SEC and IRS, Multiple Choices Questions, accounting homework help


42 Multiple Choices Questions – Please highlight the correct answer within an hour
Which of
the following are independent private-sector standard-setting bodies?
SEC and IRSNational Association of
State Boards of Accountancy and the American Accounting AssociationAICPA and IIAFASB and the Governmental Accounting
Standards Board2. When
providing audit services, the certified public accountant (CPA) is expected to
an advocate for the general
public.independent of the client.indifferent to the effect
of the financial statements and the audit advocate for the client.3. Public
Company Accounting Oversight Board (PCAOB) standards require the auditor to
evaluate the effectiveness of the audit committee as part of understanding the
control environment and monitoring. Which of the following is NOT a factor the
auditor should consider in making this evaluation?
Compensation practices with
respect to members of the audit committeeThe audit committee’s responsiveness
to issues raised by the auditorThe clarity with which the
audit committee’s responsibilities are articulatedThe independence of the audit committee from
management4. What
level of assurance does the reader of a private company financial statement
receive on the company’s system of internal controls?
NegativeNoneReasonablePositive5) Section
18 liability is relatively narrow in scope because it relates to a false or
misleading statement in documents filed with the
Internal Revenue Service
(IRS).FASB.American Institute of
Certified Public Accountants (AICPA).Securities and Exchanges Commission (SEC).6. The risk that the auditor may unknowingly fail to appropriately
modify his or her opinion on financial statements that are materially misstated
audit risk.control risk.tests of details risk.analytical procedures risk.7. Which of the following management
responsibilities is NOT established under PCAOB standards?
To perform cost-benefit
analysis with respect to internal controls relating to assertions having a
material effect on the financial statementsTo present a written
assessment of the effectiveness of the company’s internal control over
financial reporting as of the end of the company’s most recent fiscal yearTo evaluate the
effectiveness of the company’s internal control over financial reporting using
suitable criteriaTo accept responsibility for the
effectiveness of the company’s internal control over financial reporting8. The third phase of the audit involves
performing audit tests. The primary purpose of this step is to obtain evidence
about the
integrity of management.effectiveness of
management.effectiveness of the
internal control structure and fairness of the financial statements.effectiveness of the internal control
structure.9. Which
of the following assertions is NOT made by management in placing an item in the
financial statements?
Rights and obligationsPresentation and disclosureDirect controlsExistence or occurrence10. When evaluating the planned level of
substantive tests for each significant financial statement assertion, the
auditor will consider the evidence obtained from all of the following EXCEPT
assessing inherent risk.assessing detection risk.evidence of effectiveness
of computer control procedures and related follow-up.procedures to understand
the business and industry, and related completed analytical procedures.evidence about the effectiveness of internal
controls gained while obtaining an understanding of internal controls.11. Probability-proportional-to-size (PPS) sampling should NOT be used
the number of units in the
population is unknown at the start of values for sampling
units are not available.the variability of the
population is unknown.transactions and balances are tested for
overstatement.12. Specific audit objectives are normally
derived from the categories
of management’s financial statement assertions.the same as the categories
of management’s financial statement assertions.developed for each item in
the financial statements and derived from the categories of management’s
financial statement assertions.developed for each item in the financial
statements.13. When setting the level of materiality on a
particular engagement, the auditor must consider
both the unique
circumstances pertaining to the entity and the users’ information needs.the users’ information
needs.neither the unique
circumstances pertaining to the entity nor the users’ information needs.the unique circumstances pertaining to the
entity.14. The completeness assertion would be violated
unbilled shipments occurred
during the period.disclosure in the
statements of pledged receivables was inadequate.the allowance for doubtful
accounts was understated.fictitious sales transactions were included
in accounts receivable.15. The risk that a material misstatement that
could occur in an assertion will NOT be prevented or detected on a timely basis
by the entity’s internal controls is
audit risk.inherent risk.control risk.rejection risk.16. Before accepting an engagement, the auditor
should evaluate whether other conditions exist that raise questions as to the
prospective client’s auditability. Which of the following factors would be
least likely to cause concern about an entity’s auditability?
Important evidence
available only in electronic formRelated party transactionsLack of audit trailDisregard of responsibility to maintain
adequate internal controls17. In the audit risk model, audit sampling
applies to
detection risk.control risk and detection
risk.inherent risk and control
risk.inherent risk and detection risk.18. An inaccurate form of the audit risk model
would show that
detection risk may be
determined from audit risk, inherent risk, and control risk.increases in control risk
will cause decreases in detection risk.detection risk is inversely
related to inherent risk.detection risk is inversely
related to audit risk.audit risk is directly related to all other
risks in the model.19. There are several paragraphs in the auditor’s
standard report in internal control over financial reporting. Which paragraph
defines internal control over financial reporting?
Inherent limitationsDefinitionIntroductoryScope20. If reported sales for 2010 erroneously
include sales that occur in 2011, the assertion violated on the 2010 statements
would be
valuation or allocation.existence or occurrence.completeness.presentation and disclosure.21. Which of the following is NOT a
characteristic of management’s philosophy and operating style?
Conscientiousness and
conservatism in developing accounting estimatesMonitoring policies for
developing and modifying accounting systemsApproach to taking and
monitoring business risksIts attitudes and actions toward financial

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