Gleim- Final Exam
15.1.14 Adequate disclosure means that sufficient information is presented so that financial statements
are not misleading. The decisions about adequate disclosure should reflect the needs of
A. Users with a reasonable knowledge of business
B. All readers of the financial statements
C. Experts in accounting and finance
D. Government regulatory agencies - A
15.1.5 If a company's external auditor expresses an unmodified opinion as a result of the audit of the
company's financial statement's, readers of the audit report can assume that
A. The external auditor found no fraud
B. The company is financially sound and the financial statements are accurate
C. Internal control is effective
D. Material issues about the application of accounting principles were resolved to the satisfaction of the
auditor - D
15.1.1 The objective of the audit of GAAP-based financial statements is to
A. Make suggestions as to the form or content of the financial statements or to draft them in whole or in
part
B. Express an opinion on the fairness with which the statements present financial position, results of
operations, and cash flows in accordance with GAAP
C. Ensure adoption of sound accounting policies and the establishment and maintenance of internal
control
D. Express an opinion on the accuracy with which the statements present financial position, results of
operations, and cash flows in accordance with GAAP - B
15.1.2 Which of the following statements best describes the distinction between the auditor's
responsibilities and management's responsibilities?
A. Management has responsibility for maintaining and adopting sound accounting principles, and the
auditor has responsibility for internal control
, B. Management has responsibility for the basic data underlying financial statements, and the auditor has
responsibility for drafting the financial statements
C. The auditor's responsibility is confined to the audited portion of the financial statements, and
managements's responsibility is confined to the unaudited portions
D. The auditor's responsibility is confined to expressing an opinion, but the financial statements remain
the responsibility of management - D
15.1.3 The evaluation of fairness in determining the appropriate opinion to express should include
consideration of the qualitative aspects of the entity's accounting practices, including whether
A. Indicators of possible bias exist in management's judgments
B. The accounting principles used are the most conservative available
C. Management and those charged with governance agree with all the standards used in the reporting
process
D. The auditor and management agree with all the standards used in the reporting process - A
15.1.4 Which of the following best describes why an independent auditor is asked to express an opinion
on the fair presentation of financial statements?
A. It is difficult to prepare financial statements that fairly present a company's financial position, results
of operations and cash flows without the expertise of an independent auditor
B. It is management's responsibility to seek available independent aid in the appraisal of the financial
information shown in its financial statements
C. The opinion of an independent party is needed because a company may not be objective with respect
to its own financial statements
D. It is customary courtesy that all shareholders of a company receive an independent report on
management's stewardship in managing the affairs of the business - C
15.1.6 A major purpose of the auditor's report on financial statements is to
A. Assure investors of the complete accuracy of the financial statements
B. Clarify for the public the nature of the auditor's responsibility and performance
C. Deter creditors from extending loans in high-risk situations
D. Describe the specific auditing procedures undertaken to gather evidence for the opinion - B
15.1.14 Adequate disclosure means that sufficient information is presented so that financial statements
are not misleading. The decisions about adequate disclosure should reflect the needs of
A. Users with a reasonable knowledge of business
B. All readers of the financial statements
C. Experts in accounting and finance
D. Government regulatory agencies - A
15.1.5 If a company's external auditor expresses an unmodified opinion as a result of the audit of the
company's financial statement's, readers of the audit report can assume that
A. The external auditor found no fraud
B. The company is financially sound and the financial statements are accurate
C. Internal control is effective
D. Material issues about the application of accounting principles were resolved to the satisfaction of the
auditor - D
15.1.1 The objective of the audit of GAAP-based financial statements is to
A. Make suggestions as to the form or content of the financial statements or to draft them in whole or in
part
B. Express an opinion on the fairness with which the statements present financial position, results of
operations, and cash flows in accordance with GAAP
C. Ensure adoption of sound accounting policies and the establishment and maintenance of internal
control
D. Express an opinion on the accuracy with which the statements present financial position, results of
operations, and cash flows in accordance with GAAP - B
15.1.2 Which of the following statements best describes the distinction between the auditor's
responsibilities and management's responsibilities?
A. Management has responsibility for maintaining and adopting sound accounting principles, and the
auditor has responsibility for internal control
, B. Management has responsibility for the basic data underlying financial statements, and the auditor has
responsibility for drafting the financial statements
C. The auditor's responsibility is confined to the audited portion of the financial statements, and
managements's responsibility is confined to the unaudited portions
D. The auditor's responsibility is confined to expressing an opinion, but the financial statements remain
the responsibility of management - D
15.1.3 The evaluation of fairness in determining the appropriate opinion to express should include
consideration of the qualitative aspects of the entity's accounting practices, including whether
A. Indicators of possible bias exist in management's judgments
B. The accounting principles used are the most conservative available
C. Management and those charged with governance agree with all the standards used in the reporting
process
D. The auditor and management agree with all the standards used in the reporting process - A
15.1.4 Which of the following best describes why an independent auditor is asked to express an opinion
on the fair presentation of financial statements?
A. It is difficult to prepare financial statements that fairly present a company's financial position, results
of operations and cash flows without the expertise of an independent auditor
B. It is management's responsibility to seek available independent aid in the appraisal of the financial
information shown in its financial statements
C. The opinion of an independent party is needed because a company may not be objective with respect
to its own financial statements
D. It is customary courtesy that all shareholders of a company receive an independent report on
management's stewardship in managing the affairs of the business - C
15.1.6 A major purpose of the auditor's report on financial statements is to
A. Assure investors of the complete accuracy of the financial statements
B. Clarify for the public the nature of the auditor's responsibility and performance
C. Deter creditors from extending loans in high-risk situations
D. Describe the specific auditing procedures undertaken to gather evidence for the opinion - B
