ACCT 407 EXAM 1 QUESTIONS AND CORRECT ANSWERS

ACCT 407 EXAM 1 QUESTIONS AND
CORRECT ANSWERS
AssuranceA2-A2Ans--theA2lendingA2ofA2credibilityA2toA2information

AssuranceA2ServicesA2-A2Ans--
IndependentA2professionalA2servicesA2thatA2improveA2theA2qualityA2ofA2informationA2orA2its
A2contextA2forA2decisionA2makers


AttestationA2EngagementA2-A2Ans--
theA2provisionA2ofA2anA2opinionA2onA2subjectA2matterA2orA2anA2assertionA2aboutA2theA2subj
ectA2matterA2thatA2isA2theresponsibiityA2ofA2anotherA2party

AttestationA2-A2Ans--
theA2lendingA2ofA2credibilityA2ofA2assertionsA2madeA2byA2aA2thirdA2party

AuditingA2-A2Ans--
theA2systematicA2processA2ofA2objectivelyA2obtainingA2andA2evaluatingA2evidenceA2regardi
ngA2assertionsA2aboutA2economicA2actionsA2andA2eventsA2toA2ascertainA2theA2degreeA2ofA
2correspondanceA2betweenA2theA2assertionsA2andA2establishedA2criteriaA2andA2communic
atingA2theA2resultsA2toA2interestedA2users

BusinessA2RiskA2-A2Ans--
theA2riskA2thatA2anA2entityA2willA2failA2toA2meetA2itsA2objectives.A2ifA2theA2companyA2failsA2to
A2meetA2itsA2objectivesA2enoughA2times,A2theA2companyA2willA2ultimatelyA2fail


CompletenessA2-A2Ans--
allA2ofA2theA2transactions,A2events,A2assets,A2liabilities,A2equityA2interests,A2andA2otherA2di
sclosuresA2thatA2shouldA2haveA2beenA2recordedA2inA2theA2financialA2statementsA2haveA2ac
tuallyA2beenA2recorded

CutoffA2-A2Ans--
refersA2toA2accountingA2forA2revenue,A2expense,A2andA2otherA2transactionsA2inA2theA2prop
erA2periodA2(usuallyA2refersA2toA2theA2client'sA2year-endA2balanceA2sheetA2date)

ExistenceA2-A2Ans--allA2assets,A2liabilities,A2andA2equityA2interestsA2doA2actuallyA2exist

FinancialA2ReportingA2-A2Ans--
processA2ofA2providingA2statementsA2ofA2financialA2position,A2resultsA2ofA2operations,A2cha
ngesA2inA2cashA2flows,A2andA2accompanyingA2disclosureA2toA2outsideA2decisionA2makersA
2whoA2doA2notA2haveA2accessA2toA2management'sA2internalA2sourcesA2ofA2information

, InformationA2RiskA2-A2Ans--
theA2probabilityA2thatA2theA2informationA2circulatedA2byA2aA2companyA2willA2beA2falseA2orA2
misleading

InternalA2AuditingA2-A2Ans--
anA2independent,A2objectiveA2assuranceA2andA2consultingA2activityA2designedA2toA2addA2v
alueA2andA2imrpoveA2anA2organization'sA2operations

OccurenceA2-A2Ans--
AllA2ofA2theA2transactionsA2andA2eventsA2thatA2haveA2beenA2recordedA2areA2valid,A2pertain
A2toA2theA2entity,A2andA2haveA2actuallyA2takenA2place


OperationalA2AuditingA2-A2Ans--
theA2studyA2ofA2businessA2operationsA2forA2theA2purposeA2ofA2makingA2recommendationsA
2aboutA2theA2efficientA2useA2ofA2resources,A2effectiveA2achievementA2ofA2businessA2objecti
ves,A2andA2complianceA2withA2companyA2policies

PresentationA2andA2DisclosureA2-A2Ans--
ManagementA2assertionA2thatA2allA2transactionsA2andA2eventsA2haveA2beenA2presentedA2
correctlyA2andA2thatA2allA2relevantA2informationA2hasA2beenA2disclosedA2toA2financialA2stat
ementA2users,A2usuallyA2inA2theA2footnotesA2toA2theA2financialA2statements

ProfessionalA2SkepticismA2-A2Ans--
definedA2inA2theA2professionalA2auditingA2standardsA2asA2havingA2anA2attitudeA2thatA2"incl
udesA2aA2questioningA2mindA2andA2aA2criticalA2assessmentA2ofA2evidenceA2(essentiallyA2itA
2isA2anA2auditor'sA2tendencyA2toA2NOTA2believeA2management'sA2assertionsA2withoutA2cor
roboration)

RightsA2andA2ObligationsA2-A2Ans--
theA2entityA2isA2entitledA2toA2allA2rightsA2ofA2theA2assets,A2theA2liabilitiesA2areA2theA2legalA2r
esponsibilityA2ofA2theA2entity,A2andA2allA2ofA2theA2disclosedA2eventsA2andA2transactionsA2p
ertainA2toA2theA2entity

SubstantialA2EquivalencyA2-A2Ans--
theA2processA2throughA2whichA2CPAsA2licensedA2inA2oneA2stateA2canA2practiceA2inA2anoth
erA2state

ValuationA2orA2AllocationA2-A2Ans--
allA2assets,A2liabilities,A2andA2equityA2interestsA2ofA2theA2entityA2haveA2beenA2valuedA2inA2a
ccordanceA2withA2theA2relevantA2financialA2reportingA2standardsA2andA2areA2listedA2inA2the
A2financialA2statementsA2atA2theA2properA2amountA2andA2anyA2resultingA2valuationA2adjust
mentsA2haveA2beenA2appropriatelyA2recordedA2inA2theA2financialA2statements

AmericanA2InstituteA2ofA2CertifiedA2PublicA2AccountantsA2(AICPA)A2-A2Ans--
asA2relatedA2toA2professionalA2auditingA2standards,A2theA2bodyA2chargedA2withA2establishi