DEVRY ACCT 444 WEEK 1-5 COMPLETE QUIZZES
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DeVry ACCT 444 Week
1-5 Complete Quizzes
ACCT 444 Week 1 Quiz
1.
(TCO 3) Prior to the
passage of the Sarbanes-Oxley Act, which of the following was responsible for
establishing auditing standards? (Points: 3)
Public Company Accounting Oversight Board
Securities and Exchange Commission
National Association of Accounting
Auditing Standards Board
Chapter 2
2.
(TCO 1) Which one of
the following is not one of the three general standards? (Points: 3)
Proper planning and supervision
Due professional care
Adequate training and proficiency
Independence of mental attitude
Chapter 2
3.
(TCO 1) An independent
auditor must have which of the following? (Points: 3)
A pre-existing and well-informed point of view
with respect to the audit
Technical training that is adequate to meet
the requirements of a professional
Experience in taxation that is sufficient to
comply with generally accepted auditing standards
A background in many different disciplines
4.
(TCO 1) Any service
that requires a CPA firm to issue a report about the reliability of an
assertion that is made by another party is a(n) _____ (Points: 3)
assurance service.
attestation service.
tax service.
accounting and bookkeeping service.
Chapter 1
5.
(TCO 1) Which of the
following statements is incorrect regarding the SEC’s partner rotation rules?
(Points: 3)
The lead and concurring partners are subject
to a 5-year time out period.
All audit partners must rotate off the audit
engagement after 5 years.
Other audit partners are subject to a 2-year
time out period.
Small firms may be exempted from the partner
rotation requirement.
6.
(TCO 3) Burrow &
Co., CPAs, have provided annual audit and tax compliance services to Mare Corp.
for several years. Mare has been unable to pay Burrow in full for services
Burrow rendered 19 months ago. Burrow is ready to begin fieldwork for the
current year’s audit. Under the ethical standards of the profession, which of
the following arrangements will permit Burrow to begin the fieldwork on Mare’s
audit? (Points: 3)
Mare engages another firm to perform the
fieldwork, and Burrow is limited to reviewing the workpapers and issuing the
audit report.
Mare sets up a 2-year payment plan with Burrow
to settle the unpaid fee balance.
Mare gives Burrow an 18-month note payable for
the full amount of the past due fees before Burrow begins the audit.
Mare commits to pay the past due fee in full
before the audit report is issued.
Chapter 2
7.
(TCO 3) Independence
in auditing means (Points: 3)
remaining aloof from a client.
taking an unbaised and objective viewpoint.
not being financially dependent on a client.
being an advocate for a client.
Chapter 4
8.
(TCO 3) The financial
interests of which of the following parties would not be included as a direct
financial interest of the CPA? (Points: 3)
Dependent child
Relative supported by the CPA
Spouse
Sibling living in the same city as the CPA
Chapter 4
9.
(TCO 1) The phrase
U.S. generally accepted accounting principles is an accounting term that
(Points: 3)
encompasses the conventions, rules, and
procedures necessary to define U.S. accepted accounting practice at a
particular time.
provides a measure of conventions, rules, and
procedures governed by the AICPA.
is included in the audit report to indicate
that the audit has been conducted in accordance with generally accepted
auditing standards (GAAS).
includes broad guidelines of general
application but not detailed practices and procedures.
Chapter 1
10.
(TCO 1) Which of the
following statements best describes the ethical standard of the profession
pertaining to advertising and solicitation? (Points: 3)
A CPA may advertise in any manner that is not
false, misleading, or deceptive.
There are no prohibitions regarding the manner
in which CPAs may solicit new business.
All forms of advertising and solicitation are
prohibited.
A CPA may only solicit new clients through
mass mailings.
1.
(TCO 3) The
Sarbanes-Oxley Act applies to which of the following companies? (Points : 3)
Privately held companies
All companies
All public companies and privately held
companies with assets greater than $500 million
Public companies
Chapter 1
Question 4. 4. (TCO 1) An operational audit
has as one of its objectives to (Points : 3)
make recommendations for improving
performance.
determine whether the financial statements
fairly present the entity’s operations.
evaluate the feasibility of attaining the
entity’s operational objectives.
report on the entity’s relative success in
attaining profit maximization.
