K231-ind-ny - Accounting And Applications
Please complete the following self-assessment quiz - Test your own knowledge but if necessary please refer back to the training materials, manuals and/or other relevant resources to complete the questions
- 1.
A financial audit for a company is performed before the release of the financial statements on an annual basis; The Audit typically has 3 stages; select the correct order from one of the following statements below
- A.
Substantive Procedures, Management Letter, Planning & Risk Assesment
- B.
Planning & Risk Assessment, Management Letter, Substantive Procedures
- C.
Planning & Risk Assessment, Substantive Procedures, Management Letter
- D.
Substantive Procedures, Planning & Risk Assessment, Management Letter
Correct Answer
C. Planning & Risk Assessment, Substantive Procedures, Management LetterExplanation
The correct order for the stages of a financial audit is Planning & Risk Assessment, Substantive Procedures, Management Letter. First, the auditor conducts planning and risk assessment to understand the company's operations, identify potential risks, and plan the audit procedures. Then, they perform substantive procedures, which involve testing the financial transactions and account balances to ensure accuracy and completeness. Finally, the auditor prepares a management letter, which includes recommendations and suggestions for improving the company's financial controls and operations.Rate this question:
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- 2.
In an accounting sense a "Conflict of Interest" occurs when an organization has an interest in a firm that might compromise its actions. True or False?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
A conflict of interest in accounting refers to a situation where an organization has a vested interest in a firm that could potentially compromise its decision-making or actions. This means that the organization's actions may be influenced by its relationship with the firm, leading to biased or compromised decisions. Therefore, the statement that a conflict of interest occurs when an organization has an interest in a firm that might compromise its actions is true.Rate this question:
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- 3.
IBISWorld provides a total industry solution supporting the accounting firm across its service lines and support functions; which of the following statements are true in relation to how IBISWorld helps Accounting firms?
- A.
Increase revenue by identifying revenue opportunities by understanding the the client's industry issues before the client
- B.
Identify and reduce risk by understanding the challenges faced by their clients
- C.
Improve focus & productivity by increasing billable hours by reducing research time
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
IBISWorld helps accounting firms by increasing revenue through identifying revenue opportunities and understanding client's industry issues before the client. It also helps in reducing risk by understanding the challenges faced by clients. Additionally, it improves focus and productivity by reducing research time and increasing billable hours.Rate this question:
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- 4.
If you are talking to the Head of Audit in an Accounting firm for the purpose of attempting to uncover their problems and needs, which of the following questions would be the least appropriate to ask?
- A.
How much time do you spend searching the internet to gather industry information for the audit planning and assessment stage?
- B.
How important is it that you have an independent evaluation of your client’s industry conditions, risks and outlook?
- C.
Your clients are affected by things they can’t control, like up- and down- stream markets, key external drivers or the business environment. How do you identify these?
- D.
How many valuations do you do per year?
Correct Answer
D. How many valuations do you do per year?Explanation
The question "How many valuations do you do per year?" would be the least appropriate to ask because it does not pertain to uncovering the problems and needs of the Head of Audit in an Accounting firm. It focuses on a specific task rather than addressing broader issues related to the audit process, industry information gathering, independent evaluation, and identifying external drivers.Rate this question:
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- 5.
Which of the following position types do we target when prospecting Accounting firms (there is more than one answer)
- A.
Head of Business Development
- B.
Head of Audit
- C.
Library Manager
- D.
Head of Consulting
- E.
Head of Corporate Finance
- F.
Partners
- G.
Chief Marketing Officer
Correct Answer(s)
A. Head of Business Development
B. Head of Audit
C. Library Manager
D. Head of Consulting
E. Head of Corporate Finance
F. Partners
G. Chief Marketing OfficerExplanation
The correct answer is Head of Business Development, Head of Audit, Library Manager, Head of Consulting, Head of Corporate Finance, Partners, and Chief Marketing Officer. These positions are targeted when prospecting Accounting firms because they are decision-makers or influencers within the organization. The Head of Business Development is responsible for identifying new business opportunities, the Head of Audit oversees the auditing process, the Library Manager manages the firm's knowledge resources, the Head of Consulting provides consulting services, the Head of Corporate Finance handles financial matters, Partners are key decision-makers, and the Chief Marketing Officer is responsible for marketing strategies and initiatives.Rate this question:
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- 6.
Sarbannes-Oxley is a regulation aimed at increasing financial reporting standards for listed companies. True or False?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Sarbannes-Oxley was enacted in 2002Rate this question:
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- 7.
Business Valuation services are needed when a client is undergoing a merger, an acquisition or conducting a strategic review. How many of the 14 factors in a typical business valuation model can IBISWorld help with?
- A.
14
- B.
6
- C.
10
- D.
2
Correct Answer
B. 6Explanation
IBISWorld can help with 6 out of the 14 factors in a typical business valuation model. This suggests that while IBISWorld can provide valuable information and insights for clients undergoing a merger, acquisition, or strategic review, it may not cover all aspects of the business valuation process.Rate this question:
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- 8.
The Sarbanes-Oxley legislation allows external Auditors to also provide the same client with non-audit services (such as consulting)?
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Sarbanes-Oxley establishes standards for external auditor independence, to limit conflicts of interest and therefore restricts auditing firms from providing non-audit services for the same clients.Rate this question:
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- 9.
Select the 4 accounting firms that constitute the BIG 4 from the following?
- A.
PWC
- B.
EY
- C.
BDO
- D.
KPMG
- E.
Deloitte
- F.
Grant Thornton
Correct Answer(s)
A. PWC
B. EY
D. KPMG
E. DeloitteExplanation
The BIG 4 accounting firms are PWC, EY, KPMG, and Deloitte. These firms are considered the top accounting firms globally, known for their extensive networks, large client bases, and diverse range of services. They have a strong reputation for providing high-quality audit, tax, and advisory services to multinational corporations, governments, and organizations worldwide. These firms are often sought after by clients for their expertise, industry knowledge, and global reach, making them the most prominent players in the accounting profession.Rate this question:
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- 10.
Transfer pricing is the setting of the price for goods and services sold between controlled (or related) legal entities within an enterprise. True or False?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Transfer pricing refers to the practice of determining the price at which goods and services are exchanged between affiliated companies within the same organization. This is done to ensure that these transactions are conducted at fair market value, as if they were taking place between unrelated entities. Therefore, the statement that transfer pricing involves setting prices for transactions between controlled legal entities within an enterprise is true.Rate this question:
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- 11.
A 'going concern' judgement in accounting refers to a company’s ability to continue functioning as a business entity over the coming 12 months. Which two of the following sections of an IBISWorld report are least likely to be used by an Auditor to assess a 'going concern' judgement
- A.
Key Sensitivities
- B.
Number of establishments
- C.
5 year outlook
- D.
Risk rating score
- E.
Industry revenue for current year
- F.
Changing Levels and Trends
Correct Answer(s)
B. Number of establishments
E. Industry revenue for current yearExplanation
An auditor assessing a 'going concern' judgment would be more concerned with the future prospects and sustainability of the company rather than its current state. The number of establishments and industry revenue for the current year are both backward-looking measures that do not provide insights into the company's ability to continue operating in the future. Therefore, these sections of an IBISWorld report are least likely to be used by an auditor to assess a 'going concern' judgment.Rate this question:
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- 12.
Fill in the blank - Changing industry and industry risk conditions provide Accounting firms with increased opportunities for work. IBISWorld's industry reports show the level and trend of _ _ key operating factors.
Correct Answer(s)
12Explanation
IBISWorld's industry reports show the level and trend of 12 key operating factors.Rate this question:
- 13.
Changing industry trends explain why a company might hire an external consultant to help transform the business. True or False?
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Changing industry trends can have a significant impact on a company's business operations. These trends may include technological advancements, shifts in consumer preferences, or new market opportunities. To adapt to these changes effectively, a company may hire an external consultant who possesses specialized knowledge and expertise in the industry. This consultant can provide valuable insights, offer strategic guidance, and assist in implementing necessary transformations to ensure the company remains competitive and successful in the evolving market. Therefore, it is true that changing industry trends can explain why a company might hire an external consultant to help transform the business.Rate this question:
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Current Version
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Mar 20, 2023Quiz Edited by
ProProfs Editorial Team -
Oct 27, 2015Quiz Created by
Damian Mills
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