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ACC 497 Final Exam

Assignment

BUSINESS ENVIRONMENT AND CONCEPTS


Section 1: Business Structure
1. The uniform law, issued in 1984 by the Committee on Corporate Laws of the
American Bar Association, that regulates the formation, operation, and
termination of corporations is
A. The Model Business Corporation Act
B. The Uniform Commercial Code
C. The Revised Model Business Commercial Code

D. The Standard Incorporation Act


2. Which of the following statements is true?
A. The exchange of stock for services rendered is not a taxable transaction.
B. The repeal of Sec. 351 would result in more existing businesses being
incorporated.
C. Section 351 was enacted to allow taxpayers to incorporate without incurring
adverse tax consequences.
D. Section 351 is an example of a negative aspect of the corporate form of business
organization.
3. Which of the following statements is true?
A. Formation of a partnership requires legal documentation.
B. An individual engaged in the active conduct of a business must elect not to be
taxed as a partnership.
C. If two people (or business entities) work together to carry on any business or
financial operation with the intention of making a profit and sharing that profit as
co-owners, a partnership exists for federal income tax purposes.
D. The partnership form of business creates double-taxation because individual
partners are taxed, and the partnership is also taxed as a separate legal entity.
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BUSINESS ENVIRONMENT AND CONCEPTS


Section 2: Economic Concepts Essential to Obtaining an Understanding of an Entity's
Business and Industry
4. What effect would a decrease in interest rates by the Federal Reserve most likely
have in the nations manufacturing sector, all other factors remaining constant?
A. An increase in both production and employment
B. A decrease in both production and employment
C. An increase in production but a decrease in employment
D. A decrease in production, but an increase in employment

5. A table that shows the relationship between the price of a good and the quantity
demanded of that good is called
A. a price-quantity table
B. a complementary table
C. a demand schedule
D. an equilibrium schedule
6. If policymakers increase aggregate demand, the price level
A. falls, but unemployment rises
B. and unemployment fall
C. and unemployment rise
D. rises, but unemployment falls

BUSINESS ENVIRONMENT AND CONCEPTS


Section 3: Financial Management
7. Which table would show the largest factor for an interest rate of 8% for five
periods?
A. Future value of an ordinary annuity of 1
B. Present value of an ordinary annuity of 1
C. Future value of an annuity due of 1
D. Present value of an annuity due of 1
8. Financial service
A. is concerned with the duties of the financial manager
B. involves the design and delivery of advice and financial products
C. provides guidelines for the efficient operation of the business
D. handles accounting activities related to data processing
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9. As the interest rate increases for any given period, the future value interest factor
will
A. decrease

B. increase
C. remain unchanged
D. move toward 1
10. The specific cost of each source of long-term financing is based on ________ and
________ costs.
A. before-tax; historical
B. after-tax; historical
C. before-tax; book value
D. after-tax; current
11. At the operating break-even point, ________ equals zero.
A. sales revenue
B. fixed operating costs
C. variable operating costs
D. earnings before interest and taxes

BUSINESS ENVIRONMENT AND CONCEPTS


Section 4: Information Technology (IT) Implications in the Business Environment
12. Justifying expenditures for new technologies is especially difficult because
A. you do not know how many jobs will be affected
B. expenses are often recurring and are difficult to estimate
C. many benefits are intangible and are not easily known or measured
D. justifying a new technology is no different from any other capital budgeting
problem
13. The hardware of a computer system includes the computer itself and other
devices that help the computer perform its tasks. These other devices are
commonly also called
A. helper equipment
B. peripheral equipment
C. secondary equipment
D. accessory equipment

14. Software that enables businesses and government agencies to transmit and
manipulate financial data on an organization-wide basis best describes
A. communication software
B. CAD software
C. enterprise resource planning (ERP) software
D. programming software
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15. A simple diagram that shows estimated completion times versus actual
completion times for the various activities in a systems implementation project
A. an E-R diagram
B. a PERT chart
C. a Gantt chart
D. a Data flow diagram
16. What would be the best explanation for the absence of complete information on
computer crime?
A. Abuse is handled as an internal matter
B. Hesitant disclosure of abuse due to embarrassment
C. Documentation of abuses hasn't caught up with actual abuses
D. Most computer crime is not caught

