Auditing Exam 1 Practice ACTUAL
UPDATED Exam Questions and
CORRECT Answers
The possibility that an entity will fail to meet its objectives is - CORRECT ANSWER -
business risk
To minimize business risk and take advantage of opportunities, CEOs demand information that
is: - CORRECT ANSWER - reliable, relevant, timely
A company's year end was Tuesday, December 31st. On Friday, January 3rd, the entire payroll
for the week was recorded as an expense. This is an example of a(n) - CORRECT
ANSWER - cutoff error
An audit is a specific type of - CORRECT ANSWER - attestation engagement
The assertions about the actuality of each balance sheet and income statement balance is
____________, while __________ asserts that each event and transaction actually happened -
CORRECT ANSWER - existence
occurrence
The ownership assertion: - CORRECT ANSWER - includes capitalized lease property
When management provides an independent auditor with prepared financial statements, they are
making assertions that: - CORRECT ANSWER - -disclosures are fairly presented
-revenue transactions on the income statement occurred
-reported liabilities are complete
-inventory on the balance sheet exists
, The objective of _____ auditing is to help an organization accomplish its objectives by bringing
a systematic, disciplined approach to evaluate and improve the effectiveness of risk management,
control and governance processes - CORRECT ANSWER - internal
Preparing financial statements from a client's books and records without performing and
evidence-gathering work is a(n) - CORRECT ANSWER - compilation
Providing assurance for specific management assertions is referred to as - CORRECT
ANSWER - attestation
The chance that customers will buy from competitors or product lines will become obsolete are
examples of what risk? - CORRECT ANSWER - business risk
Is auditing critical to helping ensure the liquidity of the world's capital markets? - CORRECT
ANSWER - Yes
The obligation assertion: - CORRECT ANSWER - -Includes ensuring proper footnote
disclosure
-Includes an estimate for product warranty
The broadest set of information, including nonfinancial information is covered by ____ services -
CORRECT ANSWER - assurance
The U.S. Government Accountability Office: - CORRECT ANSWER - -provides a wide
range of performance audits
-emphasizes the accountability of public officials in regards to public funds and other resources
-provides a compliance audit function with respect to laws and regulations
"An independent, objective assurance and consulting activity designed to add value and improve
an organization's operations" is the definition of ___ auditing - CORRECT ANSWER -
internal
UPDATED Exam Questions and
CORRECT Answers
The possibility that an entity will fail to meet its objectives is - CORRECT ANSWER -
business risk
To minimize business risk and take advantage of opportunities, CEOs demand information that
is: - CORRECT ANSWER - reliable, relevant, timely
A company's year end was Tuesday, December 31st. On Friday, January 3rd, the entire payroll
for the week was recorded as an expense. This is an example of a(n) - CORRECT
ANSWER - cutoff error
An audit is a specific type of - CORRECT ANSWER - attestation engagement
The assertions about the actuality of each balance sheet and income statement balance is
____________, while __________ asserts that each event and transaction actually happened -
CORRECT ANSWER - existence
occurrence
The ownership assertion: - CORRECT ANSWER - includes capitalized lease property
When management provides an independent auditor with prepared financial statements, they are
making assertions that: - CORRECT ANSWER - -disclosures are fairly presented
-revenue transactions on the income statement occurred
-reported liabilities are complete
-inventory on the balance sheet exists
, The objective of _____ auditing is to help an organization accomplish its objectives by bringing
a systematic, disciplined approach to evaluate and improve the effectiveness of risk management,
control and governance processes - CORRECT ANSWER - internal
Preparing financial statements from a client's books and records without performing and
evidence-gathering work is a(n) - CORRECT ANSWER - compilation
Providing assurance for specific management assertions is referred to as - CORRECT
ANSWER - attestation
The chance that customers will buy from competitors or product lines will become obsolete are
examples of what risk? - CORRECT ANSWER - business risk
Is auditing critical to helping ensure the liquidity of the world's capital markets? - CORRECT
ANSWER - Yes
The obligation assertion: - CORRECT ANSWER - -Includes ensuring proper footnote
disclosure
-Includes an estimate for product warranty
The broadest set of information, including nonfinancial information is covered by ____ services -
CORRECT ANSWER - assurance
The U.S. Government Accountability Office: - CORRECT ANSWER - -provides a wide
range of performance audits
-emphasizes the accountability of public officials in regards to public funds and other resources
-provides a compliance audit function with respect to laws and regulations
"An independent, objective assurance and consulting activity designed to add value and improve
an organization's operations" is the definition of ___ auditing - CORRECT ANSWER -
internal
