bevaluation or allocation.existence or occurrence.completeness.presentation and disclosure.21. Which of the following is NOT a characteristic of management's philosophy and operating style?Conscientiousness and conservatism in developing accounting estimatesMonitoring policies for developing and modifying accounting systemsApproach to taking and monitoring business risksIts attitudes and actions toward financial reporting22. To emphasize the importance of integrity and ethical values among all personnel or an organization, the chief executive officer and other top managers should do all of the following EXCEPTcommunicate to all employees.send e-mail messages to all employees, promoting ethical values.reduce or eliminate incentives and temptations.set the tone by example.23. Auditor changes result from a variety of factors EXCEPTmergers between CPA firms.mergers between corporations with different independent auditors.satisfaction with a firm.a desire to reduce the audit fee.24. Anyone identified to the auditor by name prior to the audit who is the principal recipient of the auditor’s report is aforeseen beneficiary.foreseeable party.third party.primary beneficiary.25. Which of the following requires managing public companies to assess the adequacy of internal controls over financial reporting and further requires auditors to audit management’s assessment of internal controls over financial reporting and the actual effectiveness of the system of internal controls?Securities Exchange Act of 1934Section 404 of Sarbanes-OxleySAS 55Foreign Corrupt Practices Act26. Which of the following is NOT one of the factors that make up the control environment?Board of directors and audit committeeOrganizational structureAccounting personnelHuman resource policies and practices27. With respect to audit objectives, the term validity relates to which of the assertions below?Existence and occurrenceCompletenessPresentation and disclosureValuation or allocation28. Statements on auditing standards (SAS) are interpretations of what?Generally accepted auditing standardsGenerally accepted accounting principlesGenerally accepted accounting policiesGenerally accepted auditing services29. “A significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected” is the definition of amaterial weakness.material misstatement.significant deficiency.control deficiency.30. Which of the following is NOT one of the four basic functions of every transaction?ConsiderationRecordingDelivery and receiptInitiation31. The Foreign Corrupt Practices Act is administered by theIRS.SEC.Central Intelligence Agency.National Commission on Fraudulent Financial Reporting.32. Which of the following is an INCORRECT quotation from the second field work standard?“A sufficient understanding...”“determine the nature, timing, and extent of compliance tests...”“of the internal control structure is...”“to be obtained to...”33. In a normal audit, the relationship between the level of materiality used to plan the engagement and the level of materiality used to evaluate evidence is thatthe former may be higher or lower than the latter.the former is higher than the latter.they must be identical.the former is lower than the latter.34. In performing tests of details of balances, the auditor would obtain the bank statement directly from the bank, prepare the bank reconciliation, and verify all reconciling items and mathematical accuracy if detection risk washigh.very high.very low.moderate.35. Internal auditors are primarily involved withfinancial statement audits.compliance audits and operational audits.compliance audits.operational audits.36. Which of the following is NOT an example of incompatible duties?The individual who prepares the bank deposit also takes it to the bank.The individual who approves the vouchers signs and mails the checks.The warehouse manager maintains the perpetual inventory records.The authorized check signer prepares the bank reconciliation.37.  Which of the following necessary controls would address a potential misstatement arising from a voucher being paid twice?Electronic cancellation of vouchers and supporting information when a check is issuedA computer comparing the sum of checks issued with the entry to cash disbursementsPeriodic independent bank reconciliationsSeparate duties for approving payment vouchers and sighing checks38. The five management assertions outlined in generally accepted auditing standards include all of the following EXCEPTrights and obligations.presentation and disclosure.materiality.existence and occurrence.39. The susceptibility of an assertion to a material misstatement, assuming there are no controls, isanalytical procedures risk.audit risk.control risk.inherent risk.40. The Securities Act of 1933 is also known as theTruth in Lending Act.Truth in Securities Act.Sale of Securities Act.Great Depression Act.41. In planning the audit, the auditor should assess materiality at two levels:preliminary and final.account balance and detailed item.company and divisional.financial statement and account balance.42. Audit sampling is involved whenever an auditormakes an inference about a population characteristic based on a partial examination of that population.examines 100% of the population.performs tests of controls.performs tests of details.

Tags: Ace-myhomework Assignment, Affordable College Homework, APA Citation Assignment Help, Custom Essay Writing