ACC 480 Exam 1 Review Questions And Answers 100% Verified

ACC 480 Exam 1 Review Questions And Answers 100% Verified Independent auditing can best be described as a. A branch of accounting. b. A discipline that provides assurance regarding the results of accounting and other functional operations and data. c. A professional activity that measures and communicates financial and business data. d. A regulatory function that prevents the issuance of improper financial information. - answerb. A discipline that provides assurance regarding the results of accounting and other functional operations and data. Information asymmetry a. Refers to an imbalance of information among stockholders in a company. b. Refers to an imbalance of information between the auditor and the management of the company. c. Refersto an imbalance of information between stockholders and the management of the company. d. Refersto an imbalance of information between the auditor and the stockholders of the company. - answerc. Refersto an imbalance of information between stockholders and the management of the company. Which of the following best describes the primary reason an independent auditor reports on financial statements? a. To give stockholders some assurance that any fraudulent activities will be detected. b. To identify a poorly designed internal control structure that may produce unreliable financial statements. c. To provide expertise to management, which may not be totally knowledgeable of prevailing GAAP. d. To add credibility, where appropriate, since management may not be perceived as objective with respect to its own financial statements. - answerd. To add credibility, where appropriate, since management may not be perceived as objective with respect to its own financial statements. Financial statement users' demand for assurance is similar to that of a potential home buyer who hires a home inspector in that a. The buyer [or user] pays directly for this assurance in both situations. b. There are often information asymmetry and conflicts of interest. c. The cost of obtaining information is not relevant. d. Independence is not relevant in either situation. - answerb. There are often information asymmetry and conflicts of interest. Assurance services differ from auditing services in that a. Assurance services are more narrow in scope than audit services. b. Assurance services may include a report about the relevance and timeliness, not just the reliability, of the information. c. Assurance services are limited to economic events or actions, and audit services are not similarly limited. d. Audit services do not improve the quality of information as do assurance services. - answerb. Assurance services may include a report about the relevance and timeliness, not just the reliability, of the information. Which of the following best describes the relationship between attestation services and audit services? a. Attestation is a subset of auditing that improvesthe quality of information for decision makers. b. Auditing is a subset of attestation and focuses on providing companies with advisory services and decision support. c. Auditing is a subset of attestation that involves the issuance of an opinion regarding the fairness of financial statements. d. Attestation is a subset of auditing that provides more assurance than does an audit engagement. - answerc. Auditing is a subset of attestation that involves the issuance of an opinion regarding the fairness of financial statements. The fact that errors and/or omissions in certain relatively insignificant account balances would not affect an auditor's decision when reporting on the financial statements as a whole relates most closely to which major audit concept? a. Materiality. b. Audit risk. c. Management assertions. d. Reasonable assurance. - answera. Materiality. Audit evidence a. May only be gathered from parti