Multiple Choice Questions:

1. Which of the following best defines auditing?

a. Process of gathering and evaluating evidence about information to determine the degree of correspondence between the information and the standards used to prepare the information.

b. Process of gathering and evaluating evidence about information to determine the degree of correspondence between the information and the accuracy of the financial statements.

c. The process of gathering and evaluating evidence about information to determine the degree of correspondence between generally accepted accounting standards (GAAP) and the standards used to prepare the information.

d. None of the above.

2. The WorldCom case is an example of which of the following?

a. Best practices in auditing techniques.

b. Best practices according to generally accepted accounting principles (GAAP).

c. Normal level of embezzlement in the auditing environment.

d. None of the above.

3. Which of these best describes auditing?

a. Process of recording, classifying, and summarizing economic events in a manner that helps decision makers make decisions based on financial data that determines whether the financial data that have been recorded, classified, and summarized are reliable.

b. An important part of accounting.

c. Distinct from accounting.

d. None of the above.

4. Which of the following describes auditors?

a. Government watchdogs.

b. Eyes and ears of the SEC.

c. Facilitators of the movement of capital between investors and companies issuing stock or between lenders and borrowers.

d. None of the above.

5. Which of the following is not true regarding licensing of CPAs?

a. Licenses are issued at the state level.

b. Licenses are issued at the federal level.

c. Potential licensees must first pass the Uniform CPA examination.

d. None of the above.