BUSINESS ENVIRONMENT AND CONCEPTS


Section 5: Planning and Measurement
17. Which of the following processes would be accounted for using a job order cost
system?
A. Milk pasteurization
B. Town home production
C. Textbook production
D. Canned spinach production
18. In traditional costing systems, overhead is generally applied based on
A. direct labor

B. machine hours
C. direct material dollars
D. units of production
19. If standard costs are incorporated into the accounting system
A. it may simplify the costing of inventories and reduce clerical costs
B. it can eliminate the need for the budgeting process
C. the accounting system will produce information which is less relevant than the
historical cost accounting system
D. approval of the stockholders is required
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FINANCIAL ACCOUNTING AND REPORTING


Section 1: Concepts and standards for financial statements
20. Generally accepted accounting principles are
A. income tax regulations of the Internal Revenue Service.
B. standards that indicate how to report economic events.
C. theories that are based on physical laws of the universe.
D. principles that have been proven correct by academic researchers.
21. Luca Company overapplied manufacturing overhead during 2006. Which one of
the following is part of the year end entry to dispose of the overapplied amount
assuming the amount is material?
A. An increase to finished goods
B. A decrease to applied overhead
C. A decrease to work in process inventory
D. An increase to cost of goods sold
22. The cost to produce Part A was $10 per unit in 2005. During 2006, it has increased
to $11 per unit. In 2006, Supplier Company has offered to supply Part A for $9 per
unit. For the make-or-buy decision,
A. incremental revenues are $2 per unit
B. incremental costs are $1 per unit

C. net relevant costs are $1 per unit


D. differential costs are $2 per unit
23. Disneys variable costs are 30% of sales. The company is contemplating an
advertising campaign that will cost $22,000. If sales are expected to increase
$40,000, by how much will the company's net income increase?
A. $18,000
B. $28,000
C. $12,000
D. $6,000

FINANCIAL ACCOUNTING AND REPORTING


Section 2: Typical items in financial statements
24. Kershaw Bookstore had 600 units on hand at January 1, costing $18 each.
Purchases and sales during the month of January were as follows:
Date
Purchases Sales
Jan. 14
450
@$28
17
300
@$20
25
300
@$22
29
300
@$32
Kershaw does not maintain perpetual inventory records. According to a physical
count, 450 units were on hand at January 31. The cost of the inventory at January 31,
under the LIFO method is:
A. $1,200.
B. $8,100.
C. $9,300.
D. $9,600.
25. The process of formally recording or incorporating an item in the financial
statements of an entity is
A. allocation
B. articulation.
C. realization.
D. recognition.

26. The primary purpose of the statement of cash flows is to provide information
A. about the operating, investing, and financing activities of an entity during a
period.
B. that is useful in assessing cash flow prospects.
C. about the cash receipts and cash payments of an entity during a period.
D. about the entity's ability to meet its obligations, its ability to pay dividends, and
its needs for external financing.
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27. Which of the following is considered cash?
A. Travel Advances
B. Money market checking accounts
C. Money market savings certificates
D. Postdated checks
28. A company offers a cash rebate of $1 on each $4 package of batteries sold during
2007. Historically, 10% of customers mail in the rebate form. During 2007,
6,000,000 packages of batteries are sold, and 210,000 $1 rebates are mailed to
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?
A. $600,000; $600,000
B. $600,000; $390,000
C. $390,000; $390,000
D. $210,000; $390,000
29. Which of the following is a debt security?
A. Convertible bonds
B. Certificate of deposit
C. Loans receivable
D. US treasury bill

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:
(1) Newsprint had a $15,000 debit resulting from the restatement in dollars of the
accounts of its wholly owned foreign subsidiary for the year ended December 31, 2008.
(2) Newsprint had an account payable to an unrelated foreign supplier, payable in the
supplier's local currency unit (LCU) on January 15, 2009. The U.S. dollarequivalent of
the payable was $50,000 on the December 1, 2008, invoice date and $53,000 on
December 31, 2008.
In Newsprint's 2008 consolidated income statement, what amount should be included
as foreign exchange loss in computing net income, if the LCU is the functional currency
and the translation method is appropriate?
A. $28,000
B. $13,000
C. $25,000
D. $8,000

FINANCIAL ACCOUNTING AND REPORTING


Section 3: Specific types of transactions and events
31. Costs incurred internally to create intangibles are
A. capitalized.
B. capitalized if they have an indefinite life.
C. expensed as incurred.
D. expensed only if they have a limited life.
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32. The amount to be recorded as the cost of an asset under capital lease is equal to
the
A. present value of the minimum lease payments.
B. present value of the minimum lease payments or the fair value of the asset,
whichever is lower.

