ACCT 3222-3 EXAM 1 WILEY LSU ONLINE PRACTICE EXAM |
QUESTIONS AND ANSWERS | VERIFIED AND WELL DETAILED
ANSWERS (100% CORRECT ANSWERS) LATEST EXAM VERSION
Audit Services - CORRECT ANSWER - services by an independent CPA that
provide financial statement users with (1) an opinion on whether the financial
statements are presented fairly, in all material respects, in accordance with an
applicable financial reporting framework and (2) an opinion on the effectiveness of
ICFR, which enhance the degree of confidence that intended users can place in the
financial statements
Attestation Services - CORRECT ANSWER - Services performed when an
independent practitioner, or CPA, is engaged to issue a report on subject matter that
is the responsibility of another party
Relationship of assurance, attestation, and auditing services from most to least
improved of quality (i.e., assurance) - CORRECT ANSWER - Audit - highest
quality/reasonable assurance (i.e., historical financial statements)
Attestation - mid quality/limited assurance (i.e., review of historical financial
statements, examination of internal controls, review of financial forecast)
Assurance - lowest quality (i.e., compilation of historical financial statements,
website security, IT operations, non-financial information)
Assurance Services - CORRECT ANSWER - independent professional services
that improve the quality of information, or its context, for decision makers
,Applicable financial reporting framework refers to - CORRECT ANSWER - the
set of standards used in preparing the historical financial statements (i.e., GAAP,
IFRS, or federal income tax basis of accounting)
Independent implies that the service is performed by - CORRECT ANSWER -
someone who was not involved with the creation of the information and who is
objective in the evaluation of the information
Quality refers to - CORRECT ANSWER - the relevance and realiability of the
information
Information refers to - CORRECT ANSWER - subject matter that can be
financial or nonfinancial, historical or prospective, standalone data or entire
systems of data, internal or external to a company
CPAs are the only _________ accounting professionals in the US and the
________ are issued at the ____________ level - CORRECT ANSWER -
Licensed accounting professionals in the US.
Licenses are issued at the state level, not federal
A state board of accountancy will only issue - CORRECT ANSWER - a licence
to practice after all three Es have been earned
CPA Es - CORRECT ANSWER - Education, Exam, and Experience
Public companies, or issuers, in the US are required by federal government to have
- CORRECT ANSWER - an annual financial statement audit and an ICFR audit
,Private companies, or non-issuers, are _______ to have an annual audit by federal
government, but - CORRECT ANSWER - Not required by law, other interested
users may request audited financial statements (i.e., lenders)
ICFR - CORRECT ANSWER - Internal Control over Financial Reporting
Integrated Audit - CORRECT ANSWER - An audit that combines the financial
statement audit with an audit of the effectiveness of ICFR
The limitations of an audit are cause by - CORRECT ANSWER - 1. the nature of
financial reporting
2. the nature of audit procedures
3. the need for the audit to be conducted within a reasonable period of time at a
reasonable cost
The nature of financial reporting refers to - CORRECT ANSWER - the use of
judgment when preparing financial statements due to the subjectivity required
when arriving at accounting estimates and judgment required when selecting and
applying accounting methods
The nature of audit procedures refers to - CORRECT ANSWER - Reliance on
evidence provided by the client and its managements, as well as the concept of
materiality
Materiality - CORRECT ANSWER - the ability of information to influence
decisions that users make on the basis of the financial information of a specific
reporting entity
, Compliance Audit - CORRECT ANSWER - an audit to determine whether the
entity has conformed with regulations, rules, or processes
Operational (Performance) Audit - CORRECT ANSWER - An assessment of the
economy, efficiency, and effectiveness of an organization's operations
Operational Audit economy, efficiency, and effectiveness refer to - CORRECT
ANSWER - Economy refers to the cost of inputs
Efficiency refers to the relationship between inputs and outputs
Effectiveness refers to the achievement of certain goals or the production of a
certain level of outputs
Internal Audit - CORRECT ANSWER - A function within an entity which
generally evaluates and improves risk management, internal control procedures,
and elements of the governance process
Those charged with governance - CORRECT ANSWER - Persons with
responsibility for overseeing the strategic direction of the entity and the obligations
related to the accountability of the entity
The external auditor may rely on the work done by - CORRECT ANSWER -
Internal auditors when evaluating the evidence needed to form an opinion on the
financial statements or on ICFR
Financial Statement Users include - CORRECT ANSWER - Investors, suppliers,
customers, lenders, employees, governments, and the general public
