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ACCT 5200 QUIZ 2 (TEST PREP) QUESTIONS

ACCT 5200 FINAL QUESTIONS & ANSWERS

ACCT 5200 Exam 1 | Answered with complete solutions What is auditing? focuses on determining whether recorded information properly reflects the economic events that occurred during the accounting period What is the difference between auditing and accounting? Auditing verifies that accounting information is accurate Auditors must understand accounting principles and rules and know how to ____________ and ___________ audit evidence to evaluate financial information accumulate, interpret Informa...

Operational Audits correct answers concentrates on seeking aspects of operations in which wastes could be reduced by the introduction of controls Endogenous demand for audit correct answers Audit is demanded by the actors of the economy itself, not a regulatory body Exogenous demand for audit correct answers government legislation demands audit to be performed Internal values of audit to issuer correct answers better information for decision making, lower theft and fraud losses Exter...

Internal control correct answers A process, effected by an entity's BOD, management, and other personnel Composed of policies and procedures designed to provide reasonable assurance that the company achieves its objectives in following: - Reliability of financial reporting - Effectiveness/efficiency of operations - Compliance with laws/regulations Limitations of Internal Control correct answers Personnel errors - misunderstanding instructions, being careless or fatigued Manageme...

Ethics correct answers Deals with the concepts of right and wrong; standards of how people ought to act Morals correct answers Deals with manners, morals, character Values correct answers Basic and fundamental beliefs that guide or motivate attitudes or actions Nurse who refuses CPR to elderly woman video. Look at it morally and ethically and describe correct answers Ethically: she followed the rules of her company and did what she was supposed to Morally: a woman died because this ce...

Revenue recognition criteria is outlined in correct answers Staff Accounting Bulletin 101 For revenue to be recognized: some persuasive ______________________________ has to exist, delivery has occurred or services have been __________, the sellers price to the buyer is fixed or ________________, collectability is _______________________. correct answers evidence of an arrangement, rendered, determinable, reasonably assured Fraud Risks correct answers side agreements, channel stuffing, rel...

sampling correct answers to apply an audit procedure to less than 100% of items in a population attributes sampling correct answers used to estimate the proportion of a population containing a certain characteristic, aka ATTRIBUTE for test of controls: look at control deviation for substantive test of transactions: look at monetary misstatements in transactions sampling of balances correct answers used to estimate amount of misstatement present in account balance representative s...

preliminary audit planning correct answers -understand the client's business and industry -assess clients business risk -perform preliminary analytical procedures all of this happens before materiality is even set engagement letter correct answers A letter that formalizes the contract between the auditor and the entity and outlines the responsibilities of both parties. materiality definition correct answers the magnitude of an omission or misstatement of accounting information tha...

information risk correct answers the possibility that the information upon which the business risk decision was made was inaccurate causes: -remoteness of information -biases and motives of the provider -complexity -voluminous data cost of information risk is a factor in Cost of Capital; COC= risk free rate of return, economic risk premium, information risk premium higher information risk premium=high cost of capital remoteness of information correct answers can't get an insid...