C. present value of the minimum lease payments plus the present value of any
unguaranteed residual value.
D. carrying value of the asset on the lessor's books.
33. In computations of weighted average of shares outstanding, when a stock
dividend or stock split occurs, the additional shares are
A. weighted by the number of days outstanding.
B. weighted by the number of months outstanding.
C. considered outstanding at the beginning of the year.
D. considered outstanding at the beginning of the earliest year reported.
34. Debt securities that are accounted for at amortized cost, NOT fair value, are
A. held-to-maturity debt securities.
B. trading debt securities.
C. available-for-sale debt securities.
D. never-sell debt securities.
35. 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?
A. $15,000
B. $14,000
C. $12,000
D. $13,000

FINANCIAL ACCOUNTING AND REPORTING


Section 4: Accounting and reporting for governmental entities
36. Which of the following objectives is considered the cornerstone of financial
reporting by a governmental entity?
A. Accountability

B. Budgetary compliance
C. Interperiod equity
D. Service efforts and accomplishments
37. Expenditures should be budgeted by character. An example of a character
classification is
A. current expenditures.
B. salaries
C. public safety.
D. police department.
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38. Which of the following funds is accounted for on the modified accrual basis of
accounting?
A. General
B. Internal service
C. Proprietary
D. Pension trust
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?
A. Difference between the present value of the bonds at the beginning of the period
and the present value of the bonds at the end of the period
B. Face amounts of bonds times 6%
C. Book value of bonds times 6%
D. The present value of the bonds at the beginning of the period minus the present
value of the bonds at the end of the period multiplied by 6%
40. As used in governmental accounting, interperiod equity refers to a concept of
A. providing the same level of services to citizens each year.
B. measuring whether current revenues are sufficient to pay for current services.
C. levying property taxes at the same rate each year.

D. requiring that general fund budgets be balanced each year.


41. 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)
A. primary government.
B. component unit.
C. related organization.
D. affiliated organization.

FINANCIAL ACCOUNTING AND REPORTING


Section 5: Accounting and reporting for nongovernmental and not-for-profit
organizations
42. Revenues of a not-for-profit organization should be reported as
A. increases in one of the three categories of net assets.
B. increases in unrestricted net assets.
C. increases in temporarily restricted net assets.
D. increases in permanently restricted net assets.
43. Financial statements for a church-supported college should be prepared according
to standards set by the
A. American Institute of Certified Public Accountants (AICPA).
B. Financial Accounting Standards Board (FASB).
C. Government Accounting Standards Board (GASB).
D. Securities and Exchange Commission (SEC).
44. For a not-for-profit hospital, which of the following financial statements is
required?
A. Statement of financial position
B. Statement of revenues
C. Statement of retained earnings
D. Statement of functional expenses

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REGULATION
Section 1: Ethics and Professional and Legal Responsibilities
45. What agency has the ultimate authority in defining independence for publicly
traded companies?
A. AICPA
B. SEC
C. Department of Justice
D. Congress
46. A report on internal control effectiveness by management of public companies is
required by which of the following:
A. The Sarbanes-Oxley Act of 2002
B. The PCAOB
C. The AICPA
D. Only auditors are required to report on internal control effectiveness
47. Once sufficient predication has been established, what is the first step a fraud
examiner following the fraud theory approach should take?
A. Create a hypothesis.
B. Analyze data.
C. Interview witnesses.
D. Interview the suspect.
48. Which of the following best describes the objective of a fraud examination?
A. Make recommendations to management about how to prevent fraud.
B. Determine whether financial statements are free of misstatements because of
fraud.
C. Express an opinion on the guilt or innocence of a suspect.
D. Determine whether a crime has been committed, and if so, who is responsible.