Chapter 1
Question 5. 5. (TCO 1) Which of the following
services do not need to be preapproved by the audit committee of an issuer?
(Points : 3)
Nonaudit services related to internal control
over financial reporting
Tax services
Nonaudit services that are less than 5 % of
total revenues from the audit client
Services provided by the auditor on a
recurring basis
Question 8. 8. (TCO 3) Several months after an
unqualified audit report was issued, the auditor discovered the financial
statements were materially misstated. The client’s CEO agrees that there are
misstatements, but refuses to correct them. She claims that confidentiality
prevents the CPA from informing anyone. (Points : 3)
The CEO is incorrect, but because the audit
report has been issued, it is too late.
The CEO is correct and the auditor must
maintain confidentiality.
The CEO is correct, but to be ethically
correct the auditor should violate the confidentiality rule and disclose the
error.
The CEO is incorrect, and the auditor has an
obligation to issue a revised audit report, even if the CEO will not correct
the financial statements.
Chapter 4
Question 9. 9. (TCO 1) Which of the following
terms identifies a requirement for audit evidence? (Points : 3)
Adequate
Disconfirming
Reasonable
Appropriate
Chapter 1
Question 10. 10. (TCO 1) The auditor of an
issuer may provide which of the following tax services? (Points : 3)
Tax services for immediate family members of
corporate officers
Tax planning services
Tax services for officers of the issuer
Services related to confidential tax
transactions
5.
(TCO 1) Jackson &
Company, CPAs, plan to audit the financial statements of Perigee Technologies, an
issuer as defined under the Sarbanes-Oxley Act of 2002. Which of the following
situations would impair Jackson’s independence? (Points : 3)
Discovering that Lowe, the chief financial
officer of Perigee, started his accounting career 10 years earlier as a staff
accountant for Jackson & Company and continues to maintain ties with
current partners at the firm
Provision of personal tax services to Johnson,
the accounts payable manager of Perigee
Audit of Perigee’s internal control is
performed contemporaneously with the annual financial statement audit
Preparation of Perigee’s routine annual tax
return, where Jackson’s fee will be calculated as a percentage of the tax
refund obtained
ACCT 444 Week 2 Quiz
Week 2 : Auditor Legal
Liability, Fraud, & Audit Objectives – Quiz
Question 1. 1. (TCO 4) To succeed in an action
against the auditor, the client must be able to show that (Points : 3)
the auditor was fraudulent.
the auditor was grossly negligent.
there was a written contract.
there is a close causal connection between the
auditor’s behavior and the damages suffered by the client.
Chapter 5, 6 & 7
1.
(TCO 4) In connection
with the audit of financial statements, an independent auditor could be
responsible for failure to detect a material fraud if (Points : 3)
statistical sampling techniques were not used
on the audit engagement.
the auditor planned the audit in a negligent
manner.
accountants performing important parts of the
work failed to discover a close relationship between the treasurer and the
cashier.
the fraud was perpetrated by one employee who
circumvented the existing internal controls.
Question 2. 2. (TCO 4) The principal issue to
be resolved in cases involving alleged negligence is usually (Points : 3)
the amount of the damages suffered by plaintiff.
whether to impose punitive damages on the
defendant.
the level of care exercised by the CPA.
whether defendant was involved in fraud.
Chapter 5, 6 & 7
2.
(TCO 4) The principal
issue to be resolved in cases involving alleged negligence is usually (Points :
3)
the amount of the damages suffered by
plaintiff.
whether to impose punitive damages on the
defendant.
the level of care exercised by the CPA.
whether defendant was involved in fraud.
Question 3. 3. (TCO 4) While performing
services for their clients, professionals have a duty to provide a level of
care that is (Points : 3)
free from judgment errors.
superior.
greater than average.
reasonable.
Chapter 5
3.
(TCO 4) A third-party
beneficiary is one that (Points : 3)
has failed to establish legal standing before
the court.
does not have privity of contract and is
unknown to the contracting parties.
does not have privity of contract, but is
known to the contracting parties and intended to benefit under the contract.
may establish legal standing before the court
after a contract has been consummated.
