ACCT 3222-3,WILEY,LSU,EXAM 1 LATEST 2024
QUESTIONS AND CORRECT VERIFIED
ANSWERS|100% pass!!
Return on Stockholders' Equity (ROE) ratio - ANSWER-Net Income to
average equity
Generate income from funds invested by common stockholders
May be unable to pay dividends and invest in future growth if unable
to generate a sufficient return
When comparing actual results with the budget, auditors assess -
ANSWER-how profitable the client is compared to management's
expectations, significant variance should be discussed with
management.
When comparing their client with competitors, auditors assess -
ANSWER-their client's profitability relative to companies of a similar
size operating in the same industry. Significant trends are
investigated further by the audit team as they indicate there may be
a risk of material misstatement
Auditors are concerned with client's liquidity situation to - ANSWER-
alert them to any potential going-concern issues
,Acid-test (Quick) Ratio - ANSWER-Liquid Assets/ Current Liabilities
Audit Data Analytics (ADA) - ANSWER-Using software to discover and
analyze patterns, identify anomalies, and extract other useful
information in data underlying the subject matter of an audit through
analysis, modeling, and visualization for the purpose of planning or
performing an audit
Audit Services - ANSWER-services by an independent CPA that
provide financial statement users with (1) an opinion on whether the
financial statements are presented fairly, in all material respects, in
accordance with an applicable financial reporting framework and (2)
an opinion on the effectiveness of ICFR, which enhance the degree of
confidence that intended users can place in the financial statements
Attestation Services - ANSWER-Services performed when an
independent practitioner, or CPA, is engaged to issue a report on
subject matter that is the responsibility of another party
Relationship of assurance, attestation, and auditing services from
most to least improved of quality (i.e., assurance) - ANSWER-Audit -
highest quality/reasonable assurance (i.e., historical financial
statements)
Attestation - mid quality/limited assurance (i.e., review of historical
financial statements, examination of internal controls, review of
financial forecast)
,Assurance - lowest quality (i.e., compilation of historical financial
statements, website security, IT operations, non-financial
information)
Assurance Services - ANSWER-independent professional services that
improve the quality of information, or its context, for decision makers
Applicable financial reporting framework refers to - ANSWER-the set
of standards used in preparing the historical financial statements
(i.e., GAAP, IFRS, or federal income tax basis of accounting)
Independent implies that the service is performed by - ANSWER-
someone who was not involved with the creation of the information
and who is objective in the evaluation of the information
Quality refers to - ANSWER-the relevance and realiability of the
information
Information refers to - ANSWER-subject matter that can be financial
or nonfinancial, historical or prospective, standalone data or entire
systems of data, internal or external to a company
CPAs are the only _________ accounting professionals in the US and
the ________ are issued at the ____________ level - ANSWER-
Licensed accounting professionals in the US.
Licenses are issued at the state level, not federal
, A state board of accountancy will only issue - ANSWER-a licence to
practice after all three Es have been earned
CPA Es - ANSWER-Education, Exam, and Experience
Public companies, or issuers, in the US are required by federal
government to have - ANSWER-an annual financial statement audit
and an ICFR audit
Private companies, or non-issuers, are _______ to have an annual
audit by federal government, but - ANSWER-Not required by law,
other interested users may request audited financial statements (i.e.,
lenders)
ICFR - ANSWER-Internal Control over Financial Reporting
Integrated Audit - ANSWER-An audit that combines the financial
statement audit with an audit of the effectiveness of ICFR
The limitations of an audit are cause by - ANSWER-1. the nature of
financial reporting
2. the nature of audit procedures
3. the need for the audit to be conducted within a reasonable period
of time at a reasonable cost
The nature of financial reporting refers to - ANSWER-the use of
judgment when preparing financial statements due to the
QUESTIONS AND CORRECT VERIFIED
ANSWERS|100% pass!!
Return on Stockholders' Equity (ROE) ratio - ANSWER-Net Income to
average equity
Generate income from funds invested by common stockholders
May be unable to pay dividends and invest in future growth if unable
to generate a sufficient return
When comparing actual results with the budget, auditors assess -
ANSWER-how profitable the client is compared to management's
expectations, significant variance should be discussed with
management.
When comparing their client with competitors, auditors assess -
ANSWER-their client's profitability relative to companies of a similar
size operating in the same industry. Significant trends are
investigated further by the audit team as they indicate there may be
a risk of material misstatement
Auditors are concerned with client's liquidity situation to - ANSWER-
alert them to any potential going-concern issues
,Acid-test (Quick) Ratio - ANSWER-Liquid Assets/ Current Liabilities
Audit Data Analytics (ADA) - ANSWER-Using software to discover and
analyze patterns, identify anomalies, and extract other useful
information in data underlying the subject matter of an audit through
analysis, modeling, and visualization for the purpose of planning or
performing an audit
Audit Services - ANSWER-services by an independent CPA that
provide financial statement users with (1) an opinion on whether the
financial statements are presented fairly, in all material respects, in
accordance with an applicable financial reporting framework and (2)
an opinion on the effectiveness of ICFR, which enhance the degree of
confidence that intended users can place in the financial statements
Attestation Services - ANSWER-Services performed when an
independent practitioner, or CPA, is engaged to issue a report on
subject matter that is the responsibility of another party
Relationship of assurance, attestation, and auditing services from
most to least improved of quality (i.e., assurance) - ANSWER-Audit -
highest quality/reasonable assurance (i.e., historical financial
statements)
Attestation - mid quality/limited assurance (i.e., review of historical
financial statements, examination of internal controls, review of
financial forecast)
,Assurance - lowest quality (i.e., compilation of historical financial
statements, website security, IT operations, non-financial
information)
Assurance Services - ANSWER-independent professional services that
improve the quality of information, or its context, for decision makers
Applicable financial reporting framework refers to - ANSWER-the set
of standards used in preparing the historical financial statements
(i.e., GAAP, IFRS, or federal income tax basis of accounting)
Independent implies that the service is performed by - ANSWER-
someone who was not involved with the creation of the information
and who is objective in the evaluation of the information
Quality refers to - ANSWER-the relevance and realiability of the
information
Information refers to - ANSWER-subject matter that can be financial
or nonfinancial, historical or prospective, standalone data or entire
systems of data, internal or external to a company
CPAs are the only _________ accounting professionals in the US and
the ________ are issued at the ____________ level - ANSWER-
Licensed accounting professionals in the US.
Licenses are issued at the state level, not federal
, A state board of accountancy will only issue - ANSWER-a licence to
practice after all three Es have been earned
CPA Es - ANSWER-Education, Exam, and Experience
Public companies, or issuers, in the US are required by federal
government to have - ANSWER-an annual financial statement audit
and an ICFR audit
Private companies, or non-issuers, are _______ to have an annual
audit by federal government, but - ANSWER-Not required by law,
other interested users may request audited financial statements (i.e.,
lenders)
ICFR - ANSWER-Internal Control over Financial Reporting
Integrated Audit - ANSWER-An audit that combines the financial
statement audit with an audit of the effectiveness of ICFR
The limitations of an audit are cause by - ANSWER-1. the nature of
financial reporting
2. the nature of audit procedures
3. the need for the audit to be conducted within a reasonable period
of time at a reasonable cost
The nature of financial reporting refers to - ANSWER-the use of
judgment when preparing financial statements due to the
