QUESTION 1

1. The audit objective that all balances include items owned by the client is related most closely to which one of the ASB balance assertions?

   		Valuation.
   		Rights and obligations.
   		Completeness.
   		Existence.

0.8 points

QUESTION 2

1. The process of a CPA obtaining a certificate and license in a state other than the state in which the CPA's certificate was originally obtained is referred to as:

   		quid pro quo.
   		substantial equivalency.
   		re-examination.
   		relicensing.

0.8 points

QUESTION 3

1. An auditor selected items for test counts from the client's warehouse during the physical inventory observation. The auditor then traced these test counts into the detailed inventory listing that ultimately agreed to the financial statements. This procedure most likely provided evidence concerning management's assertion of:

   		completeness.
   		existence.
   		presentation and disclosure.
   		rights and obligations.
   		valuation.

0.8 points

QUESTION 4

1. Which of the following is an underlying condition that in part creates the demand by users for reliable information?

   		All of these.
   		Decisions that are time-sensitive.
   		Economic transactions that are numerous and complex.
   		Financial decisions that are important to investors and users.
   		Users separated from accounting records by distance and time.

0.8 points

QUESTION 5

1. An attestation engagement is one in which a CPA is engaged to:

   		assemble prospective financial statements based on the assumptions of the entity's management without expressing any assurance.
   		issue, or does issue, a report on subject matter or an assertion about the subject matter that is the responsibility of another party.
   		testify as an expert witness in accounting, auditing or tax matters, given certain stipulated facts.
   		provide tax advice or prepare a tax return based on financial information the CPA has not audited or reviewed.

0.8 points

QUESTION 6

1. The study of business operations for the purpose of making recommendations about the efficient use of resources, effective achievement of business objectives, and compliance with company policies is referred to as

   		compliance auditing.
   		operational auditing.
   		environmental auditing.
   		financial auditing.

0.8 points

QUESTION 7

1. Which of the following is not a PCAOB assertion about inventory related to presentation and disclosure?

   		Inventory is properly classified as a current asset on the balance sheet.
   		Inventory is properly stated at its cost on the balance sheet.
   		Major inventory categories and their valuation bases are adequately disclosed in notes.
   		All of these are PCAOB presentation and disclosure assertions about inventory.

0.8 points

QUESTION 8

1. The auditor's judgment concerning the overall fairness of the presentation of financial position, results of operations, and cash flows is applied within the framework of:

   		generally accepted auditing standards, which include the concept of materiality.
   		quality control.
   		the applicable financial reporting framework (i.e., GAAP in the United States).
   		the auditor's evaluation of the audited company's internal control.

0.8 points

QUESTION 9

1. Which of the following is not a recommendation usually made following the completion of an operational audit?

   		Compliance with company policies.
   		Effective achievement of business objectives.
   		Attesting to the fairness of the financial statements.
   		Economic and efficient use of resources.

0.8 points

QUESTION 10

1. The confirmation of an account payable balance selected from the general ledger provides primary evidence regarding which management assertion?

   		Valuation.
   		Allocation.
   		Completeness.
   		Existence.

0.8 points

QUESTION 11

1. Cutoff tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent year provide assurance about the PCAOB assertion of:

   		presentation.
   		completeness.
   		existence.
   		rights.

0.8 points

QUESTION 12

1. The risk an entity will fail to meet its objectives is referred to as:

   		business risk.
   		assurance risk.
   		information risk.
   		audit risk.

0.8 points

QUESTION 13

1. In order to be considered as external auditors with respect to government agencies, GAO auditors must be:

   		organizationally independent .
   		guided by standards similar to GAAS.
   		empowered as the accounting and auditing agency by the U.S. Congress.
   		funded by the federal government.

0.8 points

QUESTION 14

1. The engineering department at Omni Company built a piece of equipment in the company's own shop for use in the company's operations. The auditor reviewed all work orders that were capitalized as part of the equipment costs. Which of the following is the ASB transaction assertion most closely related to the auditor's testing?

   		Occurrence.
   		Accuracy.
   		Classification.
   		Completeness.

0.8 points

QUESTION 15

1. Which of the following management assertions is an auditor most likely testing if the audit objective states that all inventory on hand is reflected in the ending inventory balance?

   		Inventory is complete.
   		The entity has rights to the inventory.
   		Inventory is properly valued.
   		Inventory is properly presented in the financial statements.

0.8 points

QUESTION 16

1. Inquiries of warehouse personnel concerning possible obsolete or slow moving inventory items provide assurance about the ASB balance assertion of:

   		completeness.
   		existence.
   		presentation.
   		valuation.
   		rights and obligations.

0.8 points

QUESTION 17

1. Which of the following is not an ASB assertion about inventory related to presentation and disclosure?

   		Major inventory categories and their valuation bases are adequately disclosed in notes.
   		All of these are ASB presentation and disclosure assertions about inventory.
   		Inventory is properly stated at cost on the balance sheet.
   		Inventory is properly classified as a current asset on the balance sheet.

0.8 points

QUESTION 18

1. What is the term used to identify the risk that the client's financial statements may be materially false and misleading?

   		Risk assessment.
   		Client risk.
   		Business risk.
   		Information risk.

0.8 points

QUESTION 19

1. Which of the following best describes the main reason independent auditors report on management's financial statements?

   		The management that prepares the statements and the persons who use the statements may have conflicting interests.
   		The management that prepares the statements may have a poorly designed system of internal control.
   		Misstated account balances may be corrected as the result of the independent audit work.
   		Management fraud may exist and it is likely to be detected by independent auditors.