Auditing Chapter 1 -4 Test with all Correct & 100%
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Three common types of attestation services are:
A) audits of historical financial statements, reviews of historical financial statements, and audits
of internal control over financial reporting.
B) audits of historical financial information, verifications of historical financial information, and
attestations regarding internal controls.
C) reviews of historical financial information, verifications of future financial information, and
attestations regarding internal controls.
D) audits of historical financial information, reviews of controls related to investments, and
verifications of historical financial information. ✔Correct Answer-A) audits of historical
financial statements, reviews of historical financial statements, and audits of internal control
over financial reporting.
One objective of a compliance audit is to:
A) determine whether the financial statements fairly present the entity's operations.
B) determine whether or not the auditee violates management policies or laws and regulations.
C) make recommendations for improving performance.
D) report on the entity's relative success in attaining profit maximization. ✔Correct Answer-B)
determine whether or not the auditee violates management policies or laws and regulations.
An audit to determine whether an entity is following specific procedures or rules set down by
some higher authority is classified as a(n):
A) audit of financial statements
B) compliance audit
C) operational audit
D) production audit ✔Correct Answer-B) compliance audit.
A correct relationship among the auditor, the client, and the external users is:
A) management of a public company hires the independent auditor
B) the audit committee of a private company hires the independent auditor.
C) the client provides capital to the external users.
D) the external users can rely upon the auditors report to reduce information risk. ✔Correct
Answer-D) the external users can rely upon the auditors report to reduce information risk.
The possibility that a business may not be able to repay a bank loan because of an economic
downturn is referred to as:
, A) materiality risk
B) information risk
C) interest rate risk
D) business risk ✔Correct Answer-D) Business risk
Any service that requires a CPA firm to issue a report about the reliability of an assertion that is
made by another party is a(n):
A) accounting and bookkeeping service
B) attestation service
C) assurance service
D) tax service ✔Correct Answer-B) attestation service
Three common types of attestation services do not include:
A) reviews of performance of investment funds
B) audits of financial statements
C) reviews of historical financial information
D) audit of internal control over financial reporting ✔Correct Answer-A) reviews of
performance of investment funds
Which of the following is an accurate statement regarding the various types of other assurance
services?
A) assurance services must be about the reliability of another party's assertion about
compliance with specified criteria.
B) other assurance services must meet the definition of an attestation service.
C) The primary purpose of a management consulting engagement is to improve the quality of
information.
D) the market for other forms of assurance services is open to non-CPA competitors.
✔Correct Answer-D) the market for other form of assurance services is open to non-CPA
competitors.
One objective of an operational audit is to:
A) determine whether the financial statements fairly present the entity's operations
B) determine if the auditee is in compliance with GAAP
C) make recommendations for improving performance
D) report on the entity's relative success in attaining profit maximization. ✔Correct Answer-C)
make recommendations for improving performance
Which of the following is not an example of a compliance audit?
Verified Answers |Latest Version |Already Graded A+
Three common types of attestation services are:
A) audits of historical financial statements, reviews of historical financial statements, and audits
of internal control over financial reporting.
B) audits of historical financial information, verifications of historical financial information, and
attestations regarding internal controls.
C) reviews of historical financial information, verifications of future financial information, and
attestations regarding internal controls.
D) audits of historical financial information, reviews of controls related to investments, and
verifications of historical financial information. ✔Correct Answer-A) audits of historical
financial statements, reviews of historical financial statements, and audits of internal control
over financial reporting.
One objective of a compliance audit is to:
A) determine whether the financial statements fairly present the entity's operations.
B) determine whether or not the auditee violates management policies or laws and regulations.
C) make recommendations for improving performance.
D) report on the entity's relative success in attaining profit maximization. ✔Correct Answer-B)
determine whether or not the auditee violates management policies or laws and regulations.
An audit to determine whether an entity is following specific procedures or rules set down by
some higher authority is classified as a(n):
A) audit of financial statements
B) compliance audit
C) operational audit
D) production audit ✔Correct Answer-B) compliance audit.
A correct relationship among the auditor, the client, and the external users is:
A) management of a public company hires the independent auditor
B) the audit committee of a private company hires the independent auditor.
C) the client provides capital to the external users.
D) the external users can rely upon the auditors report to reduce information risk. ✔Correct
Answer-D) the external users can rely upon the auditors report to reduce information risk.
The possibility that a business may not be able to repay a bank loan because of an economic
downturn is referred to as:
, A) materiality risk
B) information risk
C) interest rate risk
D) business risk ✔Correct Answer-D) Business risk
Any service that requires a CPA firm to issue a report about the reliability of an assertion that is
made by another party is a(n):
A) accounting and bookkeeping service
B) attestation service
C) assurance service
D) tax service ✔Correct Answer-B) attestation service
Three common types of attestation services do not include:
A) reviews of performance of investment funds
B) audits of financial statements
C) reviews of historical financial information
D) audit of internal control over financial reporting ✔Correct Answer-A) reviews of
performance of investment funds
Which of the following is an accurate statement regarding the various types of other assurance
services?
A) assurance services must be about the reliability of another party's assertion about
compliance with specified criteria.
B) other assurance services must meet the definition of an attestation service.
C) The primary purpose of a management consulting engagement is to improve the quality of
information.
D) the market for other forms of assurance services is open to non-CPA competitors.
✔Correct Answer-D) the market for other form of assurance services is open to non-CPA
competitors.
One objective of an operational audit is to:
A) determine whether the financial statements fairly present the entity's operations
B) determine if the auditee is in compliance with GAAP
C) make recommendations for improving performance
D) report on the entity's relative success in attaining profit maximization. ✔Correct Answer-C)
make recommendations for improving performance
Which of the following is not an example of a compliance audit?
