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ACC 403 Final Exam
ACC 403 Final Exam
The most important general ledger account included in and affecting several cycles is the: (Points : 10)
cash account.
inventory account.
classification
completeness
3. Management assertions are: (Points : 10)
implied or expressed representations about accounts, transactions, and disclosures in the financial
statements.
provided to the auditor in the assertions letter, but are not disclosed on the financial statements.
4. The occurrence assertion applies to _______. (Points : 10)
account balances
6. Which of the following statements about the existence and completeness assertions is not true? (Points :
10)
help the auditor obtain an understanding of the client’s industry and business.
Foot – reperformance.
Compare – documentation.
Vouch – documentation.
For certain accounts with small balances, analytical procedures alone may be sufficient evidence.
13. Which of the following normally signs the engagement letter for an audit of a public company? (Points :
10)
Corporate treasurer.
Audit committee.
14. Which of the following is not likely to be a related party? (Points : 10)
Affiliated companies.
A warehouse employee.
estimation of the time to be spent on the audit work by audit staff and management.
statement that management advisory services would be made available upon request.
Auditing standards emphasize the need for auditors to develop and use expectations.
Analytical procedures use comparisons and relationships to assess whether account balances
appear reasonable.
17. Which of the following is correct with respect to a company’s corporate charter? (Points : 10)
The corporate charter is granted by the federal government and is required to recognize the
corporation as a separate entity.
The corporate charter includes the rules and procedures used to operate a corporation.
The corporate charter includes the exact name of the corporation, the date of incorporation, and
the types of business the corporation is authorized to conduct.
early appointment of the auditor is advantageous to the auditor and the client.
acceptance of an audit engagement after the close of the client’s fiscal year is generally not
permissible.
obsolete inventory.
increase.
decrease.
remain unchanged.
be indeterminate.
22. When discussing control risk (CR) and the audit risk model, which of the following is false? (Points : 10)
CR is a measure of the auditor’s assessment of the likelihood that misstatements will not be
prevented or detected by internal control.
If the auditor concludes that internal control is completely ineffective to prevent or detect errors,
he/she would assign a low value (e.g., 0%) to CR.
The relationship between control risk and evidence needed to support account balances is direct.
23. When setting a preliminary judgment about materiality: (Points : 10)
more evidence is required for a low dollar amount than for a high dollar amount.
less evidence is required for a low dollar amount than for a high dollar amount.
the same amount of evidence is required for either low or high dollar amounts.
Chapter 13
24. To what extent do auditors typically rely on internal controls of their public company clients? (Points :
10)
Extensively
Infrequently
Never
25. A procedure designed to test for monetary misstatements directly affecting the correctness of financial
statement balances is a: (Points : 10)
test of controls.
substantive test.
test of attributes.
existence assertions
27. When the auditor finds that there are missing controls in an area of the accounting system, the audit
program in that area would be modified in such a way as to: (Points : 10)
revenue accounts.
expense accounts.
30. The most important consideration in developing the audit plan and audit program is the: (Points : 10)
client’s size.
client’s industry.