Download (ACC 235 Chapter 1) Flashcard

Choose a format below:

TEXT Format (.txt) MS-Excel Format (.xls)

Select delimiter » Comma Semicolon Tab New Line Custom

Preview »

Side A ------ Side B
An
assurance engagement would include ------ -Giving
an opinion on a prize promoter’s claim about the amount of sweepstakes prizes
awarded in the past-Giving
an opinion on the conformity of the financial statements of a university with generally
accepted accounting principles-Giving
an opinion on the fair presentation of a newspaper’s circulation data-
 A
determination of cost savings obtained by outsourcing cafeteria services is
most likely to be an objective of  ------ operational
auditing
The
primary difference between operational auditing and financial auditing is that
in operation auditing ------ the
operational auditor is seeking to help management use resources in the most
effective manner possible
According
to the AICPA, the purpose of an audit of financial statements is to  ------ enhance
the degree of confidence that intended users can place in the financial
statements
Bankers
who are processing loan applications from companies seeking large loans will
probably ask for financial statements audited by an independent CPA because  ------ 

they generally see a potential conflict of interest between
company managers who want to get loans and the bank’s needs for reliable
financial statements


The
Sarbanes-Oxley Act of 2002 prohibits public accounting firms from providing the
following services to an audit client: ------ -Bookkeeping
services-Internal
audit services-Valuation
services
Independent
auditors of financial statements perform audits that reduce  ------ 

information risk faced by investors


The
primary objective of compliance auditing is to  ------ 

determine whether auditee personnel are following laws,
rules, regulations, and policies


These
requirements are usually necessary to become licensed as a certified public
accountant ------ 

-Successful completion of the Uniform CPA
Examination-
The
objective in an auditor’s review of credit rating of a client’s customers is to
obtain evidence related to management’s assertion about  ------ valuation
and allocation
Someone
verbally asserting that all expenses for the year have been recorded in the
accounts is ------ not
considered a sufficient basis for a CPA to conclude that all expenses have been
recorded
The
risk to investors that a company’s financial statements may be materially
misleading is called  ------ information
risk
When
auditing merchandise inventory at year-end, the auditor performs audit
procedures to ensure that all goods purchased before year-end are received
before the physical inventory count. This audit procedure provides assurance
about the  ------ cutoff
management assertion
When
auditing merchandise inventory at year-end, the auditor performs audit
procedures to obtain evidence that no goods held on consignment are included in
the client’s ending inventory balance. This audit procedure provides assurance
about the  ------ rights
and obligation management assertion
When
an auditor reviews additions to the equipment (fixed asset) account to make
sure that repair and maintenance expenses are not understated, she wants to
obtain evidence as to management’s assertion regarding  ------ existence
The
Sarbanes-Oxley Act of 2002 generally prohibits public accounting firms from: ------ -acting
in a managerial decision-making role for an audit client

-auditing the firm’s own work on an audit client

-providing
tax consulting to an audit client without audit committee approval
Substantial
equivalency refers to  ------ 

permitting a CPA to practice in another state without having
to obtain a license in that state


Reasons
to obtain professional certification ------ 



-
Attest engagement ------ Providing
an opinion on subject matter or an assertion about the subject matter that is
the responsibility of another party
Attestation ------ The
lending of credibility to assertions made by a third party
Auditing ------ A
systematic process of objectively obtaining and evaluating evidence regarding
assertions about economic actions and events to ascertain the degree of
correspondence between the assertions and established criteria and
communicating the results to interested users
Business Risk ------ The
probability an entity will fail to meet its objectives and, ultimately, fail
Cutoff (or cutoff date) ------ Refers
to a date, normally the client’s year-end balance sheet date, around which
transactions should be recorded in the proper period (year).
Financial reporting ------ Broad
based process of providing statements of financial position (balance sheets),
results of operations (income statements, statements of shareholders’ equity,
and statements of comprehensive income), changes in cash flows, statements of
cash flows), and accompanying disclosures (footnotes) to outside decision who
have no internal source of information
Information risk ------ 

The probability that the information circulated by a company
will be false or misleading


Internal auditing ------ An
assurance and consulting activity that provides management with information
regarding efficient and effective operations; compliance with laws,
regulations, policies, and procedures; and other organizational performance
issues designed to reduce risk and add value to the organization
Operational auditing ------ 

The study of business operations for the purpose of making
recommendations about the efficient use of resources, effective achievement of
business objectives, and compliance with company policies


Professional Skepticism ------ 

An auditor’s tendency not
to believe management’s assertions without sufficient corroboration


