ACCT 400 Final Exam Answers
ACCT 400 Final Exam Answers
ACCT 400 Final Exam Answers
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<strong>ACCT</strong> <strong>400</strong> <strong>Final</strong> <strong>Exam</strong> <strong>Answers</strong><br />
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Part 1 of 1 – <strong>Final</strong> <strong>Exam</strong><br />
45.0/ 50.0 Points<br />
The <strong>Final</strong> <strong>Exam</strong> has 50 true/false questions, covers Chapters 1 & 2, and 6 through 11, and has a 4<br />
hour time limit.<br />
Question 1 of 50<br />
1.0/ 1.0 Points<br />
oType I subsequent events are always referenced in the audit report.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 2 of 50<br />
1.0/ 1.0 Points<br />
Regardless of the specific form, documentary evidence shows that the receiving process<br />
occurred.
A.<br />
True<br />
B.<br />
False<br />
Question 3 of 50<br />
1.0/ 1.0 Points<br />
Preliminary time budget information is compared to actual time worked and is used for purposes<br />
of billing, performance evaluation, and future bidding.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 4 of 50<br />
1.0/ 1.0 Points<br />
Sales returns and allowances remain constant in their magnitude and never need differing levels<br />
of control and approval.<br />
A.<br />
True<br />
B.<br />
False
Question 5 of 50<br />
0.0/ 1.0 Points<br />
All assertions apply to every account.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 6 of 50<br />
1.0/ 1.0 Points<br />
Failure to provide the auditor information regarding pending litigation is grounds for a scope<br />
limitation.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 7 of 50<br />
1.0/ 1.0 Points<br />
Detail schedules need to tie to the lead schedule.
A.<br />
True<br />
B.<br />
False<br />
Question 8 of 50<br />
1.0/ 1.0 Points<br />
Sampling risk is the risk that your sample is not representative of the population.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 9 of 50<br />
1.0/ 1.0 Points<br />
An auditor’s report on an integrated audit will be unqualified if internal control over financial<br />
reporting does not have any material weaknesses and the financial statements are fairly<br />
presented.<br />
A.<br />
True<br />
B.<br />
False
Question 10 of 50<br />
0.0/ 1.0 Points<br />
If a transaction is paid for by credit card, the seller processes the sales transaction with the credit<br />
card issuer when the item is received.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 11 of 50<br />
1.0/ 1.0 Points<br />
The last steps of an integrated audit are to understand the industry and contract with the client to<br />
do the audit.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 12 of 50<br />
1.0/ 1.0 Points<br />
Cash received for sales comes in through several channels.
A.<br />
True<br />
B.<br />
False<br />
Question 13 of 50<br />
1.0/ 1.0 Points<br />
Recalculation is a form of reperformance.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 14 of 50<br />
1.0/ 1.0 Points<br />
When the mail is opened and checks are received, a document called a daily remittance list is<br />
immediately prepared.<br />
A.<br />
True<br />
B.<br />
False
Question 15 of 50<br />
1.0/ 1.0 Points<br />
All transactions in the sales and collection cycle need not be recorded at the correct amounts.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 16 of 50<br />
1.0/ 1.0 Points<br />
The audit report must contain explanatory language if there is a going concern issue.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 17 of 50<br />
1.0/ 1.0 Points<br />
One of the first concerns regarding the revenue cycle is that all recorded sales entries are the<br />
result of real transactions that do not meet the criteria for revenue recognition.
A.<br />
True<br />
B.<br />
False<br />
Question 18 of 50<br />
1.0/ 1.0 Points<br />
The Sarbanes-Oxley Act limits the amount of non-attest services that auditors may perform for<br />
public companies they audit.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 19 of 50<br />
1.0/ 1.0 Points<br />
An audit report must be issued whenever an auditor is associated with financial statements.<br />
A.<br />
True<br />
B.<br />
False
Question 20 of 50<br />
1.0/ 1.0 Points<br />
Preventative controls are preferred over detective controls.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 21 of 50<br />
0.0/ 1.0 Points<br />
Unfilled orders are taken off the list after they are received and recorded.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 22 of 50<br />
1.0/ 1.0 Points<br />
Deciding that internal controls are effective when they in fact they are not is an example of<br />
assessing control risk too high.
A.<br />
True<br />
B.<br />
False<br />
Question 23 of 50<br />
1.0/ 1.0 Points<br />
The SEC is responsible for setting standards for not-for-profit organizations.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 24 of 50<br />
1.0/ 1.0 Points<br />
Substantive testing can be reduced as a result of ITGC testing performed at year-end.<br />
A.<br />
True<br />
B.<br />
False
Question 25 of 50<br />
1.0/ 1.0 Points<br />
Materiality is a measure of magnitude; yet, it is affected by both quantitative and qualitative<br />
factors.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 26 of 50<br />
1.0/ 1.0 Points<br />
The auditor must index the files to conform to the balance sheet.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 27 of 50<br />
1.0/ 1.0 Points<br />
The auditor begins with tests of internal control.
