AC 432 Final Exam DeZoort Questions With
Accurate Answers
Exam One Material (Exam 1 Material)Search in page/ctrl+F to find each section; This one
is "Exam One Material" - ANSWER Search in page/ctrl+F to find each section; This one is
"Exam One Material"
Assurance - ANSWER professional services that improve the quality of information, or its
context, for decision makers; the broadest category of services
Attestation - ANSWER written report on a subject matter that another party is
responsible for
Audit - ANSWER a systematic process of objectively obtaining and evaluating evidence
regarding assertions about economic actions and events to ascertain the degree of
correspondence between client's assertions and established criteria
Professional Skepticism - ANSWER mindset of questioning everything, not taking
anything at face value, verify what the client presents
Generally Accepted Auditing Standards (GAAS) - ANSWER A set of systematic guidelines
used by auditors when conducting audits on companies' finances, ensuring the accuracy,
consistency and verifiability of auditors' actions and reports; focused on financial
statement audits conducted by external auditors
,Generally Accepted Accounting Principles (GAAP) - ANSWER a set of accounting
standards that is used in the preparation of financial statements by management/their
representative
unqualified, qualified, adverse, disclaimer - ANSWER What are the 4 types of Audit
opinions?
Unqualified opinion - ANSWER Financial statements are presented fairly in conformity
with GAAP; no modification necessary
Unqualified-modified opinion - ANSWER a satisfactory audit was performed, but the
auditor believes additional information needs to be provided or the standard wording
needs to be modified
Qualified opnion - ANSWER financial statements are fair "except for" problems found
during the audit that weren't corrected
Adverse opinion - ANSWER the financial statements are not presented fairly, the nature
and size of material misstatements are explained
Disclaimer Opinion - ANSWER no opinion is given regarding the fairness of the financials
because of either independence or scope concerns
, Going concern - ANSWER this is when there is great concern, "substantial doubt" for the
business' ability to continue future operations; we find
1. Conditions and events (of firm's operations)
2. Management's Plans (for financing and operating the business) - ANSWER What must
an auditor consider when issuing a going concern opinion?
Assess going concern, disclose when conditions give rise to substantial doubt - ANSWER
What are management's responsibilities regarding a going concern?
Inherent Risk * Control Risk * Detection Risk - ANSWER What is the Audit Risk Model
formula?
Inherent Risk - ANSWER the susceptibility of an assertion to a material misstatement,
assuming there were no related internal controls (industry risk)
Control risk - ANSWER the risk that a material misstatement could occur and not be
prevented or detected by internal controls
Detection risk - ANSWER the risk the auditor will not detect a material misstatement in
an assertion
Risk of material misstatement - ANSWER the combination of the two client-side
components of the audit risk model: inherent risk and control risk
Accurate Answers
Exam One Material (Exam 1 Material)Search in page/ctrl+F to find each section; This one
is "Exam One Material" - ANSWER Search in page/ctrl+F to find each section; This one is
"Exam One Material"
Assurance - ANSWER professional services that improve the quality of information, or its
context, for decision makers; the broadest category of services
Attestation - ANSWER written report on a subject matter that another party is
responsible for
Audit - ANSWER a systematic process of objectively obtaining and evaluating evidence
regarding assertions about economic actions and events to ascertain the degree of
correspondence between client's assertions and established criteria
Professional Skepticism - ANSWER mindset of questioning everything, not taking
anything at face value, verify what the client presents
Generally Accepted Auditing Standards (GAAS) - ANSWER A set of systematic guidelines
used by auditors when conducting audits on companies' finances, ensuring the accuracy,
consistency and verifiability of auditors' actions and reports; focused on financial
statement audits conducted by external auditors
,Generally Accepted Accounting Principles (GAAP) - ANSWER a set of accounting
standards that is used in the preparation of financial statements by management/their
representative
unqualified, qualified, adverse, disclaimer - ANSWER What are the 4 types of Audit
opinions?
Unqualified opinion - ANSWER Financial statements are presented fairly in conformity
with GAAP; no modification necessary
Unqualified-modified opinion - ANSWER a satisfactory audit was performed, but the
auditor believes additional information needs to be provided or the standard wording
needs to be modified
Qualified opnion - ANSWER financial statements are fair "except for" problems found
during the audit that weren't corrected
Adverse opinion - ANSWER the financial statements are not presented fairly, the nature
and size of material misstatements are explained
Disclaimer Opinion - ANSWER no opinion is given regarding the fairness of the financials
because of either independence or scope concerns
, Going concern - ANSWER this is when there is great concern, "substantial doubt" for the
business' ability to continue future operations; we find
1. Conditions and events (of firm's operations)
2. Management's Plans (for financing and operating the business) - ANSWER What must
an auditor consider when issuing a going concern opinion?
Assess going concern, disclose when conditions give rise to substantial doubt - ANSWER
What are management's responsibilities regarding a going concern?
Inherent Risk * Control Risk * Detection Risk - ANSWER What is the Audit Risk Model
formula?
Inherent Risk - ANSWER the susceptibility of an assertion to a material misstatement,
assuming there were no related internal controls (industry risk)
Control risk - ANSWER the risk that a material misstatement could occur and not be
prevented or detected by internal controls
Detection risk - ANSWER the risk the auditor will not detect a material misstatement in
an assertion
Risk of material misstatement - ANSWER the combination of the two client-side
components of the audit risk model: inherent risk and control risk
