26585756
Description
Quiz by Kayla Harbaugh, updated more than 1 year ago
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Created by Kayla Harbaugh
about 4 years ago
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Question 1
Question
Which of the following is not an inherent risk related to long-lived asset accounts?
Answer
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a. Failing to record asset disposals.
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b. Capitalizing repairs and maintenance expense.
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c. Changing depreciation estimates to manage earnings.
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d. All of these are inherent risks related to long-lived asset accounts.
Question 2
Question
Which of the following techniques can managers use to prevent the outright theft of long-lived assets?
Answer
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a. Assign accountability for long-lived assets to specific individuals.
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b. Conduct physical counts of existing and new long-lived assets purchased during the year.
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c. Capitalize transactions that they should expense.
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d. Two of these.
Question 3
Question
Which of the following controls would be most useful in providing reasonable assurance about the valuation of tangible long-lived assets?
Answer
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a. Written policies requiring authorization for the acquisition of long-lived assets.
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b. A formal budgeting process.
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c. A policy requiring that deprecation categories and lives be periodically assessed.
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d. A policy requiring the reconciliation of the physical asset count with the property ledger.
Question 4
Question
Assume that a client's controls over recording retirements of long-lived tangible assets are not well designed. Which of the following procedures would the auditor plan to perform as a way of responding to the heightened risk of material misstatement?
Answer
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a. Select long-lived tangible assets recorded in the property ledger and locate them for inspection.
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b. Review the tangible long-lived asset property ledger to see if depreciation was recorded on each tangible long-lived asset.
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c. The auditor would perform all of the above procedures to respond to the heightened risk of material misstatement due to poor client controls over recording retirements.
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d. Inspect long-lived tangible assets located at the client location and trace those assets to the property ledger.
Question 5
Question
Which of the following valuation issues are associated with merger and acquisition activity?
Answer
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a. Valuing assets of the acquired organization at their FMV at the time of acquisition.
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b. Measuring restructuring charges associated with the acquisition.
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c. Valuing liabilities of the acquired organization at their FMV at the time of acquisition.
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d. All of these.
Question 6
Question
Patents are an example of long-lived assets.
Answer
- True
- False
Question 7
Question
A fraud scheme that WorldCom top-management employed involved capitalizing items that should have been expensed.
Answer
- True
- False
Question 8
Question
If a client's long-lived assets involve only a few assets of relatively high value, it might be most efficient to test long-lived assets by using only substantive tests of details.
Answer
- True
- False
Question 9
Question
One procedure that the auditor can use to test management's assertion that tangible long-lived assets exist would be to inspect the tangible asset.
Answer
- True
- False
Question 10
Question
Goodwill is the excess of the purchase price over the fair market value of the acquired organization's tangible assets, identifiable intangible assets, and liabilities.
Answer
- True
- False
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