REGULATION

Section 2: Business Law


49. Damages intended to punish a defendant and deter the defendant and others
from engaging in the same tortious conduct in the future are called
A. penalty damages.
B. retribution damages.
C. punitive damages.
D. nominal damages.
50. Where a contract calls for action that violates a statute, in a breach of contract
case the court will
A. impose the appropriate criminal penalty.
B. ignore the contract and leave the parties where they are.
C. order both parties to return any consideration received.
D. order payments so that the parties to the illegal contract share any losses
equally.
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51. 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 breach of
contract. Will Ted prevail in his suit?
A. Yes, Ted made a valid modification to the parties original agreement.
B. No, Ted should have written a letter to change the type of boxes in the contract.
C. Yes, Ted will prevail because he has a witness to the telephone call.
D. No, Ted will not prevail because his attempt to modify the agreement was not
effective.

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?
A. Ruth will own the property with Bill as tenants by the entirety.
B. Ruth will own the property with Bill as joint tenants.
C. Bill will be the sole owner of the property.
D. Bill will have to buy out Ruths interest in the property.
53. Which of the following is a correct statement of the requirements for a bona fide
occupational qualification?
A. Job related and cost effective
B. Job related and nondiscriminatory
C. Job related and a business necessity
D. Rationally based and evenly applied
54. Which of the following statements accurately describes the workers
compensation rules?
A. The employer can avoid liability if the injured employee was contributory
negligent.
B. The employer is liable for employment-related injuries only if negligent.
C. The employee will collect for all work-related injuries and will not need to prove
negligence on the part of the employer.
D. The employee has the choice to sue or proceed under the workers compensation
statute.

REGULATION
Section 3: Federal Tax Procedures and Accounting Issues
55. When a company holds between 20% and 50% of the outstanding stock of an
investee, which of the following statements applies?
A. The investor should always use the equity method to account for its investment.
B. The investor should use the equity method to account for its investment unless
circumstances indicate that it is unable to exercise significant influence over the
investee.

C. The investor must use the fair-value method unless it can clearly demonstrate
the ability to exercise significant influence over the investee.
D. The investor should always use the fair-value method to account for its
investment.
56. On December 31, 2008, Kean Company changed its method of accounting for
inventory from weighted-average cost method to the FIFO method. This change
caused the 2008 beginning inventory to increase by $420,000. The cumulative
effect of this accounting change to be reported for the year ended December 31,
2008, assuming a 40% tax rate, is
A. $420,000.
B. $252,000.
C. $168,000.
D. $0.
57. Which of the following serves as the highest authority for tax research, planning,
and compliance activities?
A. Internal Revenue Code
B. Income Tax Regulations
C. Revenue rulings
D. Revenue procedure
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58. The retail inventory method is based on the assumption that the
A. final inventory and the total of goods available for sale contain the same
proportion of high-cost and low-cost ratio goods.
B. ratio of gross margin to sales is approximately the same each period.
C. ratio of cost to retail changes at a constant rate.
D. proportions of markups and markdowns to selling price are the same.
59. When an item of expense is paid and recorded in advance, it is normally called
A. a prepaid expense.
B. an accrued expense.
C. an estimated expense.

D. a cash expense.

REGULATION
Section 4: Federal Taxation of Property Transactions
60. Antonio owns land held for investment with a basis of $28,000. The city of
Lafayette exercises the right of eminent domain and Antonio receives a payment
of $48,000. What is Antonio's realized gain?
A. $0
B. $20,000
C. $28,000
D. $48,000
61. In April 2009 of this year, Emma acquired a machine for $50,000 for use in her
business. The machine is classified as 7-year property. Emma elects out of bonus
depreciation and does not expense the asset under Sec. 179. Emma's depreciation
on the machine this year is
A. $5,000.
B. $7,145.
C. $10,000.
D. $50,000.
62. During the current year, a corporation sells equipment for $300,000 that it had
purchased and placed in service in 2007. The equipment cost $270,000, and
$60,000 of depreciation deductions was allowed. The results of the sale are
A. ordinary income of $90,000.
B. Sec. 1231 gain of $90,000.
C. ordinary income of $60,000 and LTCG of $30,000.
D. ordinary income of $60,000 and Sec. 1231 gain of $30,000.
63. Susie owns a ranch in Wyoming, which Pat offers to purchase. Susie is not willing
to sell the ranch but is willing to exchange the ranch for an apartment complex in
Louisiana. The complex is available for sale. Pat purchases the apartment complex
in Louisiana from Jody and transfers it to Susie in exchange for Susie's ranch. The

