Business Assurance Test 2

Question 1 of 21

1

A square in a flow chart indicates

Select one of the following:

terminator
decision
manual loop
process

Explanation

Question 2 of 21

1

Which of the following is not a Generally Accepted Privacy Principle (GAPP)?

Select one of the following:

Retention and disposal
Quality
Processing integrity
Collection

Explanation

Question 3 of 21

1

The objective of AU-C 500 is to obtain written representations from management that they believe they have fulfilled their responsibilities in regards to the financial statements.

Select one of the following:

True
False

Explanation

Question 4 of 21

1

Which type of opinion means that there is sufficient appropriate evidence, but there is a material misstatement and it is pervasive through the financial statements?

Select one of the following:

unqualified
adverse
disclaimer of opinion
qualified

Explanation

Question 5 of 21

1

Which of the following are components of the control environment? (more than 1)

Select one or more of the following:

risk assessments
commitment to integrity and ethical values
notice
monitoring activities
financial reporting competencies
management's philosophy

Explanation

Question 6 of 21

1

What does a parallelogram represent in a flow chart?

Select one of the following:

decision
document
internal process
data

Explanation

Question 7 of 21

1

Susceptibility to loss, nature of the account, accounting complexities, and planning materiality are all qualitative factors in determining if an account is significant.

Select one of the following:

True
False

Explanation

Question 8 of 21

1

If the company being audited is a publicly listed corporation, the auditor must put an opinion as to the effectiveness of internal controls.

Select one of the following:

True
False

Explanation

Question 9 of 21

1

The objective of the audit of GAAP-based financial statements is to

Select one of the following:

Express an opinion on the accuracy with which the statements present financial position,
results of operations, and cash flows in accordance with generally accepted accounting principles.
Express an opinion on the fairness with which the statements present financial position,
results of operations, and cash flows in accordance with generally accepted accounting principles.
Make suggestions as to the form or content of the financial statements or to draft them in
whole or in part
Ensure adoption of sound accounting policies and the establishment and maintenance of
internal control

Explanation

Question 10 of 21

1

Which of the following statements about audit evidence is true?

Select one of the following:

A client’s accounting records can be sufficient audit evidence to support the financial
statements
The sufficiency and appropriateness of audit evidence is a matter of professional
judgment.
To be appropriate, audit evidence should be either persuasive or relevant but need not be
both.
The difficulty and expense of obtaining audit evidence about an account balance is a
valid basis for omitting the test.

Explanation

Question 11 of 21

1

How many Generally Accepted Privacy Principles are there?

Select one of the following:

5
7
10
4

Explanation

Question 12 of 21

1

A company has made a material change in its method of inventory measurement from an
unacceptable one to one in accordance with the applicable financial reporting framework.
The auditor’s report on the financial statements of the year of the change should include

Select one of the following:

Justification for the change and the effect of the change on reported net income.
A reference to the entity’s disclosure of the correction.
A note explaining the change.
No reference to consistency.

Explanation

Question 13 of 21

1

It is the duty of management to maintain internal controls, prepare the financial statements, and to provide all the information the auditor needs.

Select one of the following:

True
False

Explanation

Question 14 of 21

1

The auditor should issue written communication stating that no significant deficiencies were identified.

Select one of the following:

True
False

Explanation

Question 15 of 21

1

Who developed the Systrust service

Select one of the following:

Canadian Institute of Chartered Accountants
PCAOB and AICPA
AICPA
PCAOB
AICPA and Canadian Institute of Chartered Accountants

Explanation

Question 16 of 21

1

When considering the use of management’s written representations as audit evidence
about the completeness assertion, an auditor should understand that such representations

Select one of the following:

Constitute sufficient appropriate evidence to support the assertion when considered in
combination with sufficiently low assessed risks of material misstatement.
Complement, but do not replace, substantive procedures designed to support the
assertion.
Replace low assessed risks of material misstatement as evidence to support the
assertion.
Are not part of the evidence considered to support the assertion.

Explanation

Question 17 of 21

1

A limitation on the scope of an audit sufficient to preclude an unmodified opinion will
usually result when management

Select one of the following:

Does not make the minutes of the board of directors’ meetings available to the auditor.
Asks the auditor to report on the balance sheet and not on the other basic financial statements.
Presents financial statements that are prepared in accordance with the cash receipts and disbursements basis of accounting
States that the financial statements are not intended to be presented in accordance with generally accepted accounting principles

Explanation

Question 18 of 21

1

A continuing auditor should update the report on prior financial statements by issuing a
report modified for the

Select one of the following:

Resolution of an uncertainty related to and discovered in the current period.
Determination in the current period that a substantial doubt exists about the entity’s ability to continue as a going concern for a reasonable time.
Removal in the current period of doubt about the entity’s ability to continue as a going concern.
Purchase and consolidation of a new company by the client.