Chapter 5
Question 4. 4. (TCO 4) Tort actions against
CPAs are more common than breach of contract actions because (Points : 3)
there are more torts than contracts.
the burden of proof is on the auditor rather
than on the person suing.
the person suing need prove only negligence.
the amounts recoverable are normally larger.
Chapter 5
Question 5. 5. (TCO 4) The responsibility for
adopting sound accounting policies and maintaining adequate internal control
rests with the (Points : 3)
board of directors.
company management.
financial statement auditor.
company’s internal audit department.
Chapter 6
Question 6. 6. (TCO 3) Which of the following
is not one of the reasons that auditors provide only reasonable assurance on
the financial statements? (Points : 3)
The auditor commonly examines a sample, rather
than the entire population of transactions.
Accounting presentations contain complex
estimates, which involve uncertainty.
Fraudulently prepared financial statements are
often difficult to detect.
Auditors believe that reasonable assurance is
sufficient in the vast majority of cases.
Chapter 6
6.
(TCO 3) Which of the
following statements is most correct regarding errors and fraud? (Points : 3)
An error is unintentional, whereas fraud is
intentional.
Frauds occur more often than errors in
financial statements.
Errors are always fraud and frauds are always
errors.
Auditors have more responsibility for finding
fraud than errors.
Question 7. 7. (TCO 3) Which of the following
is not one of the factors of the fraud triangle? (Points : 3)
Incentives/pressures
Attitudes/rationalization
Opportunities
Psychological make-up
Chapter 5 or 11
7.
(TCO 3) In the fraud
triangle, fraudulent financial reporting and misappropriation of assets (Points
: 3)
share little in common.
share most of the same risk factors.
share the same three conditions.
share most of the same conditions.
Chapter 11
Question 8. 8. (TCO 3) Fraudulent financial
reporting may be accomplished through the manipulation of (Points : 3)
assets.
liabilities.
revenues.
all of the above.
Chapter 11
8.
(TCO 3) Because of the
risk of material misstatements due to fraud, an audit of financial statements
in accordance with generally accepted auditing standards should be performed
with an attitude of (Points : 3)
objective judgment.
impartial conservatism.
independent integrity.
professional skepticism.
Chapter 11
Question 9. 9. (TCO 3) Which of the following
is a factor that relates to attitudes or rationalization to commit fraudulent
financial reporting? (Points : 3)
Significant accounting estimates involving
subjective judgments
Excessive pressure for management to meet debt
repayment requirements
Management’s practice of making overly
aggressive forecasts
High turnover of accounting, internal audit
and information technology staff
Chapter 11
Question 10. 10. (TCO 3) Auditor responses to
fraud risks include which of the following? (Points : 3)
Change the overall conduct of the audit to
respond to identified fraud risks.
Design and perform audit procedures to address
identified risks.
Perform procedures to address the risk of
management override of controls.
All of the above.
Chapter 11
10.
(TCO 3) Which of the
following characteristics is most likely to heighten an auditor’s concern about
the risk of material misstatements, due to fraud in an entity’s financial
statements? (Points : 3)
Employees who handle cash receipts are not
bonded.
The entity’s industry is experiencing
declining customer demand.
Internal auditors have direct access to the
board of directors and the entity’s management.
The board of directors is active in overseeing
the entity’s financial reporting policies.
Chapter 11
ACCT 444 Week 3 Quiz
Week 3 : Audit Evidence, Planning, Risk, &
Materiality – Quiz
1.
(TCO 6) Physical
examination is the inspection or count by the auditor of items such as (Points
: 3)
cash or inventory only.
cash, inventory, canceled checks, and sales
documents.
cash, inventory, canceled checks, and tangible
fixed assets.
cash, inventory, securities, notes receivable,
and tangible fixed assets.
Chapter 7
1.
(TCO 6) The
distinction between physical examination of assets and examination of documents
is dependent on the item being examined. If the object being examined has no
inherent value, the evidence is called (Points : 3)
documentation.
physical examination.
confirmation.
none of the above.
Chapter 7
1.
(TCO 6) Which of the
following statements regarding documentation is not correct? (Points : 3)
Documentation includes examining client
records, such as general ledgers and supporting journals.
Internal documents are documents that are
generated within the company and used to communicate with external parties.
External documents are documents that are
generated outside of the company and are used to communicate the results of a
transaction.
All of the above are correct statements
Chapter 7
2.
(TCO 6) Which of the
following is not a purpose of analytical procedures? (Points : 3)
Understand the client’s industry
Assess the client’s ability to continue as a
going concern
Identify misstatements
Reduce detailed audit tests
Chapter 7
2.
(TCO 6) Analytical
procedures are (Points : 3)
diagnostic tests of financial information that
may not be classified as evidential matter.
calculations of financial information made by
a computer.
substantive tests of financial information
made by a study and comparison of relationships among data.
statistical tests of financial information
designed to identify areas requiring intensive investigation.
Chapter 7
2.
(TCO 6) When
analytical procedures reveal no unusual fluctuations, the implication is that
(Points : 3)
there are no material errors or
irregularities.
there are no material errors.
there are no material irregularities.
the possibility of a material error or
irregularity is lessened.
Chapter 7
3.
(TCO 6) The Auditing
Standards Board has concluded that analytical procedures are so important that
they are required during (Points : 3)
planning and testing phases.
planning and completion phases.
testing and completion phases.
planning, testing, and completion phases.
Chapter 7
3.
(TCO 6) The primary
purpose of performing analytical procedures in the testing phase of an audit is
to (Points : 3)
help the auditor obtain an understanding of
the client’s industry and business.
assess the going concern assumption.
indicate possible misstatements.
reduce detailed tests.
Chapter 7
3.
(TCO 6) Which of the
following statements regarding analytical procedures is not correct? (Points :
3)
The definition of analytical tests emphasizes
a comparison of client’s data to GAAP.
Analytical procedures are required on all
audits.
Analytical procedures can be used as
substantive tests.
For certain accounts with small balances,
analytical procedures alone may be sufficient evidence.
Chapter 7
4.
(TCO 6) Which of the
following statements about confirmation is true? (Points : 3)
Confirmations are expensive and so are often
not used.
Confirmations may inconvenience those asked to
supply them, but they are widely used.
Confirmations are sometimes not reliable and
so auditors use them only as necessary.
None of the above statements are true.
Chapter 7
4.
(TCO 6) Three common
types of confirmations used by auditors are (1) negative confirmations where
only a response is requested if the debtor disagrees with the amount, (2)
positive confirmations with a request for information where the debtor is
requested to respond and to include their believed balance, and (3) positive
confirmations with the information included where the debtor is requested to
respond and to confirm the balance we give them. If they were placed in the
order of their competence, from highest to lowest, the sequence would be
(Points : 3)
3, 1, 2.
1, 2, 3.
3, 2, 1.
2, 3, 1.
Chapter 7
4.
(TCO 6) Traditionally,
confirmations are used to verify (Points : 3)
individual transactions between organizations,
such as sales transactions.
bank balances and accounts receivables.
fixed asset additions.
All of the above
Chapter 7
5.
(TCO 7) The major
concern when using nonfinancial data in analytical procedures is the (Points :
3)
accuracy of the nonfinancial data.
source of the nonfinancial data.
type of nonfinancial data.
presence of multiple sources of nonfinancial
data.
Chapter 8
5.
(TCO 7) Analytical
procedures used in planning an audit should focus on identifying (Points : 3)
material weaknesses of internal control.
the predictability of financial data from
individual transactions.
the various assertions that are embodied in
the financial statements.
areas that may represent specific risks
relevant to the audit.
Chapter 8
5.
(TCO 7) Which of the
following is correct with respect to the use of analytical procedures? (Points
: 3)
Analytical procedures may be used in
evaluating balances in the testing phase as long as the auditor also uses them
in assessing the going concern assumption.
Analytical procedures must be used throughout
the audit.
