When there is a deviation between the estimate for bad debt expense and what will actually be realized as uncollectible, this is called

Multiple Choice

• A forecast error.

• Unacceptable.

• Fraud.

• A material misstatement.

Which of the following is NOT true about association and a public accountant (PA)?

Multiple Choice

• A PA is associated with the financial statements when a document containing financial statements merely identifies this person as the PA or auditor for the company.

• A PA is associated with the financial statements when the PA is considering taking on the client as a new enagement.

• A PA is associated with the financial statements when they are merely reproduced on the PAs letterhead.

If a company does not allow an auditor access to documents or limits the audit procedures, this is known as a

Multiple Choice

• Departure from GAAP.

• Material departure from GAAP.

• Reason to stop the audit.

• Scope limitation.

When an item has "pervasive materiality",

Multiple Choice

• It cannot be ignored.

• It can be ignored.

• It only impacts one account.

• A clean opinion should be given.

public accountant (PA) is not associated with the financial statements if they are produced by their computer as part of a bookkeeping service.

Group startsTrue or False

True, False,

When other independent auditors are involved in the current audit on parts of the clients business, the principal auditor can write an audit report that:

Multiple Choice

• places primary responsibility for the audit report on the other auditors.

• does not mention the other auditors and gives an unqualified opinion in a standard unqualified report.

• names the other auditors, describes their work, and presents only the principal auditors report.

• mentions the other auditors but fails to describe the extent of the other auditors work, and gives an unqualified opinion.

An auditor has found that the client is suffering financial difficulty and that the going-concern status is seriously in doubt. The client has not placed good disclosures in the financial statements. Which of the following audit report alternatives must the PA choose?

Multiple Choice

• Disclaimer of opinion

• Standard unqualified report

• Unqualified report with a going-concern explanatory (EOM) paragraph

• Qualified opinion or adverse opinion

Scope limitation reports will occur where

Multiple Choice

• Management deliberately refuses to let auditors perform some procedures or circumstances make it impossible for some procedures to be performed.

• There is an immaterial departure from GAAP.

• There is more than one entity to audit.

• There is a material departure from GAAP.

Item9

Item9

If an item is material, this means

Multiple Choice

• The item in question is important and needs to be disclosed.

• The item in question is not important.

• The item does not need to be disclosed.

• There is a scope limitation.

The opinion statement In our opinion, the accompanying financial statements present fairly, in all material respects . . ." is an example of which type of opinion?

Multiple Choice

• A qualified opinion for a scope limitation

• A qualified opinion for a departure from GAAP

• A clean opinion

• An adverse opinion

The purpose of the management's responsibility paragraph is to

Multiple Choice

• Document which statements were examined.

• Express an opinion on the financial statements.

• Give notice of management's responsibility to prepare the financial statements.

• Refer to the auditor's work on the financial statements.

An association can arise

Multiple Choice

• Only when the public accountant accepts payment for services.

• Only after the financial statements are signed and released.

• Only with the knowledge and explicit agreement of the public accountant.

• A third party assume the public accountant is involved with information issued by a company.

When financial statements contain a scope limitation and the auditors cannot obtain sufficient evidence, auditors must choose between:

Multiple Choice

• A modified (qualified) opinion or a disclaimer opinion.

• A clean opinion and a modified (qualified) opinion.

• A modified (qualified) opinion and an adverse opinion.

• A clean opinion and an adverse opinion.

When will an auditor express an opinion containing the phrase except for?

Multiple Choice

• They did not perform procedures sufficient to form an opinion on the valuation of accounts receivable that are material.

• The auditor is basing their opinion in part on work done by another auditor.

• The client refuses to provide for a probable income tax liability that is very material, or super-material.

• There is a high degree of uncertainty associated with the client companys future.

A modified (qualified) audit opinion refers to when qualified public accountants perform the audit in accordance with generally accepted auditing standards.

Group startsTrue or False

True, unselectedFalse, unselected

Item16

Item16

The purpose of the introductory paragraph is to

Multiple Choice

• Express an opinion on the financial statements.

• Identify which financial statements were examined.

• Refer to the auditor's work on the financial statements.

• Give notice of management's responsibility to prepare the financial statements.

f a public accountant (PA) consents to the use of his or her name in information. What step does the PA not have to complete?

Multiple Choice

• Determine the information is not misleading.

• Determine the information is accurately reproduced.

• Determine if the reference to his or her name has been used accurately.

• Determine who else is associated with the information.

If the public accountant has not audited, reviewed or otherwise attempted to verify the accuracy or the completeness of information provided by management, this is

Multiple Choice

• No assurance

• Positive assurance

• Low assurance

• Negative assurance

Tony, a PA, developed a system for clients to enter transaction data by remote terminal into the PAs computer. The PAs system processes the data and prints monthly financial statements. When delivered to the clients, these financial statements should include:

Multiple Choice

• a description of the remote terminal system and of the controls for ensuring accurate data processing.

• a report describing the character of the engagement and the degree of responsibility the PA is taking.

• a standard unqualified audit report.

• an adverse audit report.

When independence in an audit is lacking, an auditor should not accept the engagement.

Group startsTrue or False

True, unselectedFalse, unselected

Group ends