Explanation

Question 19 of 21

1

Which of the following statements about internal control is true?

Select one of the following:

The establishment and maintenance of internal control are important responsibilities of the internal auditor
A limitation of internal control is that management makes judgments about the extent of controls it implements
Exceptionally effective internal control is enough for the auditor to eliminate substantive procedures on a significant account balance
Properly maintained internal control reasonably ensures that collusion among employees cannot occur

Explanation

Question 20 of 21

1

A CPA has previously communicated a significant control deficiency in connection with an audit of prior financial statements of a non-issuer. As of the current audit date, the deficiency has not been corrected. What communication should be made by the CPA?

Select one of the following:

A new communication is required only if the auditor has relied on the controls
A new communication is required only if it involves an area in which the auditor has not relied on the controls
The condition should be reported
None, because management has been previously put on notice and now has sole responsibility

	Created by Vicki Myers about 9 years ago

Study questions for Business Assurance Services test 2 at Bowling Green State University.

Business Assurance Test 2

Question 1 of 21

A square in a flow chart indicates

Select one of the following:

Explanation

Question 2 of 21

Which of the following is not a Generally Accepted Privacy Principle (GAPP)?

Select one of the following:

Explanation

Question 3 of 21

The objective of AU-C 500 is to obtain written representations from management that they believe they have fulfilled their responsibilities in regards to the financial statements.

Select one of the following:

Explanation

Question 4 of 21

Which type of opinion means that there is sufficient appropriate evidence, but there is a material misstatement and it is pervasive through the financial statements?

Select one of the following:

Explanation

Question 5 of 21

Which of the following are components of the control environment? (more than 1)

Select one or more of the following:

Explanation

Question 6 of 21

What does a parallelogram represent in a flow chart?

Select one of the following:

Explanation

Question 7 of 21

Susceptibility to loss, nature of the account, accounting complexities, and planning materiality are all qualitative factors in determining if an account is significant.

Select one of the following:

Explanation

Question 8 of 21

If the company being audited is a publicly listed corporation, the auditor must put an opinion as to the effectiveness of internal controls.

Select one of the following:

Explanation

Question 9 of 21

The objective of the audit of GAAP-based financial statements is to

Select one of the following:

Explanation

Question 10 of 21

Which of the following statements about audit evidence is true?

Select one of the following:

Explanation

Question 11 of 21

How many Generally Accepted Privacy Principles are there?

Select one of the following:

Explanation

Question 12 of 21

A company has made a material change in its method of inventory measurement from an unacceptable one to one in accordance with the applicable financial reporting framework. The auditor’s report on the financial statements of the year of the change should include

Select one of the following:

Explanation

Question 13 of 21

It is the duty of management to maintain internal controls, prepare the financial statements, and to provide all the information the auditor needs.

Select one of the following:

Explanation

Question 14 of 21

The auditor should issue written communication stating that no significant deficiencies were identified.

Select one of the following:

Explanation

Question 15 of 21

Who developed the Systrust service

Select one of the following:

Explanation

Question 16 of 21

When considering the use of management’s written representations as audit evidence about the completeness assertion, an auditor should understand that such representations

Select one of the following:

Explanation

Question 17 of 21

A limitation on the scope of an audit sufficient to preclude an unmodified opinion will usually result when management

Select one of the following:

Explanation

Question 18 of 21

A continuing auditor should update the report on prior financial statements by issuing a report modified for the

Select one of the following:

Explanation

Question 19 of 21

Which of the following statements about internal control is true?

Select one of the following:

Explanation

Question 20 of 21

A CPA has previously communicated a significant control deficiency in connection with an audit of prior financial statements of a non-issuer. As of the current audit date, the deficiency has not been corrected. What communication should be made by the CPA?

A company has made a material change in its method of inventory measurement from an
unacceptable one to one in accordance with the applicable financial reporting framework.
The auditor’s report on the financial statements of the year of the change should include

When considering the use of management’s written representations as audit evidence
about the completeness assertion, an auditor should understand that such representations

A limitation on the scope of an audit sufficient to preclude an unmodified opinion will
usually result when management

A continuing auditor should update the report on prior financial statements by issuing a
report modified for the