Analytical procedures used in the testing
phase of the audit are primarily used to direct an auditor’s attention so that
the auditor’s understanding of the business is improved.
None of the above
Chapter 8
6.
(TCO 7) A measure of
how willing the auditor is to accept that the financial statements may be
materially misstated after the audit is completed and an unqualified opinion
has been issued is the (Points : 3)
inherent risk.
acceptable audit risk.
statistical risk.
financial risk.
Chapter 8
6.
(TCO 7) When inherent
risk is high, there will need to be (Points : 3)
more evidence accumulated.
more experienced staff assigned to the work.
either a or b, but not both.
both a and b.
Chapter 8
6.
(TCO 7) A measure of
the auditor’s assessment of the likelihood that there are material
misstatements in an account before considering the effectiveness of the
client’s internal control is (Points : 3)
acceptable audit risk.
control risk.
inherent risk.
statistical risk.
Chapter 8
7.
(TCO 7) What is the
responsibility of a successor auditor with respect to communicating with the
predecessor auditor in connection with a prospective new audit client? (Points
: 3)
The successor auditor has no responsibility to
contact the predecessor auditor.
The successor auditor should obtain permission
from the prospective client to contact the predecessor auditor.
The successor auditor should contact the
predecessor regardless of whether the prospective client authorizes contact.
The successor auditor need not contact the
predecessor if the successor is aware of all available relevant facts.
Chapter 8
7.
(TCO 7) A successor
auditor may perform which of the following for a new audit client? (Points : 3)
Speak to local attorneys, banks, and other
businesses regarding the company’s reputation
Speak to the predecessor auditor about
disagreements they had with management
Interview client personnel to better
understand the business and associated risks
All of the above
Chapter 8
7.
(TCO 7) Which of the
following is not correct regarding the communications between successor and
predecessor auditors? (Points : 3)
The burden of initiating the communication
rests with the predecessor auditor.
The burden of initiating the communication
rests with the successor auditor.
The predecessor auditor must receive their
former client’s permission prior to divulging information to the successor
auditor.
The predecessor auditor may choose to provide
a limited response to a successor auditor.
Chapter 8
8.
(TCO 8) The FASB
definition of materiality emphasizes what class of financial statement users?
(Points : 3)
Regulators
Informed investors
Reasonable persons
Potential investors
Chapter 9
8.
(TCO 8) Auditors are
responsible for determining whether financial statements are materially
misstated, so upon discovering a material misstatement, they must bring it to
the attention of (Points : 3)
regulators.
the audit firm’s managing partner.
no one in particular.
the client’s management.
Chapter 9
8.
(TCO 8) The
preliminary judgment about materiality is the _____ amount by which the auditor
believes the statements could be misstated and still not affect the decisions
of reasonable users. (Points : 3)
minimum
maximum
mean average
median average
Chapter 9
9.
(TCO 8) In setting
materiality guidelines for current assets, the two standard setters, FASB and
the AICPA, provide the following guidelines to practitioners (Points : 3)
Both agree that materiality should be set at
an amount greater than 10% of current assets.
FASB’s guideline is greater than 10%, but the
AICPA’s is greater than 5%.
Both agree that it should be greater than 5%.
No specific materiality guidelines are
provided by either of them.
Chapter 9
9.
(TCO 8) Auditors are
_____ to decide on the combined amount of misstatements in the financial
statements that they would consider material early in the audit. (Points : 3)
permitted
required
not allowed
strongly encouraged
Chapter 9
9.
(TCO 8) When auditors allocate
the preliminary judgment about materiality to account balances, the materiality
allocated to any given account balance is referred to as (Points : 3)
the materiality range.
the error range.
tolerable materiality.
tolerable misstatement.
Chapter 9
10.
(TCO 8) Which of the
following is not a correct statement regarding the allocation of the
preliminary judgment about materiality to balance sheet accounts? (Points : 3)
Auditors expect certain accounts to have more
misstatements than others.
The allocation has virtually no effect on
audit costs because the auditor must collect sufficient appropriate audit
evidence.
Auditors expect to identify overstatements as
well as understatements in the accounts.
Relative audit costs affect the allocation.
Chapter 9
10.
