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