ACCT 407 EXAM 1 QUESTIONS AND
CORRECT ANSWERS
inA2anA2attestationA2engagement,A2aA2CPAA2practitionerA2isA2engagedA2toA2-A2Ans--
prepareA2aA2writtenA2reportA2containingA2aA2conclusionA2aboutA2theA2reliabilityA2ofA2aA2ma
nagementA2assertion
AccordingA2toA2theA2AICPA,A2theA2purposeA2ofA2anA2auditA2ofA2financialA2statementsA2isA2t
oA2-A2Ans--
enhanceA2theA2degreeA2ofA2confidenceA2thatA2intendedA2usersA2canA2placeA2inA2financialA2
statements.
independentA2auditorsA2ofA2financialA2statementsA2performA2auditsA2thatA2reduceA2-
A2Ans--informationA2riskA2facedA2byA2investors
theA2objectiveA2inA2anA2auditor'sA2reviewA2ofA2creditA2ratingsA2ofA2aA2client'sA2customersA2i
sA2toA2obtainA2evidenceA2relatedA2toA2management'sA2assertionA2aboutA2-A2Ans--
valuationA2orA2allocation
whenA2auditingA2merchandiseA2inventoryA2atA2year-
end,A2theA2auditorA2performsA2auditA2proceduresA2toA2ensureA2thatA2allA2goodsA2purchase
dA2beforeA2year-
endA2areA2receivedA2beforeA2theA2physicalA2inventoryA2count.A2thisA2auditA2procedureA2pr
ovidesA2assuranceA2aboutA2whichA2managementA2assertion?A2-A2Ans--cutoff
whenA2anA2auditorA2reviewsA2additionsA2toA2theA2equipmentA2(fixedA2asset)A2accountA2toA2
makeA2sureA2thatA2fixedA2assetsA2areA2notA2overstated,A2sheA2wantsA2toA2obtainA2evidenc
eA2asA2toA2management'sA2assertionA2regardingA2-A2Ans--existence
whichA2ofA2theA2followingA2bestA2describesA2theA2relationshipA2betweenA2auditingA2andA2at
testationA2engagements?A2-A2Ans--
auditingA2isA2aA2subsetA2ofA2attestationA2engagementsA2thatA2focusesA2onA2theA2certificati
onA2ofA2financialA2statements
cutoffA2testsA2designedA2toA2detectA2validA2salesA2thatA2occurredA2beforeA2theA2endA2ofA2th
eA2yearA2butA2haveA2beenA2recordedA2inA2theA2subsequentA2yearA2wouldA2provideA2assura
nceA2aboutA2management'sA2assertionA2ofA2-A2Ans--completeness
anA2auditorA2selectedA2itemsA2forA2testA2countsA2fromA2theA2client'sA2warehouseA2duringA2t
heA2physicalA2inventoryA2observation.A2theA2auditorA2thenA2tracedA2theseA2testA2countsA2i
ntoA2theA2detailedA2inventoryA2listingA2thatA2agreedA2toA2theA2financialA2statements.A2ThisA
2procedureA2mostA2likelyA2providedA2evidenceA2concerningA2management'sA2assertionA2o
fA2-A2Ans--completeness
CORRECT ANSWERS
inA2anA2attestationA2engagement,A2aA2CPAA2practitionerA2isA2engagedA2toA2-A2Ans--
prepareA2aA2writtenA2reportA2containingA2aA2conclusionA2aboutA2theA2reliabilityA2ofA2aA2ma
nagementA2assertion
AccordingA2toA2theA2AICPA,A2theA2purposeA2ofA2anA2auditA2ofA2financialA2statementsA2isA2t
oA2-A2Ans--
enhanceA2theA2degreeA2ofA2confidenceA2thatA2intendedA2usersA2canA2placeA2inA2financialA2
statements.
independentA2auditorsA2ofA2financialA2statementsA2performA2auditsA2thatA2reduceA2-
A2Ans--informationA2riskA2facedA2byA2investors
theA2objectiveA2inA2anA2auditor'sA2reviewA2ofA2creditA2ratingsA2ofA2aA2client'sA2customersA2i
sA2toA2obtainA2evidenceA2relatedA2toA2management'sA2assertionA2aboutA2-A2Ans--
valuationA2orA2allocation
whenA2auditingA2merchandiseA2inventoryA2atA2year-
end,A2theA2auditorA2performsA2auditA2proceduresA2toA2ensureA2thatA2allA2goodsA2purchase
dA2beforeA2year-
endA2areA2receivedA2beforeA2theA2physicalA2inventoryA2count.A2thisA2auditA2procedureA2pr
ovidesA2assuranceA2aboutA2whichA2managementA2assertion?A2-A2Ans--cutoff
whenA2anA2auditorA2reviewsA2additionsA2toA2theA2equipmentA2(fixedA2asset)A2accountA2toA2
makeA2sureA2thatA2fixedA2assetsA2areA2notA2overstated,A2sheA2wantsA2toA2obtainA2evidenc
eA2asA2toA2management'sA2assertionA2regardingA2-A2Ans--existence
whichA2ofA2theA2followingA2bestA2describesA2theA2relationshipA2betweenA2auditingA2andA2at
testationA2engagements?A2-A2Ans--
auditingA2isA2aA2subsetA2ofA2attestationA2engagementsA2thatA2focusesA2onA2theA2certificati
onA2ofA2financialA2statements
cutoffA2testsA2designedA2toA2detectA2validA2salesA2thatA2occurredA2beforeA2theA2endA2ofA2th
eA2yearA2butA2haveA2beenA2recordedA2inA2theA2subsequentA2yearA2wouldA2provideA2assura
nceA2aboutA2management'sA2assertionA2ofA2-A2Ans--completeness
anA2auditorA2selectedA2itemsA2forA2testA2countsA2fromA2theA2client'sA2warehouseA2duringA2t
heA2physicalA2inventoryA2observation.A2theA2auditorA2thenA2tracedA2theseA2testA2countsA2i
ntoA2theA2detailedA2inventoryA2listingA2thatA2agreedA2toA2theA2financialA2statements.A2ThisA
2procedureA2mostA2likelyA2providedA2evidenceA2concerningA2management'sA2assertionA2o
fA2-A2Ans--completeness