(TCO 8) Which of the
following elements ultimately determines the specific auditing procedures that
are necessary in the circumstances to afford a reasonable basis for an opinion?
(Points : 3)
Inherent risk
Materiality
Auditor judgment
Reasonable assurance
Chapter 9
10.
(TCO 8) Why do
auditors establish a preliminary judgment about materiality? (Points : 3)
To determine the appropriate level of audit
experience required for the work
So that the client can know what records to
make available to the auditor
To plan the appropriate audit evidence to
accumulate and develop an overall audit strategy
None of the above
Chapter 9
ACCT 444 Week 4 Quiz
1.
(TCO 5) Which of the
following is responsible for establishing internal controls for a public
company? (Points : 3)
Management
Financial statement auditors
Management and auditors
Committee of Sponsoring Organizations
1.
(TCO 5) Which of the
following parties provides an assessment of the effectiveness of internal
control over financial reporting for public companies? (Points : 3)
Management
Financial statement auditors
Management and the financial statement
auditors
Committee of Sponsoring Organizations
1.
(TCO 5) Which of the
following is responsible for establishing a private company’s internal control?
(Points : 3)
Management
Auditors
Management and auditors
Committee of Sponsoring Organizations
2.
(TCO 5) Which section
of the Sarbanes-Oxley Act requires management to issue an internal control
report? (Points : 3)
202
203
404
408
2.
(TCO 5) Sarbanes-Oxley
requires management to issue an internal control report that includes two
specific items. Which of the following is one of these two requirements?
(Points : 3)
A statement that management is responsible for
establishing and maintaining an adequate internal control structure and
procedures for financial reporting
A statement that management and the board of
directors are jointly responsible for establishing and maintaining an adequate
internal control structure and procedures for financial reporting
A statement that management, the board of
directors, and the external auditors are jointly responsible for establishing
and maintaining an adequate internal control structure and procedures for
financial reporting
None of the above
2.
(TCO 5) Internal
control reports issued by public companies must identify the framework used to
evaluate the effectiveness of internal control. Which of the following is the
most common framework in the U.S.? (Points : 3)
Effective Internal Control Framework-AICPA
Internal Control-Integrated Framework-COSO
Enterprise Internal Control-COSO
There is no common framework used in the U.S.
3.
(TCO 5) Which of the
following activities would be least likely to strengthen a company’s internal
control? (Points : 3)
Separating accounting from other financial
operations
Maintaining insurance for fire and theft
Fixing responsibility for the performance of
employee duties
Carefully selecting and training employees
3.
(TCO 5) Management’s
tests of operating effectiveness might include which of the following types of
procedures? (Points : 3)
Inspection of relevant documentation
Inquiries of personnel
Reperformance of the application of controls
All of the above
3.
(TCO 5) Which of
management’s concerns with respect to implementing internal controls is the
auditor primarily concerned? (Points : 3)
Efficiency of operations
Reliability of financial reporting
Effectiveness of operations
Compliance with applicable laws and
regulations
4.
(TCO 5) Internal
controls can never be regarded as completely effective. Even if company
personnel could design an ideal system, its effectiveness depends on the
(Points : 3)
adequacy of the computer system.
proper implementation by management.
ability of the internal audit staff to
maintain it.
competency and dependability of the people
using it.
4.
(TCO 5) Even with the
most effectively designed internal control, the auditor must obtain audit
evidence, beyond testing the controls, for every (Points : 3)
transaction.
financial statement account.
material financial statement account.
financial statement account that will be
relied upon by third parties.
4.
(TCO 5) The essence of
an effectively controlled organization lies in the (Points : 3)
effectiveness of its independent auditor.
effectiveness of its internal auditor.
attitude of its employers.
attitudes of its management.
5.
(TCO 5) Which of the
following is not one of the levels of an absence of internal controls? (Points
: 3)
Major deficiency
Material weakness
Significant deficiency
Control deficiency
5.
(TCO 5) To determine
if a significant internal control deficiency or deficiencies are a material
weakness, they must be evaluated on their (Points : 3)
likelihood.
materiality or significance.
both A and B are correct.
neither A nor B is correct.
