Plz answer questions, highlight in red, and at least 93% correct, otherwise answer will be deny!!! plz really carefully working in it!!!!!!!!! plz!!!!!!!!! if you cannot make that correct, don't take it.

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Question 1 of 45 Appropriateness of evidence is a measure of ______________. Quality of evidence. None of these answers are correct. Quantity of evidence. Meaning of evidence. Sufficiency of evidence. Question 2 of 45 Select all of the following statements that are true. (There are multiple correct answers and you must select all statements that are true) It is true that the most difficult decisions about which opinion to issue are generally centered around decisions based on the materiality level and pervasiveness of GAAP violations, the significance of scope limitations, and the likelihood of the entity being a going concern. Internal auditors perform operational audits. External auditors are typically responsible for performing information systems and security audits. It is true that the auditor is only concerned about the aggregate internal control deficiencies when determining the appropriate opinion on internal control over financial reporting (ICFR). The primary client of the internal audit department is management and the audit committee of the Board of Directors. Question 3 of 45 If ______________________, the CPA would still be considered independent. The CPA would not be considered independent in any of these situations. A CPA's cousin works as a web-site designer at the audit client. A CPA's brother is the Vice-President of Sales at the CPA's audit client. A CPA's son works summers at the audit client and has earned 10 shares of stock in the audit client. A CPA's father was a salesman at the CPA's audit client and now a major portion of the father's pension fund is invested in the audit client. Question 4 of 45 Jonathan Davis, CPA takes out an automobile loan with Silicon Valley Bank (SVB) of San Jose while attending the Silicon Valley University in San Jose. Jonathan graduates one year later and is hired as an auditor by Better Accountants, LLP. His first assigned audit engagement is with SVB, a client of Better Accountants. As a new audit assistant, Jonathan continues to pay his automobile loan payments each month. According to the AICPA, why is Jonathan considered a covered member for SVB independence purposes? He has a direct financial interest in SVB. He graduated in the same area as the client is operating. He will be working on the engagement. He has an immaterial direct financial interest in SVB. None of these answers are correct. Question 5 of 45 Which of the following is typically a purpose for performing analytical procedures at the end of an audit? None of these answers are correct. To ask "hard questions" about the company's results and its relationship to external factors. To provide the client with a value added service in conjunction with audit activities. To increase the amount of items reported in the management letter. To document planning in accordance with GAAS. Question 6 of 45 _________________ is an example of inspection of documentation? Observe controls. Review shipping documents. None of these answers are correct. Estimate the expected amount of interest income. Recalculate the total amount include on a sales invoice Question 7 of 45 ______________ is the audit report referred to when the auditor has no reservations about management's financial statements. An integrated report An adverse report An unqualified report A peer review A qualified report Question 8 of 45 Select all of the following statements that are true. (There are multiple correct answers and you must select all that are true) Audits of Level 3 assets are the most straightforward as they involve an observable, active market. When assessing fair value of Level 1 assets, auditors will use information on the sale of identical items in active or inactive markets as a source of audit evidence. Violations of GAAP resulting in a qualified opinion affect the standard audit report through adding an explanatory paragraph before the opinion paragraph, and modifying the opinion paragraph to read "except for." Qualified opinions can only be issued by auditors when there are violations of GAAP or scope limitations. The volume of transactions affected is not one of the critical criteria in assessing identified internal control deficiencies. Question 9 of 45 Which of the following statements are true? (There are multiple correct answers) It is true that when the risk of material misstatement is increased, the auditor increases the extent of audit procedures and requires less evidence. It is true that the AICPA's fundamental principles and guidance for auditing standards can be divided into four sections: purpose of the audit, responsibility of the auditor, performance of the audit, and reporting of the results. It is true that all audit procedures must be completed before year end. It is true that the PCAOB is a public board, appointed by Congress, to provide oversight of the firms that audit public companies registered with the SEC. It is true that auditing exists because users need unbiased information on which to assess management performance and make economic decisions. Question 10 of 45 Select all of the following statements that are true. (There are multiple answers) It is true that auditors are permitted to perform for a contingent fee an audit of the financial statements if the audit committee approves the agreement in advance of the services being provided. It is true that walkthroughs and inquiries are often used to obtain an understanding of internal controls. It is true that complex audit judgments and decisions often involve accounts that require subjective estimates by management. It is true that audit evidence consists of both information that corroborates management's assertions and information that contradicts such assertions. It is true that the audit report is modified to five paragraphs as a result of another audit firm performing part of the financial statement audit. Question 11 of 45 _________________ is an example of an internal risk for an organization. Changes in price of raw materials. Changes in internal information technology. Increases in substitute services or products. Changes in regulation that make the business model unsustainable. Changes in the reliability of source