Auditing Theory

10 Questions | Total Attempts: 651

SettingsSettingsSettings
Please wait...
Audit Theory Quizzes & Trivia

Questions and Answers
  • 1. 
    Which organizations operate to enforce ethical conduct among certified public accountants?
    • A. 

      The SEC and state boards of accountancy.

    • B. 

      The AICPA, state societies of CPAs, and state boards of accountancy.

    • C. 

      The AICPA, state societies of CPAs, and the SEC.

    • D. 

      The National Association of State Boards of Accountancy.

  • 2. 
    Which of the following is prohibited by the AICPA Code of Professional Conduct? 
    • A. 

      A firm that designates itself “Members of the AICPA” when one partner has been expelled from the AICPA.

    • B. 

      Practice of public accounting in the form of a professional corporation.

    • C. 

      Use of the partnership name for a limited period by one of the partners in a public accounting firm after the death or withdrawal of all other partners.

    • D. 

      Holding as an investment 10 of 1,000 outstanding shares in a commercial corporation that performs bookkeeping services.

  • 3. 
    In a governmental financial audit, the auditor is required to test an entity's compliance with applicable laws and regulations and to prepare a written report that provides all of the following except
    • A. 

      Positive assurance on items tested.

    • B. 

      . Negative assurance on items not tested.

    • C. 

      A description of material instances of noncompliance for items tested.

    • D. 

      . A description of the entity's performance on major financial assistance programs.

  • 4. 
    In assessing sampling risk, the risk of incorrect rejection and the risk of assessing control risk too                         high relate to the 
    • A. 

      Efficiency of the audit.

    • B. 

      Effectiveness of the audit.

    • C. 

      Selection of the sample.

    • D. 

      Audit quality controls.

  • 5. 
    In a variables sampling plan, an auditor must generally consider each of the following except
    • A. 

      Variation within the population.

    • B. 

      Acceptable risk of incorrect acceptance.

    • C. 

      Tolerable error.

    • D. 

      Population size.

  • 6. 
    When an auditor selects a sample of items from the vouchers payable register for the last month of the period audited and traces the items to underlying documents, the auditor is gathering evidence primarily in support of the assertion that
    • A. 

      . Recorded obligations were paid.

    • B. 

      Incurred obligations were recorded in the correct period.

    • C. 

      . Recorded obligations were valid.

    • D. 

      Cash disbursements were recorded as incurred obligations.

  • 7. 
          To improve control over merchandise purchases, a company's receiving department should
    • A. 

      Accept merchandise only if an approved purchase order is on hand.

    • B. 

      . Accept and count all merchandise received from known vendors.

    • C. 

      Rely on shipping documents to prepare receiving reports.

    • D. 

      Be responsible for handling merchandise but not for preparing receiving reports.

  • 8. 
    Client strategy templates provide a means for an auditor to 
    • A. 

      . Acquire, evaluate, and document evidence

    • B. 

      Focus on transactions likely to affect audit risk.

    • C. 

      Compile the strategies and characteristics of an entity.

    • D. 

      Distinguish between engagement risk and audit risk.

  • 9. 
    Which of the following incorrectly matches the authoritative body with its authoritative pronouncements?
    • A. 

      Accounting and Review Services Committee: "Statements on Standards for Accounting and Review Services"

    • B. 

      Auditing Standards Board: "Statements on Auditing Standards"

    • C. 

      Auditing Standards Executive Committee: "Statements on Auditing Procedure"

    • D. 

      . Securities and Exchange Commission: "Financial Reporting Releases"

  • 10. 
    Due professional care requires
    • A. 

      A critical review of the work done at every level of supervision.

    • B. 

      The examination of all corroborating evidence available.

    • C. 

      The exercise of error-free judgment.

    • D. 

      A consideration of internal control structure that includes tests of controls.

Back to Top Back to top