6.
(TCO 10) Which of the
following is not a benefit of using IT-based controls? (Points : 3)
Ability to process large volumes of
transactions
Ability to replace manual controls with
computer-based controls
Reduction in misstatements due to consistent
processing of transactions
Over-reliance on computer-generated reports
6.
(TCO 10) Which of the
following is not a risk to IT systems? (Points : 3)
Need for IT experience
Separation of IT duties
Improved audit trail
Hardware and data vulnerability
6.
(TCO 10) Which of the
following is not a risk specific to IT environments? (Points : 3)
Reliance on the functioning capabilities of
hardware and software
Increased human involvement
Loss of data due to insufficient backup
Reduced segregation of duties
7.
(TCO 10) Which of the following
IT duties should be separated from the others? (Points:3)
Systems development
Operations
Data control
All of the above
7.
(TCO 10) The extent to
which IT duties are separated in an organization depends on (Points : 3)
the organization’s size.
the organization’s complexity.
both A and B.
neither A nor B.
7.
(TCO 10) Programmers
should do all but which of the following? (Points : 3)
Test programs for proper performance
Evaluate legitimacy of transaction data input
Develop flowcharts for new applications
Programmers should perform each of the above
8.
(TCO 10) Which of the
following is a category of general controls? (Points : 3)
Processing controls
Output controls
Physical and online security
Input controls
8.
(TCO 10) General
controls include all of the following except (Points : 3)
systems development.
online security.
processing controls.
hardware controls.
8.
(TCO 10) Which of the
following is least likely to be used in obtaining an understanding of client
general controls? (Points : 3)
Examination of system documentation
Inquiry of client personnel (e.g. key users)
Observation of transaction processing
Reviews of questionnaires completed by client
IT personnel
9.
(TCO 10) Controls that
apply to a specific element of the system are called (Points : 3)
user controls.
general controls.
systems controls.
application controls.
9.
(TCO 10) A control
that relates to all parts of the IT system is called a(n) (Points : 3)
general control.
systems control.
universal control.
applications control.
9.
(TCO 10) Auditors
should evaluate the _____ before evaluating application controls because of the
potential for pervasive effects. (Points : 3)
input controls
control environment
processing controls
general controls
10.
(TCO 10) Which of the
following is not an example of an application control? (Points: 3)
An equipment failure causes system downtime.
There is a preprocessing authorization of the
sales transactions.
There are reasonableness tests for the unit
selling price of a sale.
After processing, all sales transactions are
reviewed by the sales department.
10.
(TCO 10) Which of the
following is not a category of an application control? (Points : 3)
Processing controls
Output controls
Hardware controls
Input controls
10.
(TCO 10) Which of the
following statements related to application controls is correct? (Points : 3)
Application controls relate to various aspects
of the IT function, including software acquisition and the processing of
transactions.
Application controls relate to various aspects
of the IT function, including physical security and the processing of
transactions in various cycles.
Application controls relate to all aspects of
the IT function.
Application controls relate to the processing
of individual transactions.
ACCT 444 Week 5 Quiz
1.
(TCO 6) The auditor
looks for an indication on duplicate sales invoices to see whether the invoices
have been verified. This is an example of (Points : 3)
a test of details of balances.
a test of control.
a substantive test of transactions.
both a test of control and a substantive test
of transactions.
1.
(TCO 6) Tests of
controls may include which of the following types of evidence? (Points : 3)
Observation
Reperformance
Inquiries
All of the above
1.
(TCO 6) For
efficiency, tests of controls are frequently done at the same time as (Points :
3)
analytical procedures.
compliance tests.
tests of transactions.
tests of details of balances.
2.
(TCO 6) Analytical
procedures are defined in the auditing standards as (Points : 3)
compliance tests.
substantive tests.
tests of controls.
helpful procedures not possessing the validity
of other tests available to the auditor.
2.
(TCO 6) Which of the
following is not a direct result of performing analytical procedures? (Points :
3)
Identify areas of potential misstatements.
Reduce detailed audit risk.
Understand the client’s business.
Identify specific errors in the accounts.
