ACCT 400 Final Exam Answers

ACCT 400 Final Exam Answers

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Part 1 of 1 – Final Exam

45.0/ 50.0 Points

The Final Exam has 50 true/false questions, covers Chapters 1 & 2, and 6 through 11, and has a 4 hour time limit.

Question 1 of 50 1.0/ 1.0 Points oType I subsequent events are always referenced in the audit report. A. True B. False

Question 2 of 50 1.0/ 1.0 Points Regardless of the specific form, documentary evidence shows that the receiving process occurred. A. True B. False

Question 3 of 50 1.0/ 1.0 Points Preliminary time budget information is compared to actual time worked and is used for purposes of billing, performance evaluation, and future bidding. A. True B. False

Question 4 of 50 1.0/ 1.0 Points Sales returns and allowances remain constant in their magnitude and never need differing levels of control and approval. A. True B. False

Question 5 of 50 0.0/ 1.0 Points All assertions apply to every account. A. True B. False

Question 6 of 50 1.0/ 1.0 Points Failure to provide the auditor information regarding pending litigation is grounds for a scope limitation. A. True B. False

Question 7 of 50 1.0/ 1.0 Points Detail schedules need to tie to the lead schedule. A. True B. False

Question 8 of 50 1.0/ 1.0 Points Sampling risk is the risk that your sample is not representative of the population. A. True B. False

Question 9 of 50 1.0/ 1.0 Points An auditor’s report on an integrated audit will be unqualified if internal control over financial reporting does not have any material weaknesses and the financial statements are fairly presented. A. True B. False

Question 10 of 50 0.0/ 1.0 Points If a transaction is paid for by credit card, the seller processes the sales transaction with the credit card issuer when the item is received. A. True B. False

Question 11 of 50 1.0/ 1.0 Points The last steps of an integrated audit are to understand the industry and contract with the client to do the audit. A. True B. False

Question 12 of 50 1.0/ 1.0 Points Cash received for sales comes in through several channels. A. True B. False

Question 13 of 50 1.0/ 1.0 Points Recalculation is a form of reperformance. A. True B. False

Question 14 of 50 1.0/ 1.0 Points When the mail is opened and checks are received, a document called a daily remittance list is immediately prepared. A. True B. False

Question 15 of 50 1.0/ 1.0 Points All transactions in the sales and collection cycle need not be recorded at the correct amounts. A. True B. False

Question 16 of 50 1.0/ 1.0 Points The audit report must contain explanatory language if there is a going concern issue. A. True B. False

Question 17 of 50 1.0/ 1.0 Points One of the first concerns regarding the revenue cycle is that all recorded sales entries are the result of real transactions that do not meet the criteria for revenue recognition. A. True B. False

Question 18 of 50 1.0/ 1.0 Points The Sarbanes-Oxley Act limits the amount of non-attest services that auditors may perform for public companies they audit. A. True B. False

Question 19 of 50 1.0/ 1.0 Points An audit report must be issued whenever an auditor is associated with financial statements. A. True B. False

Question 20 of 50 1.0/ 1.0 Points Preventative controls are preferred over detective controls. A. True B. False

Question 21 of 50 0.0/ 1.0 Points Unfilled orders are taken off the list after they are received and recorded. A. True B. False

Question 22 of 50 1.0/ 1.0 Points Deciding that internal controls are effective when they in fact they are not is an example of assessing control risk too high. A. True B. False

Question 23 of 50 1.0/ 1.0 Points The SEC is responsible for setting standards for not-for-profit organizations. A. True B. False

Question 24 of 50 1.0/ 1.0 Points Substantive testing can be reduced as a result of ITGC testing performed at year-end. A. True B. False

Question 25 of 50 1.0/ 1.0 Points Materiality is a measure of magnitude; yet, it is affected by both quantitative and qualitative factors. A. True B. False

Question 26 of 50 1.0/ 1.0 Points The auditor must index the files to conform to the balance sheet. A. True B. False

Question 27 of 50 1.0/ 1.0 Points The auditor begins with tests of internal control. A. True B. False

Question 28 of 50 1.0/ 1.0 Points The integrity of management plays a key role in deciding whether or not to accept a client. A. True B. False

Question 29 of 50 1.0/ 1.0 Points Since much of a health-care provider’s collections are paid by third-party payers, it is important for the health-care provider to verify the patient’s insurance coverage before providing services. A. True B. False

Question 30 of 50 1.0/ 1.0 Points The cutoff assertion refers to the distinction between the company and its subsidiaries and related entities. A. True B. False

Question 31 of 50 1.0/ 1.0 Points When checks are received in the mail, they should immediately be restrictively endorsed and a daily remittance list should be prepared concurrently. A. True B. False

Question 32 of 50 1.0/ 1.0 Points Publically-traded company refers to any SEC registrant. A. True B. False

Question 33 of 50 1.0/ 1.0 Points If a client changes auditors, the new auditors may have to reissue the audit report for the previous year. A. True B. False

Question 34 of 50 1.0/ 1.0 Points An Unbilled Services account can be used to capture services that are provided before and during the surgery that have not yet been billed. The Unbilled Services account is most important at the end of the fiscal period so that proper revenue is recorded. A. True B. False

Question 35 of 50 1.0/ 1.0 Points Auditors perform walkthroughs as an efficient way to gain an understanding of ICFR and assess design effectiveness. A. True B. False

Question 36 of 50 1.0/ 1.0 Points Currently, the primary authoritative body that regulates individual CPAs is the Congress of the United States. A. True B. False

Question 37 of 50 1.0/ 1.0 Points Obsolete inventory is an example of inherent risk. A. True B. False

Question 38 of 50 1.0/ 1.0 Points The seller will not hear from a customer when a cash payment the customer made is not posted to the customer’s account balance. A. True B. False

Question 39 of 50 1.0/ 1.0 Points Deciding that internal controls are not effective when they in fact they are is an example of assessing control risk too low. A. True B. False

Question 40 of 50 1.0/ 1.0 Points Computers are the primary resources used on an audit. A. True B. False

Question 41 of 50 0.0/ 1.0 Points CPAs who perform financial statement audits of public companies are responsible for the accuracy of the client’s financial statements. A. True B. False

Question 42 of 50 1.0/ 1.0 Points Audit steps for the revenue cycle are anchored in the overall audit plan. A. True B. False

Question 43 of 50 1.0/ 1.0 Points Materiality is first set at the account balance level and is then aggregated to the financial statement level. A. True B. False

Question 44 of 50 1.0/ 1.0 Points Problems that come from social engineering are the result of a lack of internal controls. A. True B. False

Question 45 of 50 0.0/ 1.0 Points Controls are needed to ensure that goods are received on a timely basis and bills are sent out for all goods that are received. A. True B. False

Question 46 of 50 1.0/ 1.0 Points The contract between the audit firm and client is called the engagement letter. A. True B. False

Question 47 of 50 1.0/ 1.0 Points Physical vaulting refers to the control procedure involving the capture of transactions that by-passed the firewall. A. True B. False

Question 48 of 50 1.0/ 1.0 Points An unfilled order report is an internal document listing customer orders that have received credit approval but have not been shipped. A. True B. False

Question 49 of 50 1.0/ 1.0 Points If the unadjusted difference resulting from projecting the error rate to the account balance is less than the tolerable misstatement, the auditor may choose to ignore the error. A. True B. False

Question 50 of 50 1.0/ 1.0 Points Generally accepted auditing standards refer to those standards that have been adopted by the PCAOB. A. True B. False