A.<br />
True<br />
B.<br />
False<br />
Question 28 of 50<br />
1.0/ 1.0 Points<br />
The integrity of management plays a key role in deciding whether or not to accept a client.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 29 of 50<br />
1.0/ 1.0 Points<br />
Since much of a health-care provider’s collections are paid by third-party payers, it is important<br />
for the health-care provider to verify the patient’s insurance coverage before providing services.<br />
A.<br />
True<br />
B.<br />
False
Question 30 of 50<br />
1.0/ 1.0 Points<br />
The cutoff assertion refers to the distinction between the company and its subsidiaries and related<br />
entities.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 31 of 50<br />
1.0/ 1.0 Points<br />
When checks are received in the mail, they should immediately be restrictively endorsed and a<br />
daily remittance list should be prepared concurrently.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 32 of 50<br />
1.0/ 1.0 Points<br />
Publically-traded company refers to any SEC registrant.
A.<br />
True<br />
B.<br />
False<br />
Question 33 of 50<br />
1.0/ 1.0 Points<br />
If a client changes auditors, the new auditors may have to reissue the audit report for the previous<br />
year.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 34 of 50<br />
1.0/ 1.0 Points<br />
An Unbilled Services account can be used to capture services that are provided before and during<br />
the surgery that have not yet been billed. The Unbilled Services account is most important at the<br />
end of the fiscal period so that proper revenue is recorded.<br />
A.<br />
True<br />
B.<br />
False
Question 35 of 50<br />
1.0/ 1.0 Points<br />
Auditors perform walkthroughs as an efficient way to gain an understanding of ICFR and assess<br />
design effectiveness.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 36 of 50<br />
1.0/ 1.0 Points<br />
Currently, the primary authoritative body that regulates individual CPAs is the Congress of the<br />
United States.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 37 of 50<br />
1.0/ 1.0 Points<br />
Obsolete inventory is an example of inherent risk.
A.<br />
True<br />
B.<br />
False<br />
Question 38 of 50<br />
1.0/ 1.0 Points<br />
The seller will not hear from a customer when a cash payment the customer made is not posted<br />
to the customer’s account balance.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 39 of 50<br />
1.0/ 1.0 Points<br />
Deciding that internal controls are not effective when they in fact they are is an example of<br />
assessing control risk too low.<br />
A.<br />
True<br />
B.<br />
False
Question 40 of 50<br />
1.0/ 1.0 Points<br />
Computers are the primary resources used on an audit.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 41 of 50<br />
0.0/ 1.0 Points<br />
CPAs who perform financial statement audits of public companies are responsible for the<br />
accuracy of the client’s financial statements.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 42 of 50<br />
1.0/ 1.0 Points<br />
Audit steps for the revenue cycle are anchored in the overall audit plan.
A.<br />
True<br />
B.<br />
False<br />
Question 43 of 50<br />
1.0/ 1.0 Points<br />
Materiality is first set at the account balance level and is then aggregated to the financial<br />
statement level.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 44 of 50<br />
1.0/ 1.0 Points<br />
Problems that come from social engineering are the result of a lack of internal controls.<br />
A.<br />
True<br />
B.<br />
False
Question 45 of 50<br />
0.0/ 1.0 Points<br />
Controls are needed to ensure that goods are received on a timely basis and bills are sent out for<br />
all goods that are received.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 46 of 50<br />
1.0/ 1.0 Points<br />
The contract between the audit firm and client is called the engagement letter.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 47 of 50<br />
1.0/ 1.0 Points<br />
Physical vaulting refers to the control procedure involving the capture of transactions that bypassed<br />
the firewall.
A.<br />
True<br />
B.<br />
False<br />
Question 48 of 50<br />
1.0/ 1.0 Points<br />
An unfilled order report is an internal document listing customer orders that have received credit<br />
approval but have not been shipped.<br />
A.<br />
True<br />
B.<br />
False<br />
Question 49 of 50<br />
1.0/ 1.0 Points<br />
If the unadjusted difference resulting from projecting the error rate to the account balance is less<br />
than the tolerable misstatement, the auditor may choose to ignore the error.<br />
A.<br />
True<br />
B.<br />
False
Question 50 of 50<br />
1.0/ 1.0 Points<br />
Generally accepted auditing standards refer to those standards that have been adopted by the<br />
PCAOB.<br />
A.<br />
True<br />
B.<br />
False