goods. Question 12 of 45 If _________________________, this would indicate that fraud is pervasive throughout the company under audit. The company's management negotiates deals with vendors in such a manner as to pay lower prices. All of these would indicate that fraud is pervasive. The company's management drives luxury vehicles and takes vacations to exotic places. The company's management estimates bad debts using an aged accounts receivables ledger rather than as a percent of sales. The company's management takes an overly aggressive approach to revenue recognition Question 13 of 45 Assume that the auditor concludes that there may be a going-concern problem. In that case, which of the following is not typically evaluated to determine the reasonableness of management's plans to overcome this problem? Management's assumption about increasing prices or market share in relationship to current industry developments. Management's past track record related to delaying unnecessary expenditures. Management's assumptions about cost savings related to a reduction in the work force should be recomputed and evaluated to determine any hidden costs. Management's assumptions about selling off assets and their relationship to current market prices. None of these answers are correct. Question 14 of 45 Which one of the following statements is true? Appropriateness deals with the quantity of evidence the auditor collects, whereas sufficiency deals with the quality of evidence the auditor collects. Liabilities and expenses are most often tested for overstatements. Underlying accounting records consist of evidence of controls as well as supporting records such as checks, invoices, the general and subsidiary ledger and journal entries. Even though all audits are different, they can all be approached in the same manner. The client's verbal evidence is more reliable than evidence from independent outside sources. Question 15 of 45 All of the following statements are false, except: Lapping of accounts receivable is least likely to occur when there is an inadequate segregation of duties. Audit procedures have to be announced or be completed at predictable times. An attitude of professional skepticism by the auditor is not needed when internal controls over revenue have been tested and found to be effective. A detection risk of 90% would suggest that an auditor must perform extensive substantive audit testing. The auditor's determination that day's sales in accounts receivable increased from 44 days to 100 days would usually be found through the use of ratio analysis. Question 16 of 45 Which of the following statements is false? When business risk is low, the auditor does not have a high concern about the ability of the organization to operate efficiently. An appropriate mix of evidence for a low risk client could include 20% tests of details, 40% analytics, and 40% tests of controls; an appropriate mix of evidence for a high risk client could include 60% tests of details, 20% analytics, and 20% tests of controls. The purpose of the auditor's consideration of the effectiveness of internal controls is to determine the nature, extent and timing of substantive testing. Touring a company's plant offers much insight into potential audit issues. A company that ships a large quantity of its products from its manufacturing plant to a warehouse that it leases until the customer is ready for the product should record the delivery as revenue. Question 17 of 45 Select all the statements from the following list which are true. (There are multiple answers and you should choose all that are correct) It is true that warranty reserves is a long-term liability account with a high risk of material misstatement. It is true that marketable securities is a long-term liability account with a high risk of material misstatement. In the introductory paragraph of the audit opinion, the auditor will describe the division of responsibility between the reporting company's management and the audit firm. If the auditor believes that there is a remote probability that resolution of an uncertainty will have a material effect on the financial statements, he should issue a standard unqualified audit opinion. In the FASB hierarchy of inputs to consider for assessing fair value, quoted prices on identical items is associated with Level 3. Question 18 of 45 The auditor will most likely issue which of the following audit reports if he decides to draw attention to large related party transactions occurring in the financial statements of the client? Qualified with an explanatory paragraph Unqualified with an explanatory paragraph Qualified Consolidation Adverse Question 19 of 45 Which of the following statements is true? The Center for Audit Quality has the primary authority to set auditing standards. Since the auditor is not responsible for the presentation of financial statements, he/she has no responsibility for fraud in the financial statements. The Center for Audit Quality was started by the International Federation of Accountants. A CFO intentionally overstating sales to boost profits is an example of fraudulent financial reporting. The treasurer's diversion of hundreds of thousands of dollars into a personal money market account is an example of fraudulent financial reporting. Question 20 of 45 An auditor uses an aged accounts receivable report to accomplish which of the following? To uncover lapping Assess the adequacy of the allowance for doubtful accounts. Identify debits in the receivables balance that should be reclassified to payables. Encourage the client to collect on receivables that are long past due. Select the type of confirmations that will be sent to banks. Question 21 of 45 The auditors' reprocessing of transactions are designed to test which of the following assertions? Existence Accuracy Occurrence Completeness Rights Question 22 of 45 All of the following statements are true, except: A tendency for fraud may exist when the granting of stock options is dependent on reaching an earnings goal. A consistent pattern of earnings growth would eliminate the auditor's concern for fraud in revenue recognition. Ineffective internal controls result in higher risk of material misstatement in the financial statements than effective internal controls. A company's history of exactly meeting analyst estimates is a factor which could lead auditors to assess inherent risk at a higher level. The intentional