WILEY TEST SET 1 QUESTIONS AND
ANSWERS WITH VERIFIED SOLUTIONS
100% CORRECT RATED A+ NEWLY
UPDATED 2025
Generally accepted auditing standards are
a) required procedures to be used to gather evidence to support financial statements
b) policies and procedures designed to provide reasonable assurance that the CPA
firm and its personnel comply with professional standards.
c) pronouncements issued by the Auditing Standards Board
d) rules acknowledged by the accounting profession because of their universal
application - ANSWER✔✔C
Which of the following is MOST likely to be unique to the audit work of CPAs as
compared to work performed by practitioners of other professions?
a) due professional care
b) competence
c) independence
d) complex body of knowledge - ANSWER✔✔C
The PCAOB's standards require that due care is to be exercised in the performance
of an audit. This standard is ordinarily interpreted to require
a) thorough review of the existing safeguards over access to assets and records
b) limited review of the indications of employee fraud and illegal acts
,c) objective review of the adequacy of the technical training and proficiency of
firm personnel
d) critical review of the judgement exercised at every level of supervision -
ANSWER✔✔D
According to the standards of the profession, which of the following circumstances
will prevent a CPA performing audit engagements from being independent?
a) obtaining a collateralized automobile loan from a financial institution client
b) litigation with a client relating to billing for consulting for which the amount is
immaterial
c) employment of the CPA's spouse as a client's director of internal audit
d) acting as an honorary trustee for a not-for-profit organization client -
ANSWER✔✔C
According to the ethical standards of the profession, which of the following acts is
generally prohibited?
a) issuing a modified report explaining a failure to follow a governmental
regulatory agency's standards when conducting an attest service for a client
b) revealing confidential client information during a quality review of a
professional practice by a team from the state CPA society
c) accepting a contingent fee for representing a client in an examination of the
client's federal tax return by an IRS agent
d) retaining client records after an engagement is terminated prior to completion
and the client had demanded their return. - ANSWER✔✔D
According to the standards of the profession, which of the following activities
would most likely NOT impair a CPAs independence?
,a) providing advisory services for a client
b) contracting with a client to supervise the client's office personnel
c) signing a client's checks in emergency situations
d) accepting a luxurious gift from a client - ANSWER✔✔A
According to the ethical standards of the profession, which of the following acts is
generally prohibited?
a) purchasing a product from a third party and reselling it to a client
b) writing a financial management newsletter promoted and sold by a publishing
company
c) accepting a commission for recommending a product to an audit client
d) accepting engagements obtained through the efforts of third parties -
ANSWER✔✔C
To exercise due professional care an auditor should
a) critically review the judgement exercised by those assisting in the audit
b) examine all available corroborating evidence supporting managements
assertions
c) design the audit to detect all instances of illegal acts
d) attain the proper balance of professional experience and formal education -
ANSWER✔✔A
Which of the following statements is correct regarding an accountant's working
papers?
, a) the accountant owns the working papers and generally may disclose them as the
accountant sees fit
b) the client owns the working papers but the accountant has custody of them until
the accountant's bill is paid in full
c) the accountant owns the working papers but generally may not disclose them
without the client's consent or a court order
d) the client owns the working papers but, in the absence of the accountant's
consent, may not disclose them without a court order. - ANSWER✔✔C
Financial statement assertions are established for account balances,
a) classes of transactions and disclosures
b) classes of transactions
c) disclosures
d) None - ANSWER✔✔A
Which of the following is NOT a financial statement assertion relating to account
balances?
a) completeness
b) existence
c) rights and obligations
d) valuation and completeness - ANSWER✔✔D
As the acceptable level of detection risk decreases, an auditor may
ANSWERS WITH VERIFIED SOLUTIONS
100% CORRECT RATED A+ NEWLY
UPDATED 2025
Generally accepted auditing standards are
a) required procedures to be used to gather evidence to support financial statements
b) policies and procedures designed to provide reasonable assurance that the CPA
firm and its personnel comply with professional standards.
c) pronouncements issued by the Auditing Standards Board
d) rules acknowledged by the accounting profession because of their universal
application - ANSWER✔✔C
Which of the following is MOST likely to be unique to the audit work of CPAs as
compared to work performed by practitioners of other professions?
a) due professional care
b) competence
c) independence
d) complex body of knowledge - ANSWER✔✔C
The PCAOB's standards require that due care is to be exercised in the performance
of an audit. This standard is ordinarily interpreted to require
a) thorough review of the existing safeguards over access to assets and records
b) limited review of the indications of employee fraud and illegal acts
,c) objective review of the adequacy of the technical training and proficiency of
firm personnel
d) critical review of the judgement exercised at every level of supervision -
ANSWER✔✔D
According to the standards of the profession, which of the following circumstances
will prevent a CPA performing audit engagements from being independent?
a) obtaining a collateralized automobile loan from a financial institution client
b) litigation with a client relating to billing for consulting for which the amount is
immaterial
c) employment of the CPA's spouse as a client's director of internal audit
d) acting as an honorary trustee for a not-for-profit organization client -
ANSWER✔✔C
According to the ethical standards of the profession, which of the following acts is
generally prohibited?
a) issuing a modified report explaining a failure to follow a governmental
regulatory agency's standards when conducting an attest service for a client
b) revealing confidential client information during a quality review of a
professional practice by a team from the state CPA society
c) accepting a contingent fee for representing a client in an examination of the
client's federal tax return by an IRS agent
d) retaining client records after an engagement is terminated prior to completion
and the client had demanded their return. - ANSWER✔✔D
According to the standards of the profession, which of the following activities
would most likely NOT impair a CPAs independence?
,a) providing advisory services for a client
b) contracting with a client to supervise the client's office personnel
c) signing a client's checks in emergency situations
d) accepting a luxurious gift from a client - ANSWER✔✔A
According to the ethical standards of the profession, which of the following acts is
generally prohibited?
a) purchasing a product from a third party and reselling it to a client
b) writing a financial management newsletter promoted and sold by a publishing
company
c) accepting a commission for recommending a product to an audit client
d) accepting engagements obtained through the efforts of third parties -
ANSWER✔✔C
To exercise due professional care an auditor should
a) critically review the judgement exercised by those assisting in the audit
b) examine all available corroborating evidence supporting managements
assertions
c) design the audit to detect all instances of illegal acts
d) attain the proper balance of professional experience and formal education -
ANSWER✔✔A
Which of the following statements is correct regarding an accountant's working
papers?
, a) the accountant owns the working papers and generally may disclose them as the
accountant sees fit
b) the client owns the working papers but the accountant has custody of them until
the accountant's bill is paid in full
c) the accountant owns the working papers but generally may not disclose them
without the client's consent or a court order
d) the client owns the working papers but, in the absence of the accountant's
consent, may not disclose them without a court order. - ANSWER✔✔C
Financial statement assertions are established for account balances,
a) classes of transactions and disclosures
b) classes of transactions
c) disclosures
d) None - ANSWER✔✔A
Which of the following is NOT a financial statement assertion relating to account
balances?
a) completeness
b) existence
c) rights and obligations
d) valuation and completeness - ANSWER✔✔D
As the acceptable level of detection risk decreases, an auditor may