ranch and the complex each have a $1,000,000 fair market value. Which of the
following is true?
A. The transaction qualifies as a like-kind exchange for Pat but not for Susie.
B. The transaction qualifies as a like-kind exchange for both Pat and Susie.
C. The transaction qualifies as a like-kind exchange for Susie but not for Pat.
D. The transaction does not qualify as a like-kind exchange for either Pat or Susie.

REGULATION
Section 5: Federal Taxation Individuals
64. A married person who files a separate return can claim a personal exemption for
his or her spouse if the spouse is not the dependent of another and has
A. gross income that is less than the personal exemption.
B. adjusted gross income that is less than the personal exemption.
C. no gross income.
D. no taxable income.
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65. Ricky has rented a house from Sarah since last year. The rent is usually $800 per
month, but Sarah reduced the monthly rent down to $600 for all 12 months this
year in exchange for Ricky constructing an addition to the house. The addition has
a fair market value of $3,500. How much total rental income must Sarah report
this year?
A. $7,200
B. $9,600
C. $10,700
D. $14,200
66. Alex is a calendar-year sole proprietor. He began business on December 1 of this
year. He uses the accrual method of accounting. Alex had the following collections
in the same month: He collected $7,000 in December from clients who paid cash
for services to be performed next year. He collected $5,000 in December for
services performed during December, which he deposited in an operating account
on December 31 of this year. He collected $9,000 in December on accounts

receivable for services performed in December, which he deposited in an


operating account on January 2 of next year. What is the amount Alex must
include in his income for December?
A. $7,000
B. $12,000
C. $14,000
D. $21,000
67. Bianca is beneficiary of an $80,000 insurance policy on her father's life. Upon his
death, she may elect to receive the proceeds in 5 yearly installments of $17,500 or
may take the $80,000 lump sum. She elects to take the lump sum payment. What
are the tax consequences in year one?
A. All $17,500 each year is taxable.
B. $7,500 interest is taxable in the first year.
C. There is no taxable income.
D. $1,500 of the $17,500 payment is taxable each year.
68. Nonrefundable tax credits
A. only offset a taxpayer's tax liability.
B. may only be used if the taxpayer is receiving a refund.
C. have expired but may be reinstated with new tax legislation.
D. allow the excess over the taxpayer's tax liability to be paid to the taxpayer.
69. Paul makes the following property transfers in the current year: $22,000 cash to
his wife, $34,000 cash to a qualified charity, $120,000 house to his son, and $3,000
computer to an unrelated friend. The total of Paul's taxable gifts, assuming he
does not elect gift splitting with his spouse, subject to the unified transfer tax, is
A. $107,000.
B. $123,000.
C. $145,000.
D. $179,000.

REGULATION
Section 6: Federal Taxation-Entities

70. Which of the following best describes the weight of a revenue ruling?
A. Revenue rulings carry more weight than regulations.
B. Revenue rulings carry more weight than federal court decisions.
C. Regulations carry more weight than revenue rulings.
D. Revenue rulings should never be used as authority because they only apply to the
taxpayer requesting the ruling.
71. Which of the following statements is true?
A. A corporation's fiscal year generally ends on the last day of the month.
B. A fiscal year may end on December 31.
C. A new corporation can elect a fiscal year that runs from February 16 to February
15 of the following year.
D. A corporation's first tax year must cover a full 12-month period.
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Answers
72. One consequence of a property distribution by a corporation to a shareholder is
A. the amount of the distribution is increased by any liability assumed by the
shareholder.
B. the holding period of the distributed property includes the holding period of the
distributing corporation.
C. the shareholder's basis in the distributed property is the same as the distributing
corporation's basis.
D. any liabilities assumed by the shareholder do not reduce the shareholder's basis.
73. Joshua owns 100% of Steeler Corporation's stock. Joshua's basis in the stock is
$8,000. Steeler Corporation has E&P of $40,000. If Steeler Corporation redeems
60% of Joshua's stock for $50,000, Joshua must report dividend income of
A. $0.
B. $8,000.
C. $40,000.
D. $50,000.
74. In computing the ordinary income of a partnership, a deduction is allowed for

