Question 11

Which of the following is not an aspect of Rule 201 of the General Standards of the Code of Professional Conduct?
Answer

A member must not take on an engagement that is beyond the member’s professional competence.

A member must exercise duties prudently and professionally.

A member must adequately plan and supervise the performance of professional services.

A member firm must not advertise services to competing clients

Question 12

Which of the following represents a situation in which auditors may disclose client information to outside parties?
Answer

Bringing working papers to a professional CPA workshop as an example of quality work.

Complying with a validly issued and enforceable subpoena or summons.

Showing the client’s bank statement to a neighbor who is a shareholder to emphasize its cash position.

Explaining to the local television news station why the client is likely to miss payroll in the forthcoming periods.

Question 13

The significance of the bill of lading is to provide which of the following?
Answer

The warehouse personnel with the product that must be shipped to customers.

Invoices to customers for proper collection.

A credit application for customer approval.

Evidence of title transfer of goods to customers

Question 14

A control that may be implemented to ensure all sales that occur are recorded in the general ledger includes which of the following?
Answer

Use of prenumbered shipping, invoice and sales documents.

Use of prenumbered statements, inventory lists and credit memos.

Reconciliation of invoices with customer statements.

Use of pre-authorized price lists

Question 15

The relationship between the sales cycle and an inventory system can best be noted in which of the following examples?
Answer

Credit is established prior to completion of a sales order.

Invoices are sent to customers only after shipment is evidenced.

Availability of products ordered are verified prior to processing a sale.

Billing information is added to the database for new customers.

Question 16

The aged accounts receivable report is utilized by the auditor to accomplish which of the following?
Answer

Encourage the client to collect on receivables that are long past due.

Select the type of confirmations that will be sent to banks.

Assess the adequacy of the allowance for doubtful accounts.

Identify debits in the receivables balance that should be reclassified to payables.

Question 17

All of the following are recommended features of a fire protection system for a computer center except
Answer

clearly marked exits

an elaborate water sprinkler system

manual fire extinguishers in strategic locations

automatic and manual alarms in strategic locations

Question 18

Inherent risk
Answer

exists because all control structures are flawed in some ways.

is the likelihood that material misstatements exist in the financial statements of the firm.

is associated with the unique characteristics of the business or industry of the client.

is the likelihood that the auditor will not find material misstatements

Question 19

The following are examples of commodity assets except
Answer

network management

systems operations

systems development

server maintenance

Question 20

Tests of controls include
Answer

confirming accounts receivable

counting inventory

completing questionnaires

counting cash

Question 21

Which is a common method of providing executive compensation by allowing top management to purchase stock at a fixed share price?
Answer

Stock splits

Arbitrage

Dividends

Stock options

Question 22

Which legislation led to the establishment of the Public Company Accounting Oversight Board?
Answer

Private Securities Litigation Reform Act

Sarbanes-Oxley Act

Gramm-Leach-Bliley Act

Glass-Steagall Act

Question 23

_______ is a performance evaluation method that focuses on both financial and nonfinancial
indicators of performance such as customer satisfaction.
Answer

360 degree survey

Critical incidents method

Balance scorecard

Pareto chart

Question 24

Which of the following applies to a “cookie jar?”
Answer

Understated accounts payable

Overstated current assets

Overstated reserves

Recording fictitious revenues

Question 25

In asset fraud, assets are most often:
Answer

understated.

overstated.

recorded as liabilities.

recorded as revenues.

You Need a Professional Writer To Work On Your Paper?