Accounting Audit Final Exam MCQs 2015
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Question 1
A single audit is required of:
A federal or nonfederal entity that receives more than $500,000 in a year.
A nonfederal entity that received more than $100,000 in a year.
Nonfederal entities that expend $500,000 or more in federal awards in a year.
Question 2
During a review of the financial statements of a nonpublic entity, the CPA finds that the financial
statements contain a material departure from generally accepted accounting principles. If
management refuses to correct the financial statement presentations, the CPA should
Disclose the departure in a separate paragraph of the report
Issue an adverse opinion
Attach a footnote explaining the effects of the departure
Issue a compilation report
Question 3
A CPA auditing an electric utility wishes to determine whether all customers are being billed.
The CPA's best direction of test is from the
Meter department records to the billing (sales) register
Billing (sales) register to the meter department records
Accounts receivable ledger to the billing (sales) register
Billing (sales) register to the accounts receivable ledger
Question 4
Generally, loss contingencies that are judged to be remote:
Should be disclosed in the footnotes
Should be recorded in the financial statements
Should not be disclosed in the footnotes
Should be recorded in the financial statements and the footnotes
Question 5
For an engagement in which the auditor performs a set of agreed-upon procedures, the auditor
should do any of the following except

Compare the procedures to be applied to the specified users’ written requirements
Discuss the procedures with a representative of the users
Perform procedures similar to those applied in a review engagement
Review contracts or correspondence from the specified users
Question 6
The auditor’s best course of action with respect to “other financial information” included in an
annual report containing the auditor’s report is to
Indicate in the auditor’s report that the “other financial information” is unaudited
Consider whether the “other financial information” is accurate by performing a limited review
Obtain written representations from management as to the material accuracy of the “other
financial information.”
Read and consider the manner of presentation of the “other financial information
Question 7
An auditor’s study and evaluation of the internal accounting control system made in connection
with an annual audit is usually not sufficient to express an opinion on an entity’s system because
The evaluation of weaknesses is subjective enough that an auditor should not express an opinion
on the internal accounting controls alone.
The audit cost-benefit relationship permits an auditor to express only reasonable assurance that
the system operates as designed.
Management may change the internal accounting controls to correct weaknesses.
Only those controls on which an auditor intends to rely are reviewed, tested, and evaluated
Question 8
Before issuing a report on the compilation of financial statements of a nonpublic entity, the
accountant should
Apply analytical procedures to selected financial data to discover any material misstatements.
Corroborate at least a sample of the assertions management has embodied in the financial
statements.
Inquire of the client’s personnel whether the financial statements omit substantially all
disclosures.
Read the financial statements to consider whether the financial statements are free from obvious
material errors

Question 9
Auditors are more concerned with the occurrence assertion for revenues than the completeness
assertion because:
Clients are more likely to overstate than understate revenues
Clients are more likely to understate than overstate revenues
It is difficult to determine when services have been performed
The allowance for doubtful accounts often is understated
Question 10
In auditing accounts payable, an auditor's procedures most likely would focus primarily on
management's assertion of
Existence
Rights and obligations
Completeness
Valuation and allocation
Question 11
Once a CPA has determined that accounts receivable have increased because of slow collection
in a "tight money" environment, the CPA would be likely to
Increase the balance in the allowance for bad debts account
Review the going concern ramifications
Require the client to tighten their credit policy
Expand tests regarding the collectability of receivables
Question 12
In the first audit of a client, because of the client’s record retention policies, an auditor was not
able to gather sufficient evidence about the consistent application of accounting principles
between the current and the prior year, as well as the amounts of assets or liabilities at the
beginning of the current year. If the amounts in question could materially affect current operating
results, the auditor would
Be unable to express an opinion on the current year’s results of operations and cash flows
Express a qualified opinion on the financial statements because of a client-imposed scope
limitation
Withdraw from the engagement and refuse to be associated with the financial statements

Accounting Audit Final Exam MCQs 2015

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