A.
B.
C.
D.

net Sec. 1231 losses


bad debts
foreign income taxes paid
charitable contributions

75. Which of the following would terminate a Subchapter S election?


A. Estate becomes a shareholder.
B. Grantor trust becomes a shareholder.
C. Voting trust becomes a shareholder.
D. Partnership becomes a shareholder.

AUDITING AND ATTESTATION


Section 1: Plan the Engagement, Evaluate the Prospective Client and Engagement,
Decide Whether to Accept or Continue the Client and the Engagement, and Enter into
an Agreement with the Client
76. The function of auditing is
A. to locate every financial error
B. to provide interested parties with added assurance that the financials are not
materially inaccurate
C. to provide more precise accounting information for accurate tax reporting
D. to locate every dollar misappropriated
77. 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 datas accuracy
B. working independently, reach similar conclusions
C. working independently, prove, beyond doubt, the datas truthfulness
D. working together, agree on the datas accuracy
78. 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. Auditing, tax, and review services
C. Accounting, tax, and review services

D. Auditing, accounting, and tax services


79. Internal auditors are primarily involved with
A. compliance audits
B. operational audits
C. compliance audits and operational audits
D. financial statement audits
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80. 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 as
A. reasonable assurance
B. negligent performance
C. negative assurance
D. necessary ignorance
81. 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?
A. Complexity of calculations
B. Management turnover, reputation, and accounting skills
C. Susceptibility to misappropriation
D. Sensitivity of operating results to economic factors

AUDITING AND ATTESTATION


Section 2: Consider Internal Control in Both Manual and Computerized Environments
82. Specific audit objectives are normally
A. the same as the categories of managements financial statement assertions
B. developed for each item in the financial statements and derived from the
categories of managements financial statement assertions
C. managements assertion of fairness.

D. broken down into eight types.


83. The Committee of Sponsoring Organizations (COSO) report identified five
interrelated components of internal control. Since then, a sixth category has been
identified, which is
A. monitoring
B. risk assessment
C. information and communication
D. antifraud programs and controls
84. Which of the following necessary controls would address a potential
misstatement arising from a voucher being paid twice?
A. Periodic independent bank reconciliations
B. Electronic cancellation of vouchers and supporting information when a check is
issued
C. Separate duties for approving payment vouchers and signing checks
D. A computer comparing the sum of checks issued with the entry to cash
disbursements
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 the
A. rights and obligations assertion
B. presentation and disclosure assertion
C. valuation or allocation assertion
D. existence or occurrence assertion
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AUDITING AND ATTESTATION


Section 3: Obtain and Document Information to Form a Basis for Conclusions
86. One of the six steps involved in performing analytical procedures includes the
following:
A. Understand the role of analytical procedures in planning and performing the
audit.

B. Understand the relationship between materiality and audit evidence.


C. Analyze data and identify significant differences.
D. Perform the calculations using industry data.
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 that
A. they must be identical
B. the former may be higher or lower than the latter
C. the former is higher than the latter
D. the former is lower than the latter
88. Use of auditor judgment or of a risk matrix is necessary in revising planned
detection risk whenever
A. risk assessments are not quantified
B. assessed control risk at the account balance level does not support the planned
level of control risk
C. control risk is assessed above the minimum
D. control risk is assessed below the maximum
89. In the audit risk model, audit sampling applies to
A. detection risk
B. inherent risk and control risk
C. control risk and detection risk
D. inherent risk and detection risk
90. Audit sampling is involved whenever an auditor
A. examines 100% of the population
B. makes an inference about a population characteristic based on a partial
examination of that population
C. performs tests of controls
D. performs tests of details
91. How can long-term assets best be tested for ownership?
A. Examining documents of title
B. Reviewing the ledger to ensure the item is listed

