Auditing Exam 1 Practice UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Auditing services and attestation services are the same. (T/F) - CORRECT ANSWER -
False
Auditing is a type of attest service. (T/F) - CORRECT ANSWER - True
Which of the following statements about the study of auditing is NOT true?
A. The study of auditing rarely involves judgement and rather focuses on learning the rules,
techniques, and computations required to analyze financial statements.
B. The study of auditing can be valuable to future accountants and business decision makers
whether or not they plan to become auditors.
C. The study of auditing focuses on learning the analytical and logical skills necessary to
evaluate the relevance and reliability of information.
D. All of the above statements are not true. - CORRECT ANSWER -A
Why do auditors generally use a sampling approach to evidence gathering?
A. The auditor's relationship with the auditee is generally adversarial, so the auditor will not have
access to all of the financial information of the company.
B. Auditors must limit their exposure to their auditee to maintain independence.
C. Auditors are experts and do not need to look at much to know whether the financial
statements are correct or not.
D. Auditors must consider the cost and the feasibility of conducting an audit - CORRECT
ANSWER -D
Which of the following best describes the concept of audit risk?
, A. The risk of the auditor being sued because of association with an auditee.
B. The risk that auditors use audit procedures that are inappropriate.
C. The overall risk that a material misstatement exists in the financial statements.
D. The risk that the auditor will provide a "clean" opinion on financial statements that are, in
fact, materially misstated. - CORRECT ANSWER -D
When the auditor is unable to determine the amounts associated with the illegal acts of entity
personnel because of an inability to obtain adequate evidence, the auditor should issue a(n)
A. unqualified report that uses 'except for' wording.
B. disclaimer of opinion.
C. adverse opinion.
D. unqualified opinion with a separate explanatory/emphasis-of-matter paragraph. - CORRECT
ANSWER -D
Which of the following is NOT an element of the standard unmodified report.
A. Report title.
B. Addressee.
C. Introductory paragraph.
D. Statement of Retained Earnings. - CORRECT ANSWER -D
When the client fails to include information that is necessary for the fair presentation of financial
statements in accordance with GAAP (Hint: GAAP violation), the circumstance requires the
auditor to express a(n)
A. qualified opinion or a disclaimer of opinion.
B. qualified opinion or an adverse opinion.
C. adverse opinion or a disclaimer of opinion.
ACTUAL Exam Questions and CORRECT
Answers
Auditing services and attestation services are the same. (T/F) - CORRECT ANSWER -
False
Auditing is a type of attest service. (T/F) - CORRECT ANSWER - True
Which of the following statements about the study of auditing is NOT true?
A. The study of auditing rarely involves judgement and rather focuses on learning the rules,
techniques, and computations required to analyze financial statements.
B. The study of auditing can be valuable to future accountants and business decision makers
whether or not they plan to become auditors.
C. The study of auditing focuses on learning the analytical and logical skills necessary to
evaluate the relevance and reliability of information.
D. All of the above statements are not true. - CORRECT ANSWER -A
Why do auditors generally use a sampling approach to evidence gathering?
A. The auditor's relationship with the auditee is generally adversarial, so the auditor will not have
access to all of the financial information of the company.
B. Auditors must limit their exposure to their auditee to maintain independence.
C. Auditors are experts and do not need to look at much to know whether the financial
statements are correct or not.
D. Auditors must consider the cost and the feasibility of conducting an audit - CORRECT
ANSWER -D
Which of the following best describes the concept of audit risk?
, A. The risk of the auditor being sued because of association with an auditee.
B. The risk that auditors use audit procedures that are inappropriate.
C. The overall risk that a material misstatement exists in the financial statements.
D. The risk that the auditor will provide a "clean" opinion on financial statements that are, in
fact, materially misstated. - CORRECT ANSWER -D
When the auditor is unable to determine the amounts associated with the illegal acts of entity
personnel because of an inability to obtain adequate evidence, the auditor should issue a(n)
A. unqualified report that uses 'except for' wording.
B. disclaimer of opinion.
C. adverse opinion.
D. unqualified opinion with a separate explanatory/emphasis-of-matter paragraph. - CORRECT
ANSWER -D
Which of the following is NOT an element of the standard unmodified report.
A. Report title.
B. Addressee.
C. Introductory paragraph.
D. Statement of Retained Earnings. - CORRECT ANSWER -D
When the client fails to include information that is necessary for the fair presentation of financial
statements in accordance with GAAP (Hint: GAAP violation), the circumstance requires the
auditor to express a(n)
A. qualified opinion or a disclaimer of opinion.
B. qualified opinion or an adverse opinion.
C. adverse opinion or a disclaimer of opinion.