2.
(TCO 6) Analytical
procedures may be classified as being primarily (Points : 3)
tests of controls.
substantive tests.
tests of ratios.
tests of details of balances.
3.
(TCO 6) Which of the
following audit tests is usually the least costly to perform? (Points : 3)
Analytical procedures
Tests of controls
Tests of balances
Substantive tests of transactions
3.
(TCO 6) Which of the
following audit tests is usually the most costly to perform? (Points : 3)
Analytical procedures
Tests of controls
Tests of balances
Substantive tests of transactions
4.
(TCO 6) Which of the
following tests commonly occur together? (Points : 3)
Substantive tests of transactions and tests of
controls
Substantive tests of transactions and
obtaining an understanding of internal controls
Analytical procedures and tests of controls
All of the above
4.
(TCO 6) Which of the
following relationships between types of tests and audit evidence is not
correct? (Points : 3)
Tests of details and documentation
Tests of controls and observation
Tests of details and observation
Substantive tests of transactions and
reperformance
5.
(TCO 6) The sequence
of steps in gathering evidence as the basis of the auditor’s opinion are
(Points : 3)
substantive tests, initial assessment of
control risk, and tests of controls.
initial assessment of control risk,
substantive tests, and tests of controls.
initial assessment of control risk, tests of
controls, and substantive tests.
tests of controls, initial assessment of
control risk, and substantive tests.
5.
(TCO 6) The purpose of
tests of controls is to provide reasonable assurance that the (Points : 3)
accounting treatment of transactions and
balances is valid and proper.
internal control procedures are functioning as
intended.
entity has complied with GAAP disclosure
requirements.
entity has complied with requirements of
quality control.
6.
(TCO 9) It is
important that sales be billed and recorded in the journal as soon as possible
after (Points : 3)
the order is received.
the order is received and credit is approved.
credit is approved and it is verified that
there is enough inventory to fill the order.
the shipment takes place.
6.
(TCO 9) The use of
prenumbered sales invoices is meant to prevent (Points : 3)
the failure to bill or record sales.
duplicate billings and recording of sales.
both A and B are correct.
neither A nor B is correct.
6.
(TCO 9) Prenumbered
documents will only be useful for control purposes if (Points : 3)
a different numerical sequence is used for
each company.
the sequence is accounted for periodically.
employees do not have access to the complete
sequence.
All of the above
7.
(TCO 9) Which one of
the following is not an auditor’s concern about a key authorization point in
the sales or collection cycle? (Points : 3)
The receiving room must have authorization
before releasing items to inventory control.
Credit must be authorized before the sale.
Goods must be shipped after the authorization.
Prices must be authorized.
7.
(TCO 9) At which point
in an ordinary sales transaction would a lack of specific authorization be of
least concern to the auditor? (Points : 3)
Granting of credit
Shipment of goods
Determination of discounts
Selling of goods for cash
8.
(TCO 9) The
credit-granting functions should be separated from which of the following?
(Points : 3)
Purchasing functions
Manufacturing function
Sales function
None of the above
9.
(TCO 9) When designing
substantive tests of transactions for sales, the auditor is concerned with the
possibility of several types of misstatements. Which of the following is not
one of the types of these misstatements? (Points : 3)
Sales being included in the journal for which
no shipment was made
Sales to related parties, such as officers and
subsidiaries
Sales recorded more than once
Shipments being made to nonexistent customers
and recorded as sales
10.
(TCO 9) A key internal
control in the sales and collection cycle is the separation of duties between
cash handling and record keeping. The objective most directly associated with
this control is to verify that (Points : 3)
cash receipts recorded in the cash receipts
journal are reasonable.
cash receipts are properly classified.
recorded cash receipts result from legitimate
transactions.
existing cash receipts are recorded.
10.
(TCO 9) Which one of
the following would the auditor consider to be an incompatible operation if the
cashier receives remittances from the mailroom? (Points : 3)
The cashier prepares the daily deposit.
The cashier makes the deaily deposit at a
local bank.
The cashier posts the receipts to the accounts
receivable subsidiary ledger cards.
The cashier endorses the checks.
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