Question 1

1 / 1 pts
Although the CPA does not guarantee his findings, his opinion is nevertheless valuable
to various 3rd parties.  The value of the CPA's opinion lies in the fact that

  
He has followed generally accepted auditing standards.
 

  
He has the qualifications required by law to be a CPA.
 

  
He is under the supervision by the Board of Accountancy.
 
Correct!
  
He has gathered sufficient appropriate evidential matter to support his opinion.
 
 
Question 2
1 / 1 pts
Independent auditors of financial statements perform audits that reduce and control -
Correct!
  
Information risk faced by investors
 

  
Timeliness of financial statements.
 

  
Complexity of financial statements
 

  
Business risk faced by investors
 
 
Question 3
1 / 1 pts
Given the following statements:
Statement 1:  An audit  in accordance with PSAs is designed to provide reasonable
assurance that the financial statements taken as a whole are free from material
                              misstatements.
Statement 2:  The auditor should not represent compliance with PSAs unless he/she
has complied  with all the PSAs relevant to an audit.

  
Both statements are false
 

  
Only Statement 2 is true.
 
Correct!
  
Both statements are true
 

  
Only statement 1 is true
 
 
Question 4
1 / 1 pts
The adequacy of disclosures in the financial statements and footnotes is the primary
responsibility of the:

  
Staff member who drafted the statements
 

  
Auditor in charge of the field work.
 
Correct!
  
Client
 

  
partner assigned to engagement
 
 
Question 5
1 / 1 pts
The standard setters use the following format for auditing standards EXCEPT

  
Application and Other Explanatory Material
 
Correct!
  
opinion formulation process
 

  
Requirements
 

  
Objectives
 
 
Question 6
1 / 1 pts
Which of the following statements is false?
Correct!
  
The purpose of an audit is to enhance the degree of confidence that managers can
place in the financial statements, thereby, facilitating their decision making.
 

  
Auditors are responsible for having the appropriate competence and capabilities to
perform the audit, should comply with ethical requirements, amaintain professional
skepticism throughout the audit.
 

  
The auditor needs to obtain reasonable assurance as to whether the financial
statements arte free from material misstatements.
 
   
An audit has inherent limitations such that the auditor is not able to obtain absolute
assurance about whether the financial statements are free from misstatements.
 
 
Question 7
1 / 1 pts
Which of the following statements is true about the audit opinion formulation process
presented in this chapter?
 

  
The audit opinion formulation process in different for the financial statement only audit
and the integrated audit.
 

  
The audit opinion formulation process is comprised of seven phases.
 

  
All of the above are true statements regarding the audit opinion formulation process.
 
Correct!
  
The audit opinion formulation process is based on the premise that management has
responsibility to prepare the financial statements and maintain internal control over
financial reporting.
 
 
Question 8
1 / 1 pts
Which of the following activities is not part of the activities within the audit opinion
formulation process?

  
The auditor identifies and assesses risks of material misstatements and then responds
to those identified risks.
 
Correct!
  
The auditor determines the appropriate non-audit consulting services to provide to the
client.
 

  
The auditor develops a common understanding of the audiot engagement with the
client.
 

  
The auditor determines the appropriate audit opinion(s) to issue.
 
 
Question 9
1 / 1 pts
Which of the following accounts would not be included in the Acquisition and Payment
for Long-Lived Assets Cycle?

  
Gain on disposal
 

  
Equipment
 

  
Depreciation expense
 
Correct!
  
Revenue
 
 
Question 10
1 / 1 pts
In which of the following scenarios is the auditor most likely to obtain more (or more
rigorous) substantive evidence?
Correct!
  
When the design of internal controls is determined to be ineffective.
 
   
When the account is immaterial.
 

  
When subjectivity related to the assertion is low.
 

  
when controls ae determined to be operating effectively.,
 
 
Question 11
0 / 1 pts
Which of the following is a reason that the auditor uses an accounting cycle approach
when performing an audit?

  
COSO internal control components are based on the accounting cycles.
 

  
The accounting cycle approach allows the auditor to focus exclusively on either the
balance sheet or the income statement.
 

  
The auditor needs to be able to provide an opinion related to each accounting cycle.
 
You Answered
  
The accounting cycles provide a convenient way to break the audit up into manageable
pieces
 
 
Question 12
1 / 1 pts
In the acquisition and Payments for Inventory, Goods, and Services, which of the
following is not one of the related accounts where material misstatements can occur?
Correct!
  
Accounts Receivable
 

  
Inventory
 

  
Cash
 

  
Expenses
 
 
Question 13
1 / 1 pts
Given the following statements:
Statement 1:  Assertions about completeness address whether all transactions and
accounts recorded in the financial statements have occurred during the period.
Statement 2:  Assertions about rights address whether recorded assets are the rights of
the organization.

  
Statement 1 is True
 

  
Both statement s are false.
 

  
Both statements are truye.
 
Correct!
  
Statement 1 is False.
 
 
Question 14
1 / 1 pts
Which of the following is not a management assertion?
Correct!
   
Placement
 

  
Rights and obligation
 

  
Valuation
 

  
Existence
 
 
Question 15
1 / 1 pts
What actions should auditors take if they identify control deficiencies at their client?
 

  
Determine whether and how the preliminary control risk assessment should be
modified.
 
Correct!
  
Actions (a), (b), and (c) are all appropriate
 

  
Assess the severity of those deficiencies.
 

  
Provide documentation about the effect of the control risk assessment on modifications
to substantive procedures.