Multiple-Choice Questions

1. The objective of the ordinary examination by the independent auditor is the expression of an
opinion on
easy

a a. the fairness of the financial statements.

b. the accuracy of the financial statements.

c. the accuracy of the annual report.

d. the balance sheet and income statement.

2. Auditors accumulate evidence to

easy a. defend themselves in the event of a lawsuit.

d b. justify the conclusions they have otherwise reached.

c. satisfy the requirements of the Securities Acts of 1933 and 1934.

d. enable them to reach conclusions about the fairness of the financial statements and issue an
appropriate audit report.

3. The factor which distinguishes an error from fraud is

easy a. materiality.

b b. intent.

c. whether it is a dollar amount or a process.

d. whether it is a caused by the auditor or the client.

4. Which of the following is not one of the reasons that auditors provide reasonable, but not absolute
assurance on the financial statements?
easy

d a. The auditor commonly examines a sample, rather than the entire population of transactions.

b. Accounting presentations contain complex estimates which inherently involve uncertainty.

c. Fraudulently prepared financial statements are often difficult to detect.