1.Documentation of an internal control system

All of the above are correct statements

Can employ either narrative descriptions, flowcharts or questionnaires (ICQ's)

Is a required step by the auditor before testing the system

Benefits both the firm being audited and the auditor

Should list all inputs, processes and outputs to the system

2.ASPE means

None of the other alternatives are correct

Auditing for Small and Private Entities

Accounting for Small Private Enterprises

Auditing for Syndicated Petroleum Enterprises

Accounting for Syndicated Petroleum Entities

3.The following definition pertains to which desirable attribute of financial statements: Users must be able to (a) distinguish between real changes in economic performance and artificial changes attributable solely to changes in accounting policy, and (b) adjust for differences in performance between firms that are attributable to the employment of different accounting policies.

relevance

timeliness

None of the other alternatives are correct

objectivity

reliability

4.Which of the following is a good example of a preventive control?

All the other alternatives are good preventive controls

Segregating the duties of approving transactions and recording transactions

Approvals of purchase orders

Keeping cash locked in a safe

Supervisory review of payroll before payroll cheques are distributed at month-end

5.A large department store allows customers to open accounts and make credit purchases. There are 5,000 customer accounts. To collect evidence as part of the audit of Accounts Receivable, an auditor of the department store might write to a sample of the customers asking them to confirm their account balances. Such a confirmation process is designed to test management's assertions of

matching

timeliness

ownership and valuation

None of the other alternatives are correct

going-concern

6.The following definition pertains to which accounting principle or convention: assets are recorded and subsequently reported at their acquisition prices.

None of the other alternatives are correct

Monetary unit

Going concern

Matching

Materiality

7.You are interviewing for the position of Manager of Accounting for a medium-sized import/export business. The owner of the business explains that the present Manager of Accounting's salary is not fixed but instead is based on the business's profits. The owner explains this practice is consistent with the way the managers of all departments in the business are paid. You observe that continuing such an arrangement is likely to

violate matching

be illegal

None of the other alternatives are correct

align managers' interests with the owner's and ensure the most accurate financial reporting

increase the risk of reported earnings not presenting fairly the results of operations

8.The following definition pertains to which accounting principle or convention: the underlying costs of generating a revenue stream are in the same income statement as the revenue stream.

Business entity

Historical cost

Going concern

None of the other alternatives are correct

Objectivity

9.The following definition pertains to which accounting principle or convention: an individual accounting unit is separate and distinct from other economic activities and the personal affairs of the owners.

Matching

Going concern

None of the other alternatives are correct

Monetary unit

Materiality

10.The following definition pertains to which desirable attribute of financial statements: Objectivity, called neutrality by some theorists, is closely related to reliability. The information presented in the financial statements should be neutral (free of bias - should not favour one set of stakeholders over another) an attribute difficult to achieve without an independent audit since financial statements, prepared by management, represent a report card on the success of management activities.

relevance

None of the other alternatives are correct

reliability

timeliness

objectivity