C. Inquiring with management


D. Reviewing prior year workpapers
92. How can long-term assets best be tested for current present value?
A. Reviewing the depreciation schedule for accuracy and completeness
B. Physically examining the assets and appraising the assets
C. Applying time value of money analysis
D. Performing an analytical review
ACC 497 Final Exam answers tutorial here ACC 497 Final Exam

AUDITING AND ATTESTATION


Section 4: Review the Engagement to Provide Reasonable Assurance That Objectives
Are Achieved and Evaluate Information Obtained to Reach and to Document
Engagement Conclusions
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?
A. Purchase requisitions
B. Suppliers invoices
C. Receipted bank deposit slips
D. Cutoff bank statements
94. Which of the following accounts in a merchandising company is affected by both
the revenue cycle and another cycle?
A. Sales
B. Sales returns and allowances
C. Inventory
D. Accounts receivable
95. The auditors strategy in performing test counts during the inventory observation
is to
A. concentrate tests on high-dollar items and take a representative sample of other
items

B. test all high dollar items


C. randomly select all test items
D. concentrate tests in areas where employees seem to be disregarding the
inventory instructions
96. Which one of the following analytical procedures may indicate possible inventory
obsolescence problems when ratios are large?
A. Inventory turnover
B. Finished goods produced to raw material used
C. Inventory growth to cost of sales growth
D. Finished goods produced to direct labor
97. The control of all funds during the count of cash on hand is meant primarily to
prevent
A. transfers by the client
B. any chance of double counting
C. unauthorized disbursements
D. client personnel from viewing the count procedure
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AUDITING AND ATTESTATION


Section 5: Prepare Communications to Satisfy Engagement Objectives
98. Whether the entity maintains effective controls to provide reasonable assurance
that private customer information obtained because of e-commerce is protected is
defined as
A. transaction integrity
B. information protection
C. risk assessment
D. performance measurement
99. A lawyers refusal to respond to a letter of audit inquiry normally requires the
auditor to
A. issue a qualified opinion or a disclaimer of opinion

B. issue an unqualified opinion with an explanatory paragraph


C. issue a qualified or adverse opinion
D. issue a standard three-paragraph unqualified opinion
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ACC 497 Final Exam Assignment
100. Which of the following is a tort?
A. Breach of contract
B. A wrongful act that does not injure another persons property, body, or
reputation
C. Gross negligence
D. Unintentional error where appropriate degree of care was exercised and no one
was injured

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This article covers the topic for the University of Phoenix ACC 497 Final Exam. The
author is working in the field of education from last 5 years. This article covers the
questions & answers of ACC 497 Final Exam Assignment from UOP. Other topics in the
class are as follows:
ACC 497 Week 1 Complete
ACC 497 Week 1 DQ 1
ACC 497 Week 1 DQ 2
ACC 497 Week 1 DQ 3
ACC 497 Week 1 FASB Codification System Orientation Paper
ACC 497 Week 2 Case Study Assignment
ACC 497 Week 2 Complete
ACC 497 Week 2 DQ 1
ACC 497 Week 2 DQ 2
ACC 497 Week 2 DQ 3
ACC 497 Week 2 Financial Statements Paper Part 1
ACC 497 Week 3 Assignments From The Readings
ACC 497 Week 3 Assignments From the Readings (Learning Team)
ACC 497 Week 3 Case Study Assignment
ACC 497 Week 3 Complete

ACC 497 Week 3 DQ 1


ACC 497 Week 3 DQ 2
ACC 497 Week 3 Financial Statements Paper Part II
ACC 497 Week 4 Assignments From the Readings
ACC 497 Week 4 Assignments From the Readings (Learning Team)
ACC 497 Week 4 Complete
ACC 497 Week 4 DQ 1
ACC 497 Week 4 DQ 2
ACC 497 Week 5 Assignments from the Readings
ACC 497 Week 5 Case Study Assignment
ACC 497 Week 5 Complete
ACC 497 Week 5 DQ 1
ACC 497 Week 5 DQ 2

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