ACC 405 CHAPTER 4 QUESTIONS
AND ANSWERS
Intentional-Distortions-of-financial-statements---ans-✔✔Management-fraud-generally-
refers-to
Reporting-immaterial-frauds-to-a-level-of-management-at-least-one-level-above-the-people-
involved---ans-✔✔External-auditors-are-responsible-for:
The-discovery-of-unexplained-payments-made-to-government-employees---ans-
✔✔Which-of-the-following-information-that-comes-to-an-auditor's-attention-most-likely-
would-raise-a-question-about-the-occurrence-of-illegal-acts?
Operating-expense-transactions---ans-✔✔Analytical-procedures-are-most-appropriate-
when-testing-which-of-the-following-types-of-transactions?
An-error-in-recording-amortization-of-the-excess-of-the-investor's-cost-over-the-
investment's-underlying-book-value---ans-✔✔An-auditor's-analytical-procedures-indicate-
a-lower-than-expected-return-on-an-equity-method-investment.-This-situation-most-likely-
could-have-been-caused-by:
Checking---ans-✔✔Prior-to,-or-in-conjunction-with,-the-information-gathering-procedures-
for-an-audit,-audit-team-members-should-discuss-the-potential-for-material-misstatement-
due-to-fraud.-Which-of-the-following-best-describes-the-mind-set-that-the-audit-team-
should-maintain-during-this-discussion?
Comparing-current-year-to-prior-year-sales-volumes---ans-✔✔Which-of-the-following-
analytical-procedures-most-likely-would-be-used-during-the-planning-stage-of-an-audit?
The-adequacy-of-the-disclosure-of-the-related-party-transactions---ans-✔✔In-auditing-
related-parties-transactions,-an-auditor-ordinarily-places-primary-emphasis-on:
Projecting-a-deviation-rate-by-comparing-the-results-of-a-statistical-sample-with-the-actual-
population-characteristics.---ans-✔✔Which-of-the-following-would-not-be-considered-an-
analytical-procedures?
There-is-a-broad-indication-of-financial-reporting-fraud---ans-✔✔While-performing-an-
audit-of-the-financial-statements-of-a-company-for-the-year-ended-December-31,-year-1,-
the-auditor-notes-that-the-company's-sales-increased-substantially-in-December,-year-1,-
AND ANSWERS
Intentional-Distortions-of-financial-statements---ans-✔✔Management-fraud-generally-
refers-to
Reporting-immaterial-frauds-to-a-level-of-management-at-least-one-level-above-the-people-
involved---ans-✔✔External-auditors-are-responsible-for:
The-discovery-of-unexplained-payments-made-to-government-employees---ans-
✔✔Which-of-the-following-information-that-comes-to-an-auditor's-attention-most-likely-
would-raise-a-question-about-the-occurrence-of-illegal-acts?
Operating-expense-transactions---ans-✔✔Analytical-procedures-are-most-appropriate-
when-testing-which-of-the-following-types-of-transactions?
An-error-in-recording-amortization-of-the-excess-of-the-investor's-cost-over-the-
investment's-underlying-book-value---ans-✔✔An-auditor's-analytical-procedures-indicate-
a-lower-than-expected-return-on-an-equity-method-investment.-This-situation-most-likely-
could-have-been-caused-by:
Checking---ans-✔✔Prior-to,-or-in-conjunction-with,-the-information-gathering-procedures-
for-an-audit,-audit-team-members-should-discuss-the-potential-for-material-misstatement-
due-to-fraud.-Which-of-the-following-best-describes-the-mind-set-that-the-audit-team-
should-maintain-during-this-discussion?
Comparing-current-year-to-prior-year-sales-volumes---ans-✔✔Which-of-the-following-
analytical-procedures-most-likely-would-be-used-during-the-planning-stage-of-an-audit?
The-adequacy-of-the-disclosure-of-the-related-party-transactions---ans-✔✔In-auditing-
related-parties-transactions,-an-auditor-ordinarily-places-primary-emphasis-on:
Projecting-a-deviation-rate-by-comparing-the-results-of-a-statistical-sample-with-the-actual-
population-characteristics.---ans-✔✔Which-of-the-following-would-not-be-considered-an-
analytical-procedures?
There-is-a-broad-indication-of-financial-reporting-fraud---ans-✔✔While-performing-an-
audit-of-the-financial-statements-of-a-company-for-the-year-ended-December-31,-year-1,-
the-auditor-notes-that-the-company's-sales-increased-substantially-in-December,-year-1,-