loading of sales at the end of a period to customers that do not need the goods at that time should not be recorded as revenues. Question 23 of 45 Which of the following accounts is not a directly related account in the revenue cycle? Sales discounts Allowance for doubtful accounts Sales returns and allowances Accounts receivable Warranty expense Question 24 of 45 Please select all of the following statements that are false. (There are multiple answers and you should select all that are false) It is true that the inventory account does not require any subjective estimates by management. In the FASB hierarchy of inputs to consider for assessing fair value, quoted prices on identical items is associated with Level 1. The scope paragraph of an unqualified opinion primarily gives information relating to statements and dates under audit. It is true that complex audit judgments and decisions often involve accounts that require subjective estimates by management. It is true that the experience level of the audit team is not delineated in the audit report. Question 25 of 45 In order for revenue recognition on a product sale to occur, the company must make sure that which of the following has been accomplished? The customer is given the option to return the product at any time. The product is adequately delivered to the customer. The cash is realized on the sale of the product. A price is discussed based upon the customer's resale of the product. The discount period has passed. Question 26 of 45 All of the following statements are true, except: It is true that when the client has a large number of relatively small accounts receivable and the assessed level of control risk for receivables and related revenue transactions is high, the auditor is more likely to use negative confirmations. It is true that audit evidence consists of both information that corroborates management's assertions and information that contradicts such assertions. It is true that when the risk of material misstatement is heightened, the auditor increases the extent of audit procedures and requires more evidence. It is true that inherent and control risks are risk controlled by the auditor. It is true that the auditor uses professional judgment to determine which audit procedures to perform. Question 27 of 45 Which of the following statements are true? (There are multiple correct answers) It is true that planning materiality helps the auditor determine the extent of audit evidence needed in order to provide an opinion on the financial statements. It is true that when fraud risk is great in the organization under audit, procedures applied are likely to be more extensive. It is true that according to the Sarbanes-Oxley Act, the audit committee must have at least 3 independent members. It is true that internal controls are the responsibility of management. It is true that in most audits, materiality is most commonly expressed as a percentage of net income. Question 28 of 45 The auditor's detection of __________________ is a key indicator of fraud in the revenue cycle. Credit entries in customer accounts receivable for authorized writeoffs. Altered shipping documents and invoices. Customer collections that are over 90 days past due. Recurring entries in the sales journal. None of these answers are correct. Question 29 of 45 Which of the following statements are true? (There are multiple answers) It is true that the revenue cycle considered by auditors includes the sales process but not collections. It is true that the audit report can be a verbal presentation to the audit committee about the client. It is true that performing a walkthrough provides an understanding of the nature of processing in important accounting applications. It is true that an integrated audit report provides opinions on both financial statements and internal controls. It is true that when there is an uncertainty surrounding the financial statements, the auditor may still be able to give an unqualified opinion. Question 30 of 45 Which of the following statements is true? The SEC and PCAOB independence rules for auditors are identical. Internal audit is the term used to describe a systematic process of objectively obtaining evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users. Corporate governance is a process by which the owners, but not the creditors, exert control and require accountability for the resources entrusted to the organization. Obtaining evidence about internal controls is the phase of the audit opinion formulation process that is most commonly thought of as auditing by the general public. The AICPA has a peer review program that reviews and evaluates the portions of an audit firm's accounting and audit practice that are not inspected by the PCAOB. Question 31 of 45 In which of the following independent situations, is it most likely that fraud related to revenue recognition will be identified by the auditor? Sales have increased 5% in the current period over the previous period and is consistent with the results of competitors. Sales have decreased 5% in the current period over the previous period and is consistent with the results of competitors. Sales are higher in the month preceding each quarter end. Gross margin is equivalent in the current period to previous periods and is below that of the industry. The sales of a revolutionary new product are increasing beyond that of the competition in the periods immediately following its introduction. Question 32 of 45 If the audit client experiences a(an) _____________________, then the auditor would consider this to be an indication of a potential going-concern problem? improper reporting of internal controls by management large increase to sales in the month previous to year-end loss of the controller to a competitor adverse key financial ratios None of these answers are correct Question 33 of 45 One form of _____________ is when a cross-sectional analysis of revenue recorded across multiple sales locations is performed. trend analysis ratio analysis common size analysis completeness analysis correlation analysis Question 34 of 45 The _________________ phase of the audit opinion formulation process is most commonly thought of as auditing by the general public. performing risk assessment obtaining evidence about internal controls making reporting decisions None of these answers are correct. obtaining substantive evidence about accounts Question 35 of 