XMOCK EXAM 1 COMPLETE DETAILED
CASE STUDY
Dante CPA is auditing the financial statements of Crest computing. During the previous year, Kratzke CPAs
audited the financial statements. Crest has decided to present comparative financial statements for the
current year. which of the following statements is true about Kratke's report?
a. Kratzke should not reissue their report, since they may be unaware of recent circumstances that might
have affected the previous years FS
b. Kratzke should not reissue their report unless dante agrees to cosign that report
c. Kratzke should reissue the report on the previous statements without performing any additional
procedures as long as no changes have been made to those statements
d. Kratzke may issue their report on the previous statements only after performing limited procedures to
evaluate the continuing appropriateness of the report - D. should preform limited procedures like
reading the current statements, comparing current and prior statements, and obtaining a rep letter from
crest and dante
auditing standards require that the independent auditors report shall contain either an expression of
opinion regarding the financial statements, taken as a whole or an assertion to the effect that an opinion
cannot be expressed. which of the following would be prohibited by auditing standards?
a. none of the other actions are prohibited
b. the auditor disclaims an opinion on the entire set of FS
c. an auditor is hired to render an opinion on the balance sheet only
d. the auditor disclaims an opinion on the income statement and on the statement of cash flows, but
renders an unmodified opinion on the balance sheet - a. one objective of the auditor is issuing a report is
to prevent misinterpretation of the degree of responsibility assumed by the auditor. Disclaiming an
opinion on one or all of the statements is acceptable, as is a limited reporting engagement in which not
all of the financial statements are audited
as the acceptable level of detection risk decreases, and auditor may change the:
a. assessed level of inherent risk
b. assessed level of control risk from low to high
c. nature of substantive tests from a less effective to a more effective procedure
, d. timing of substantive tests from year end to interim - c. better evidence must be obtained to achieve a
lower level of detection risk
which is true about accounts receivable confirmations?
a. confirmations may be based on a single transaction rather that entire customer balances
b. confirmations provide evidence about existence rights and valuation
c. the client may mail the confirmations, but they should be returned directly to the auditor
d. blank confirmations provide improved response rates but may be less reliable - a. the auditor should
consider the types of information respondents will be readily able to confirm. for example, it may be
easier for certain respondents to confirm individual transactions rather than entire balances.
Kent industries anticipates that its sales revenue will grow by 5% during the coming year based on
historical returns, but also believes there is a slight chance for 20% growth if a new product that is
currently being developed is launched during the year. Kents management has prepared two sets of
financial statements, one based on 5% growth and the other based on 10% growth, in an effort to plan
for the future. Giacomo, CPA has been hired to examine both sets of financial statements. which of the
following is true regarding the two reports?
a. the report on the 10% growth FS would include a statement that the results may not be achieved
whereas the 5% growth FS would not require such comment
b. neither the report on the 10% growth FS nor the report on the 5% growth should provide positive
assurance
c. Both the report on the 10% growth FS and the report on the 5% growth FS are appropriate for limited
use
d. the 5% - c. both financial forecasts and financial projections are appropriate for limited use
an auditor provides positive assurance in all of the following reports except:
a. a report on a specified account in a FS
b. a report on a finanical presentation to comply with contractual agreements or regulatory
requirements
c. a report on other comprehensive basis of accounting financial statements
d. a report on compliance with contractual or regulatory requirements related to audited FS - d. negative
assurance is provided on compliance with contractual or regulatory requirements related to audited
financial statements
which of the following types of audit evidence is the least reliable?
a. canceled check
b. bank statement obtained from the client
c. vendors invoice
CASE STUDY
Dante CPA is auditing the financial statements of Crest computing. During the previous year, Kratzke CPAs
audited the financial statements. Crest has decided to present comparative financial statements for the
current year. which of the following statements is true about Kratke's report?
a. Kratzke should not reissue their report, since they may be unaware of recent circumstances that might
have affected the previous years FS
b. Kratzke should not reissue their report unless dante agrees to cosign that report
c. Kratzke should reissue the report on the previous statements without performing any additional
procedures as long as no changes have been made to those statements
d. Kratzke may issue their report on the previous statements only after performing limited procedures to
evaluate the continuing appropriateness of the report - D. should preform limited procedures like
reading the current statements, comparing current and prior statements, and obtaining a rep letter from
crest and dante
auditing standards require that the independent auditors report shall contain either an expression of
opinion regarding the financial statements, taken as a whole or an assertion to the effect that an opinion
cannot be expressed. which of the following would be prohibited by auditing standards?
a. none of the other actions are prohibited
b. the auditor disclaims an opinion on the entire set of FS
c. an auditor is hired to render an opinion on the balance sheet only
d. the auditor disclaims an opinion on the income statement and on the statement of cash flows, but
renders an unmodified opinion on the balance sheet - a. one objective of the auditor is issuing a report is
to prevent misinterpretation of the degree of responsibility assumed by the auditor. Disclaiming an
opinion on one or all of the statements is acceptable, as is a limited reporting engagement in which not
all of the financial statements are audited
as the acceptable level of detection risk decreases, and auditor may change the:
a. assessed level of inherent risk
b. assessed level of control risk from low to high
c. nature of substantive tests from a less effective to a more effective procedure
, d. timing of substantive tests from year end to interim - c. better evidence must be obtained to achieve a
lower level of detection risk
which is true about accounts receivable confirmations?
a. confirmations may be based on a single transaction rather that entire customer balances
b. confirmations provide evidence about existence rights and valuation
c. the client may mail the confirmations, but they should be returned directly to the auditor
d. blank confirmations provide improved response rates but may be less reliable - a. the auditor should
consider the types of information respondents will be readily able to confirm. for example, it may be
easier for certain respondents to confirm individual transactions rather than entire balances.
Kent industries anticipates that its sales revenue will grow by 5% during the coming year based on
historical returns, but also believes there is a slight chance for 20% growth if a new product that is
currently being developed is launched during the year. Kents management has prepared two sets of
financial statements, one based on 5% growth and the other based on 10% growth, in an effort to plan
for the future. Giacomo, CPA has been hired to examine both sets of financial statements. which of the
following is true regarding the two reports?
a. the report on the 10% growth FS would include a statement that the results may not be achieved
whereas the 5% growth FS would not require such comment
b. neither the report on the 10% growth FS nor the report on the 5% growth should provide positive
assurance
c. Both the report on the 10% growth FS and the report on the 5% growth FS are appropriate for limited
use
d. the 5% - c. both financial forecasts and financial projections are appropriate for limited use
an auditor provides positive assurance in all of the following reports except:
a. a report on a specified account in a FS
b. a report on a finanical presentation to comply with contractual agreements or regulatory
requirements
c. a report on other comprehensive basis of accounting financial statements
d. a report on compliance with contractual or regulatory requirements related to audited FS - d. negative
assurance is provided on compliance with contractual or regulatory requirements related to audited
financial statements
which of the following types of audit evidence is the least reliable?
a. canceled check
b. bank statement obtained from the client
c. vendors invoice
