ACC 403 Midterm Exam Answers

ACC 403 Midterm Exam Answers
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ACC 403 Midterm Exam Answers
Part 1
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Question 1

Recording, classifying, and summarizing economic events in
a logical manner for the purpose of providing financial information
for decision making is commonly called:

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Question 2

________ risk reflects the possibility that the information upon
which the business decision was made was inaccurate.

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Question 3

The use of the Certified Public Accountant title is regulated
by:

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Question 4

The Sarbanes-Oxley Act applies to which of the following
companies?

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Question 5

Three common types of attestation services are:

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Question 6

The three requirements for becoming a CPA include all but
which of the following?

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Question 7

Members of the Public Company Accounting Oversight Board
are appointed and overseen by:

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Question 8

Assume the Public Company Accounting Oversight Board
(PCAOB) identifies a violation during its inspection of a registered
accounting firm. The PCAOB:

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Question 9

Hansen Corporation's stock is listed on a national stock
exchange and registered with the Securities and Exchange
Commission. Hansen's management hires a CPA to perform an
independent audit of Hansen's financial statements. The primary
objective of this audit is to provide assurance to the:

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Question 10

Which of the following are audit standards used in
professional practice by audit firms?

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Question 11

Statements on Auditing Standards issued by the AICPA's
Auditing Standards Board are:

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Question 12

In order to properly plan and perform an audit, an important
fact for both the auditor and the client to understand is that:

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Question 13

The first step to be followed when deciding the appropriate
audit report in a given set of circumstances is to:

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Question 14

As a result of management's refusal to permit the auditor to
physically examine inventory, the auditor must depart from the
unqualified audit report because:

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Question 15

If the phrase "except for" is present in the opinion paragraph
of the audit report, the auditor has issued a(n):

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Question 16

Under AICPA auditing standards, the primary auditor issuing
the opinion on the financial statements is called the:

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Question 17

Whenever the client imposes restrictions on the scope of the
audit, the auditor should be concerned that management may be
trying to prevent discovery of misstatements. In such cases, the
auditor will likely issue a:

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Question 18

Which of the following is least likely to cause uncertainty
about the ability of an entity to continue as a going concern?

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Question 19

The members of a client's "audit committee" should be:

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Question 20

Which of the following services are allowed by the SEC
whenever a CPA also audits the company?

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Question 21

A six-step approach is often used to resolve an ethical
dilemma. The first step in this process is to:

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Question 22

Under the AICPA independence rules, the auditor:

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Question 23

Independence is required of a CPA when performing:

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Question 24

When CPAs are able to maintain their actual independence, it
is referred to as independence in:

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Question 25

The Sarbanes-Oxley Act ________ a CPA firm from doing both
bookkeeping and auditing services for the same public company
client.

Part 2

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Question 1

The principal issue in cases involving alleged negligence is
usually:

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Question 2

"Absence of reasonable care that can be expected of a
person in a set of circumstances" defines:

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Question 3

While the Foreign Corrupt Practices Act of 1977 remains in
effect, its internal control provisions have been largely
superseded by which of the following?

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Question 4

The standard of due care to which the auditor is expected to
adhere to in the performance of the audit is referred to as the:

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Question 5

In the performance of an audit, a CPA:

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Question 6

The laws that have been developed through court decisions
are called:

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Question 7

The auditor's best defense when material misstatements are
not uncovered is to have conducted the audit:

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Question 8

The responsibility for the preparation of the financial
statements and the accompanying footnotes belongs to:

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Question 9

A questioning mindset:

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Question 10

The posting and summarization audit objective is the
auditor's counterpart to management's assertion of:

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Question 11

The concept of reasonable assurance indicates that the
auditor is:

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Question 12

If a short-term note payable is included in the accounts
payable balance on the financial statement, there is a violation of
the:

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Question 13

The evaluations of financial information through analysis of
plausible relationships among financial and nonfinancial data is
the definition of:

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Question 14

Appropriateness of evidence is a measure of the:

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Question 15

The auditor must gather sufficient and appropriate evidence
during the course of the audit. Sufficient evidence must:

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Question 16

When auditors use documentation to support recorded
transactions and amounts, the process is usually called:

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Question 17

A benefit obtained from using industry averages is that it
provides a(n):

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Question 18

When the auditor uses tracing as an audit procedure for
tests of transactions she is primarily concerned with which audit
objective?

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Question 19

Calculating the gross margin for the current year under audit
as a percent of sales and comparing it with previous years is what
type of evidence?

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Question 20

Business risk:

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Question 21

In making client acceptance decisions, the audit firm will
consider:

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Question 22

If an auditor is requested to perform nonaudit services for a
public company audit client, who is responsible for agreeing to
those services with the audit firm?

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Question 23

The auditor is likely to accumulate more evidence when the
audit is for a company:

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Question 24

Most auditors assess inherent risk as high for related parties
and related-party transactions because:

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Question 25

The two major factors affecting acceptable audit risk are: