ACCT562 2022 April Week 2 Quiz Latest

ACCT562 Auditing - An Operational and Internal Perspective Including Fraud Examination

Week 2 Quiz  

Question 1(TCO B) One of the primary purposes of the planning phase is to:

  identify possible operational area problems.

  identify competitive pressures.

  follow-up on earlier audit issues.

  interview senior managers new to their responsibilities.

Question 2(TCO B) Information obtained during the course of planning includes:

  management stock trading activity.

  previous auditor credentials.

  information from Motley Fool message boards.

  financial information.

Question 3(TCO B) Sources of planning information comes from all of the following EXCEPT:

  interviews

  physical inspection

  anonymous tips

  financial data

Question 4(TCO B) Problem areas should be identified. The auditor is encouraged to chase the ___________, not the _________________.

  elephant; mice

  cat; rat

  shark; tuna

  dog; bone

Question 5(TCO F) Senior management is most likely to understate business performance in the financial statements for which of the following reasons?

  To reduce the value of an owner-managed business for purposes of a divorce settlement.

  To comply with loan covenants.

  To increase the value of a corporate unit whose management is planning a buyout.

  To trigger performance-related compensation or earn-out payments.

Question 6(TCO F) The conceptual framework for financial reporting includes several assumptions that underlie generally accepted accounting principles. Which of the following is one of these assumptions?

  Economic entity

  Relevance

  Comparability

  Matching

Question 7(TCO F) Which of the following is a duty of the Public Company Accounting Oversight Board?

  tering accounting firms that audit publicly traded companies.

  Establishing or adopting standards relating to audits of publicly traded companies.

  Enforcing compliance with professional standards and securities laws relating to public company audits.

  All of the above

Question 8(TCO F) Scott Ruskin is the CEO of Decatur Materials. The company has been struggling for the last few years and is in danger of defaulting on several of its bank loan covenants. Scott is facing significant pressure from the board of directors to turn the company around. Unless he meets all of the financial goals for the year, he will be out the door without a golden parachute. To improve the financial appearance of the company, Scott undertakes a scheme to boost the balance sheet by faking inventory. The analysis of what financial ratio would most likely bring this scheme to light?

  Quick ratio

  Collection ratio

  Inventory turnover

  Profit margin

Question 9(TCO F) Establishing clear and uniform accounting procedures with no exception clauses can help reduce financial statement fraud by addressing which side of the fraud triangle?

  Pressures to commit fraud

  Opportunity to commit fraud

  Rationalizations of financial statement fraud

  Non-shareable problems

Question 10(TCO F) In the vertical analysis of an income statement, _____________ is assigned 100 percent, with all other items expressed as a percentage thereof.

  gross sales

  net sales

  gross margin

  net income