45 Which of the following statements are false? (There are multiple correct answers) It is true that the Clarity Project is an initiative of the AICPA to converge its auditing standards with those of the PCAOB. It is true that preventive controls are designed to provide reasonable assurance that the correct program is used for processing, all transactions are processed, and the transactions update appropriate files. It is true that the auditor needs to obtain absolute assurance that the financial statements are free from material misstatement. It is true that segregation of duties is considered a part of the monitoring component of the COSO framework for internal control structure. It true that auditors make materiality assessments to help in planning the audit evidence to obtain and in evaluating the audit evidence that was obtained. Question 36 of 45 Which of the following statements are false? (There are multiple answers) It is true that the auditing standards issued by the PCAOB are identical to the auditing standards issued by the AICPA. It is true that the auditor uses professional judgment to determine which audit procedures to perform. It is true that materiality relates to the significance or importance of an item. It is true that the amount of evidence gathered is not important to an auditor since the quality of the evidence is of primary importance. It is true that liability concepts developed through court decisions are referred to as statutory law. Question 37 of 45 In order for an audit firm to perform financial statement audits for public companies, it must _____________________. Register with the Public Company Accounting Oversight Board. Register with the American Institute of Certified Public Accountants. Register with the Internal Revenue Service. Register with the U.S. General Accounting Office. Register with the Institute of Internal Auditors. Question 38 of 45 All of the following statements are true, except: It is true that when misstatements are detected, but they individually are not material, they should be ignored when determining the appropriate audit report. Most audit firms use a schedule to accumulate the known and projected misstatements and the carryover effects of prior-year uncorrected misstatements. It is true that the need for assurance services arises because the interests of the users of information may be different from that of the interests of those responsible for providing information. During an audit, review activities that are completed towards the end of the audit are quite varied. It is true that, at the end of an audit, adjustments that are "waived" will remain uncorrected. Question 39 of 45 All of the following statements are true, except: The audit committee is a subcommittee of the board of directors comprised of independent outside directors. Auditing exists because users need unbiased information on which to assess management performance and make economic decisions. Any major disagreement the auditor has with management should be discussed with the audit committee. Bondholders are one of the users of financial statements. External auditors frequently serve on the audit committees of their clients. Question 40 of 45 ________________ is not a way management obtains evidence regarding the effectiveness of internal control over the accounting system? Performing a walkthrough of the accounting system. Reviewing system flowcharts. Reviewing system procedures manuals. Taking plant and operational tours. Making inquiries of banks and attorneys Question 41 of 45 Research consistently shows that there are three factors associated with most frauds. The three factors are: 1. Incentives or Pressures 2. Opportunities 3. Attitudes or Rationalization With each factor, there are indicators that the factor may exist. Which of the following indicators is not associated with the Incentives or Pressures factor? Personal need for financial enhancement. Significant related-party transactions. Management compensation schemes. Audit firm answers to management and not to the audit committee. Compliance with debt covenants Question 42 of 45 __________________ is not a factor included in Rule 201 - General Standards of the AICPA Code of Professional Conduct. Sufficient relevant data. Due professional care. Integrity and objectivity. All of these factors are included in Rule 201. Planning and supervision. Question 43 of 45 Which of the following is not an aspect of Rule 201 of the General Standards of the Code of Professional Conduct? A member must not take on an engagement that is beyond the member's professional competence. None of these answers are correct. A member must exercise duties prudently and professionally. A member must adequately plan and supervise the performance of professional services. A member firm must not advertise services to competing clients. Question 44 of 45 All of the following statements are true, except: It is true that the SEC has authority to establish GAAP for all business enterprises. It is true that a quality audit is one performed "in accordance with generally accepted auditing standards (GAAS) to provide reasonable assurance that the audited financial statements and related disclosures are presented in accordance with generally accepted accounting principles (GAAP) and (2) are not materially misstated whether due to errors or fraud." It is true that significant changes in the competitive market and a decrease in the competitiveness of the client's products are potential indicators of going-concern problems. It is true that management will often resist a going-concern modification because investors, lenders, and customers may lose faith in the business. It is true that some auditors may be reluctant to issue a going-concern audit opinion because it may hasten the failure of the client company. Question 45 of 45 All of the following statements are false, except: The audit committee is a subcommittee of the board of directors comprised of independent outside directors. Management of companies should have the ability to hire and fire the external auditor. The SEC has authority to establish GAAP for all business enterprises. The Public Company Accounting Oversight Board was established by the AICPA in response to Securities laws. Corporate governance is a process by which the owners, but not the creditors, exert control and require accountability for the resources entrusted to the organization