QUESTIONS AND ANSWERS | VERIFIED AND WELL DETAILED
ANSWERS (100% CORRECT ANSWERS) LATEST EXAM VERSION
Audit Services - CORRECT ANSWER - services by an independent CPA that
provide financial statement users with (1) an opinion on whether the financial
statements are presented fairly, in all material respects, in accordance with an
applicable financial reporting framework and (2) an opinion on the effectiveness of
ICFR, which enhance the degree of confidence that intended users can place in the
financial statements
Attestation Services - CORRECT ANSWER - Services performed when an
independent practitioner, or CPA, is engaged to issue a report on subject matter that
is the responsibility of another party
Relationship of assurance, attestation, and auditing services from most to least
improved of quality (i.e., assurance) - CORRECT ANSWER - Audit - highest
quality/reasonable assurance (i.e., historical financial statements)
Attestation - mid quality/limited assurance (i.e., review of historical financial
statements, examination of internal controls, review of financial forecast)
Assurance - lowest quality (i.e., compilation of historical financial statements,
website security, IT operations, non-financial information)
Assurance Services - CORRECT ANSWER - independent professional services
that improve the quality of information, or its context, for decision makers
,Applicable financial reporting framework refers to - CORRECT ANSWER - the
set of standards used in preparing the historical financial statements (i.e., GAAP,
IFRS, or federal income tax basis of accounting)
Independent implies that the service is performed by - CORRECT ANSWER -
someone who was not involved with the creation of the information and who is
objective in the evaluation of the information
Quality refers to - CORRECT ANSWER - the relevance and realiability of the
information
Information refers to - CORRECT ANSWER - subject matter that can be
financial or nonfinancial, historical or prospective, standalone data or entire
systems of data, internal or external to a company
CPAs are the only _________ accounting professionals in the US and the
________ are issued at the ____________ level - CORRECT ANSWER -
Licensed accounting professionals in the US.
Licenses are issued at the state level, not federal
A state board of accountancy will only issue - CORRECT ANSWER - a licence
to practice after all three Es have been earned
CPA Es - CORRECT ANSWER - Education, Exam, and Experience
Public companies, or issuers, in the US are required by federal government to have
- CORRECT ANSWER - an annual financial statement audit and an ICFR audit
,Private companies, or non-issuers, are _______ to have an annual audit by federal
government, but - CORRECT ANSWER - Not required by law, other interested
users may request audited financial statements (i.e., lenders)
ICFR - CORRECT ANSWER - Internal Control over Financial Reporting
Integrated Audit - CORRECT ANSWER - An audit that combines the financial
statement audit with an audit of the effectiveness of ICFR
The limitations of an audit are cause by - CORRECT ANSWER - 1. the nature of
financial reporting
2. the nature of audit procedures
3. the need for the audit to be conducted within a reasonable period of time at a
reasonable cost
The nature of financial reporting refers to - CORRECT ANSWER - the use of
judgment when preparing financial statements due to the subjectivity required
when arriving at accounting estimates and judgment required when selecting and
applying accounting methods
The nature of audit procedures refers to - CORRECT ANSWER - Reliance on
evidence provided by the client and its managements, as well as the concept of
materiality
Materiality - CORRECT ANSWER - the ability of information to influence
decisions that users make on the basis of the financial information of a specific
reporting entity
, Compliance Audit - CORRECT ANSWER - an audit to determine whether the
entity has conformed with regulations, rules, or processes
Operational (Performance) Audit - CORRECT ANSWER - An assessment of the
economy, efficiency, and effectiveness of an organization's operations
Operational Audit economy, efficiency, and effectiveness refer to - CORRECT
ANSWER - Economy refers to the cost of inputs
Efficiency refers to the relationship between inputs and outputs
Effectiveness refers to the achievement of certain goals or the production of a
certain level of outputs
Internal Audit - CORRECT ANSWER - A function within an entity which
generally evaluates and improves risk management, internal control procedures,
and elements of the governance process
Those charged with governance - CORRECT ANSWER - Persons with
responsibility for overseeing the strategic direction of the entity and the obligations
related to the accountability of the entity
The external auditor may rely on the work done by - CORRECT ANSWER -
Internal auditors when evaluating the evidence needed to form an opinion on the
financial statements or on ICFR
Financial Statement Users include - CORRECT ANSWER - Investors, suppliers,
customers, lenders, employees, governments, and the general public
