ACC 406 Exam 1 MC Practice Questions With Correct Answers

ACC 406 Exam 1 MC Practice Questions With
Correct Answers

a. |Which |of |the |following |best |describes |the |relationship |between |assurance |services |and |
attest |services? |- |CORRECT |ANSWER✔✔-Both |attest |and |assurance |services |require |
independence.



b. |Which |of |the |following |has |primary |responsibility |for |the |fairness |of |the |representations |
made |in |financial |statements? |- |CORRECT |ANSWER✔✔-Client's |management.



c. |The |most |important |benefit |of |having |an |annual |audit |by |a |public |accounting |firm |is |to: |- |
CORRECT |ANSWER✔✔-Provide |assurance |to |investors |and |other |outsiders |that |the |financial |
statements |are |reliable.



d. |The |Sarbanes-Oxley |Act |created |the |Public |Company |Accounting |Oversight |Board |(PCAOB). |
Which |of |the |following |is |not |one |of |the |responsibilities |of |that |board? |- |CORRECT |
ANSWER✔✔-Review |financial |reports |filed |with |the |SEC.



e. |Which |of |these |organizations |has |the |responsibility |to |perform |inspections |of |auditors |of |
public |companies? |- |CORRECT |ANSWER✔✔-Public |Company |Accounting |Oversight |Board.



f. |Governmental |auditing, |in |addition |to |including |audits |of |financial |statements, |often |
includes |audits |of |efficiency, |effectiveness, |and: |- |CORRECT |ANSWER✔✔-Compliance



g. |In |general, |internal |auditors' |independence |will |be |greatest |when |they |report |directly |to |
the: |- |CORRECT |ANSWER✔✔-Audit |committee |of |the |board |of |directors.

,h. |Which |of |the |following |did |not |precipitate |the |passage |of |the |Sarbanes-Oxley |Act |of |2002 |
to |regulate |public |accounting |firms: |- |CORRECT |ANSWER✔✔-Ethical |scandals |at |the |AICPA.



i. |Which |of |the |following |organizations |establishes |accounting |standards |for |U.S. |government |
agencies? |- |CORRECT |ANSWER✔✔-The |Federal |Accounting |Standards |Advisory |Board.



j. |Which |of |the |following |is |correct |about |forensic |audits? |- |CORRECT |ANSWER✔✔-Forensic |
audits |are |usually |performed |in |situations |in |which |fraud |has |been |found |or |is |suspected.



k. |What |best |describes |the |purpose |of |the |auditors' |consideration |of |internal |control |in |a |
financial |statement |audit |for |a |nonpublic |company? |- |CORRECT |ANSWER✔✔-To |determine |the
|nature, |timing, |and |extent |of |audit |testing.




l. |Which |of |the |following |is |an |example |of |a |compliance |audit? |- |CORRECT |ANSWER✔✔-An |
audit |of |a |company's |policies |and |procedures |for |adhering |to |environmental |laws |and |
regulations.



The |risk |that |a |company |will |not |be |able |to |meet |its |commitments |is |referred |to |as: |- |
CORRECT |ANSWER✔✔-business |risk.



The |CPA |exam: |- |CORRECT |ANSWER✔✔-has |four |sections



Which |of |the |following |is |not |an |example |of |an |assurance |service? |- |CORRECT |ANSWER✔✔-
Preparation |of |a |tax |return.



Which |of |the |following |is |a |type |of |attest |engagement? |- |CORRECT |ANSWER✔✔-Agreed-upon |
procedures.



The |audit |of |an |income |tax |return |by |an |auditor |of |the |Internal |Revenue |Service |is |considered |
a |(an): |- |CORRECT |ANSWER✔✔-compliance |audit.

, Some |of |the |following |criteria |are |essential |to |satisfactory |performance |in |several |professions. |
Which |one |is |unique |to |audit |work |by |CPAs? |- |CORRECT |ANSWER✔✔-Independence



An |effect |of |the |Sarbanes-Oxley |Act |of |2002 |was |to: |- |CORRECT |ANSWER✔✔-reduce |the |
accounting |profession's |level |of |self-regulation.



Which |of |the |following |is |an |area |in |which |the |Public |Company |Accounting |Oversight |Board |is |
not |empowered |to |establish |or |adopt |standards? |- |CORRECT |ANSWER✔✔-Accounting



Independent |auditors |of |the |year |1900 |differed |from |the |auditors |of |today |in |that |auditors |in |
1900 |were |more |concerned |with: |- |CORRECT |ANSWER✔✔-the |accuracy |of |the |balance |sheet.



Senior |auditors |typically |perform |all |of |the |following |tasks, |except: |- |CORRECT |ANSWER✔✔-
sign |the |audit |report.



An |audit |designed |to |detect |violations |of |laws |and |regulations |would |be |referred |to |as: |- |
CORRECT |ANSWER✔✔-a |compliance |audit.



To |improve |the |quality |of |financial |statements |filed |with |it, |the |SEC |has |adopted. |- |CORRECT |
ANSWER✔✔-Regulation |S-X.



Independent |audits |of |today |place |more |emphasis |on |sampling |than |did |the |audits |of |the |
19th |century. |- |CORRECT |ANSWER✔✔-True



The |American |Institute |of |Certified |Public |Accountants |creates |the |CPA |Exam, |while |individual |
states |issue |CPA |certificates |and |permits |CPAs |to |practice. |- |CORRECT |ANSWER✔✔-True