Substantial Equivalency ------ 

The process through which CPAs licensed in one state can
practice in another state

Side A ------ Side B
An
assurance engagement would include ------ -Giving
an opinion on a prize promoter’s claim about the amount of sweepstakes prizes
awarded in the past-Giving
an opinion on the conformity of the financial statements of a university with generally
accepted accounting principles-Giving
an opinion on the fair presentation of a newspaper’s circulation data-
 A
determination of cost savings obtained by outsourcing cafeteria services is
most likely to be an objective of  ------ operational
auditing
The
primary difference between operational auditing and financial auditing is that
in operation auditing ------ the
operational auditor is seeking to help management use resources in the most
effective manner possible
According
to the AICPA, the purpose of an audit of financial statements is to  ------ enhance
the degree of confidence that intended users can place in the financial
statements
Bankers
who are processing loan applications from companies seeking large loans will
probably ask for financial statements audited by an independent CPA because  ------

they generally see a potential conflict of interest between
company managers who want to get loans and the bank’s needs for reliable
financial statements

The
Sarbanes-Oxley Act of 2002 prohibits public accounting firms from providing the
following services to an audit client: ------ -Bookkeeping
services-Internal
audit services-Valuation
services
Independent
auditors of financial statements perform audits that reduce  ------

information risk faced by investors

The
primary objective of compliance auditing is to  ------

determine whether auditee personnel are following laws,
rules, regulations, and policies

These
requirements are usually necessary to become licensed as a certified public
accountant ------

-Successful completion of the Uniform CPA
Examination-
The
objective in an auditor’s review of credit rating of a client’s customers is to
obtain evidence related to management’s assertion about  ------ valuation
and allocation
Someone
verbally asserting that all expenses for the year have been recorded in the
accounts is ------ not
considered a sufficient basis for a CPA to conclude that all expenses have been
recorded
The
risk to investors that a company’s financial statements may be materially
misleading is called  ------ information
risk
When
auditing merchandise inventory at year-end, the auditor performs audit
procedures to ensure that all goods purchased before year-end are received
before the physical inventory count. This audit procedure provides assurance
about the  ------ cutoff
management assertion
When
auditing merchandise inventory at year-end, the auditor performs audit
procedures to obtain evidence that no goods held on consignment are included in
the client’s ending inventory balance. This audit procedure provides assurance
about the  ------ rights
and obligation management assertion
When
an auditor reviews additions to the equipment (fixed asset) account to make
sure that repair and maintenance expenses are not understated, she wants to
obtain evidence as to management’s assertion regarding  ------ existence
The
Sarbanes-Oxley Act of 2002 generally prohibits public accounting firms from: ------ -acting
in a managerial decision-making role for an audit client

-auditing the firm’s own work on an audit client

-providing
tax consulting to an audit client without audit committee approval
Substantial
equivalency refers to  ------

permitting a CPA to practice in another state without having
to obtain a license in that state

Reasons
to obtain professional certification ------

-
Attest engagement ------ Providing
an opinion on subject matter or an assertion about the subject matter that is
the responsibility of another party
Attestation ------ The
lending of credibility to assertions made by a third party
Auditing ------ A
systematic process of objectively obtaining and evaluating evidence regarding
assertions about economic actions and events to ascertain the degree of
correspondence between the assertions and established criteria and
communicating the results to interested users
Business Risk ------ The
probability an entity will fail to meet its objectives and, ultimately, fail
Cutoff (or cutoff date) ------ Refers
to a date, normally the client’s year-end balance sheet date, around which
transactions should be recorded in the proper period (year).
Financial reporting ------ Broad
based process of providing statements of financial position (balance sheets),
results of operations (income statements, statements of shareholders’ equity,
and statements of comprehensive income), changes in cash flows, statements of
cash flows), and accompanying disclosures (footnotes) to outside decision who
have no internal source of information
Information risk ------

The probability that the information circulated by a company
will be false or misleading

Internal auditing ------ An
assurance and consulting activity that provides management with information
regarding efficient and effective operations; compliance with laws,
regulations, policies, and procedures; and other organizational performance
issues designed to reduce risk and add value to the organization
Operational auditing ------

The study of business operations for the purpose of making
recommendations about the efficient use of resources, effective achievement of
business objectives, and compliance with company policies

Professional Skepticism ------

An auditor’s tendency not
to believe management’s assertions without sufficient corroboration

Substantial Equivalency ------

The process through which CPAs licensed in one state can
practice in another state