ACC 440 EXAM 1 QUESTIONS WITH ACCURATE
ANSWERS RATED A+
An auditor most likely would analyze inventory turnover rates to obtain evidence
concerning management's assertions about:
a. Existence or occurrence.
b. Valuation or allocation.
c. Rights and obligations.
d. Presentation and disclosure. - ANSWER B
When the financial statements contain a material departure from GAAP, the auditor will
generally issue a(an), dependent on materiality of the item:
Qualified Adverse
opinion opinion
a. Yes No
b. No Yes
c. Yes Yes
d. No No - ANSWER C
The primary reason for an audit by an independent, external CPA firm is:
a. To guarantee that there are no misstatements in the financial statements.
b. To ensure that any fraud will be discovered.
c. To lend credibility to the financial statements.
d. To relieve management of responsibility for the financial statements. - ANSWER C
, Analytical procedures used in the overall review stage of an audit generally include:
a. Considering unusual or unexpected account balances that were not previously
identified.
b. Performing tests of transactions to corroborate management's financial statement
assertions.
c. Gathering evidence concerning account balances that have not changed from the
previous year.
d. Gaining knowledge of the client's industry. - ANSWER A
Under which of the following circumstances would a disclaimer of opinion not be
appropriate?
a. The auditor is unable to determine the amounts associated with an employee fraud
scheme.
b. Management does not provide reasonable justification for a change in accounting
principles.
c. The client refuses to let the auditor confirm certain accounts receivable or apply
alternative procedures to verify their balances.
d. The chief executive is unwilling to provide copies of the corporate minute books. -
ANSWER B
Which of the following presumptions is correct about the reliability of evidential matter?
a. Evidence obtained indirectly from outside sources is the most reliable evidential
matter.
b. Analytical procedures are the most reliable form of evidence.
c. Reliability of evidential matter refers to the amount of corroborative evidence
obtained.
d. An effective internal control structure provides more assurance about the reliability
of evidential matter. - ANSWER D
Park, CPA was engaged to audit the financial statements of Tech Co., a new client, for
the year ended December 31, 2019. Park obtained sufficient evidence for all of Tech's
financial statement items except Tech's January 1, 2019 inventory balances, which are
highly material. Park's opinion on Tech's 2019 financial statements most likely will be
ANSWERS RATED A+
An auditor most likely would analyze inventory turnover rates to obtain evidence
concerning management's assertions about:
a. Existence or occurrence.
b. Valuation or allocation.
c. Rights and obligations.
d. Presentation and disclosure. - ANSWER B
When the financial statements contain a material departure from GAAP, the auditor will
generally issue a(an), dependent on materiality of the item:
Qualified Adverse
opinion opinion
a. Yes No
b. No Yes
c. Yes Yes
d. No No - ANSWER C
The primary reason for an audit by an independent, external CPA firm is:
a. To guarantee that there are no misstatements in the financial statements.
b. To ensure that any fraud will be discovered.
c. To lend credibility to the financial statements.
d. To relieve management of responsibility for the financial statements. - ANSWER C
, Analytical procedures used in the overall review stage of an audit generally include:
a. Considering unusual or unexpected account balances that were not previously
identified.
b. Performing tests of transactions to corroborate management's financial statement
assertions.
c. Gathering evidence concerning account balances that have not changed from the
previous year.
d. Gaining knowledge of the client's industry. - ANSWER A
Under which of the following circumstances would a disclaimer of opinion not be
appropriate?
a. The auditor is unable to determine the amounts associated with an employee fraud
scheme.
b. Management does not provide reasonable justification for a change in accounting
principles.
c. The client refuses to let the auditor confirm certain accounts receivable or apply
alternative procedures to verify their balances.
d. The chief executive is unwilling to provide copies of the corporate minute books. -
ANSWER B
Which of the following presumptions is correct about the reliability of evidential matter?
a. Evidence obtained indirectly from outside sources is the most reliable evidential
matter.
b. Analytical procedures are the most reliable form of evidence.
c. Reliability of evidential matter refers to the amount of corroborative evidence
obtained.
d. An effective internal control structure provides more assurance about the reliability
of evidential matter. - ANSWER D
Park, CPA was engaged to audit the financial statements of Tech Co., a new client, for
the year ended December 31, 2019. Park obtained sufficient evidence for all of Tech's
financial statement items except Tech's January 1, 2019 inventory balances, which are
highly material. Park's opinion on Tech's 2019 financial statements most likely will be
