Professional Documents
Culture Documents
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customers. Assuming there is no beginning liability balance, what is the rebate expense and
liability, respectively, shown on the 2007 financial statements dated December 31?29) Which of
the following is a debt security?30) The balance in Newsprint Corp.s foreign exchange loss
account was $10,000 on December 31, 2008, before any necessary year-end adjustment relating
to the following:31) Costs incurred internally to create intangibles are32) The amount to be
recorded as the cost of an asset under capital lease is equal to the33) In computations of weighted
average of shares outstanding, when a stock dividend or stock split occurs, the additional shares
are34) Debt securities that are accounted for at amortized cost, NOT fair value, are35) Elvis
Company purchases inventory for $70,000 on March 19, 2008, and sells it to Graceland
Corporation for $95,000 on May 14, 2008. Graceland still holds the inventory on December 31,
2008, and determines that its market value (replacement cost) is $82,000 at that time. Graceland
writes the inventory down from $95,000 to its lower market value of $82,000 at the end of the
year. Elvis owns 75% of Graceland. Based on this information, what amount of inventory should
be eliminated in the consolidation workpaper for 2008?36) Which of the following objectives is
considered the cornerstone of financial reporting by a governmental entity?37) Expenditures
should be budgeted by character. An example of a character classification is38) Which of the
following funds is accounted for on the modified accrual basis of accounting?39) Several years
ago, Durham City issued $1 million in zero coupon bonds due and payable in 2010. The bonds
were sold at an amount to yield investors 6% over the life of the bonds. During the current year,
how much interest expenditures would Durham City recognize related to these bonds?40) As
used in governmental accounting, interperiod equity refers to a concept of41) The state has a
legally separate State Building Authority, which has a board appointed by the Governor. The
authority issues debt in its name, holds title to buildings in its name, and leases its building
exclusively to the state. The authority would be considered a(n)42) Revenues of a not-for-profit
organization should be reported as43) Financial statements for a church-supported college should
be prepared according to standards set by the44) For a not-for-profit hospital, which of the
following financial statements is required?45) What agency has the ultimate authority in defining
independence for publicly traded companies?46) A report on internal control effectiveness by
management of public companies is required by which of the following:47) Once sufficient
predication has been established, what is the first step a fraud examiner following the fraud
theory approach should take?48) Which of the following best describes the objective of a fraud
examination?49) Damages intended to punish a defendant and deter the defendant and others
from engaging in the same tortious conduct in the future are called50) Where a contract calls for
action that violates a statute, in a breach of contract case the court will51) Teds Gifts and Sweets
enters into a written contract with Bannon Candies to supply Teds with 60 boxes containing a
dozen coconut clusters each month for sale to the public. The agreement contained an integration
clause. Before the first delivery under the contract, Ted and his warehouse manager called
Debbie, the Bannons account representative, to request that the candies be delivered in special
Valentines Day boxes. Debbie told Ted, Dont worry, Ill tell the shipping department to take
care of that. When the candies were delivered, they were in standard cardboard boxes. Ted
called Bannon and threatened to sue for beach of contract. Will Ted prevail in his suit?52) Jane
and Bill are married. They purchase a house and lot as tenants by the entirety. Then Jane is killed
in a car accident. Her will leaves everything to her sister, Ruth. What will happen to Janes
interest in the property?53) Which of the following is a correct statement of the requirements for
a bona fide occupational qualification?54) Which of the following statements accurately
describes the workers compensation rules?55) When a company holds between 20% and 50% of
data are verifiable. Data are verifiable when two or more qualified individuals,78) Statement on
Quality Control Standards No. 2 identifies certain quality control elements that should be
considered when performing which types of services?79) Internal auditors are primarily involved
with80) The statement that the reviewer is not aware of any material modifications that should
be made to the statements in order for them to be in conformity with GAAP is known as81) The
assessment of inherent risk requires considering matters that have a pervasive effect on assertions
for all or many accounts and matters that may pertain only to assertions for specific accounts.
Which of the following is an example of a pervasive effects matter?82) Specific audit objectives
are normally83) The Committee of Sponsoring Organizations (COSO) report identified five
interrelated components of internal control. Since then, a sixth category has been identified,
which is84) Which of the following necessary controls would address a potential misstatement
arising from a voucher being paid twice?85) An effective accounting system should identify and
record only the valid transaction of the entity that occurred in the current period, which relates to
the86) One of the six steps involved in performing analytical procedures includes the
following:87) 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 that88) Use of auditor
judgment or of a risk matrix is necessary in revising planned detection risk whenever89) In the
audit risk model, audit sampling applies to90) Audit sampling is involved whenever an
auditor91) How can long-term assets best be tested for ownership?92) How can long-term assets
best be tested for current present value?93) Because of the effects of circulation, some audit
evidence is more reliable than other evidence. Which of the following is generally considered to
be most reliable?94) Which of the following accounts in a merchandising company is affected by
both the revenue cycle and another cycle?95) The auditors strategy in performing test counts
during the inventory observation is to96) Which one of the following analytical procedures may
indicate possible inventory obsolescence problems when ratios are large?97) The control of all
funds during the count of cash on hand is meant primarily to prevent98) Whether the entity
maintains effective controls to provide reasonable assurance that private customer information
obtained because of e-commerce is protected is defined as99) A lawyers refusal to respond to a
letter of audit inquiry normally requires the auditor to100) Which of the following is a tort?