Questions Chapter 1 2 Choose the correct answer

Questions Chapter 1 & 2

Choose the correct answer: 1. The three requirements for becoming a CPA include all but which of the following? A) Uniform CPA examination requirement. B) Educational requirements. C) Character requirements. D) Experience requirement. 2. Four common types of auditors are: A) CPA firms, Internal Auditor, external auditor, and IRS B) Internal Auditor, external auditor, CPA firms and IRS. C) CPA firms, GAO, Internal Auditor, and external auditor. D) CPA firms, GAO, IRS, and Internal Auditor.

3. In the audit of historical financial statements, what accounting criteria is most common? A) Regulatory accounting principles. B) Generally accepted accounting principles. C) A and B D) Loan a agreement provisions 4. An audit of historical financial statements most commonly includes the: A) balance sheet, statement of retained earnings, and the statement of cash flows. B) income statement, the statement of cash flows, and the statement of net working capital. C) statement of cash flows, balance sheet, and the statement of retained earnings. D) balance sheet, income statement, and the statement of cash flows.

5. The scope paragraph of the standard unqualified audit report states that the audit is designed to: A) discover all errors and/or irregularities. B) discover material errors and/or irregularities. C) conform to generally accepted accounting principles. D) obtain reasonable assurance whether the statements are free of material misstatement. 6. The audit report date on a standard unqualified report indicates: A) the last day of the fiscal period. B) the date on which the financial statements were filed with the Securities and Exchange Commission. C) the last date on which users may institute a lawsuit against either client or auditor. D) the last day of the auditor's responsibility for the review of significant events that occurred subsequent to the date of the financial statements.

7. The introductory paragraph of the standard audit report states that the financial statements are: A) the responsibility of the auditor. B) the responsibility of management. C) the joint responsibility of management and the auditor. D) none of the above. 8. The introductory paragraph of the standard audit report performs which functions? I. State the CPA has performed an audit. II. Lists the financials being audited. III. States the financials are the responsibility of the auditor.

9. Which of the following audits can be regarded as generally being a compliance audit? A) IRS agents' examinations of taxpayer returns. B) GAO auditor's evaluation of the computer operations of governmental units. C) An internal auditor's review of a company's payroll authorization procedures. D) A CPA firm's audit of a public company. 10. Auditing standards require that the audit report must be titled and that the title must: A) include the word "independent. " B) indicate if the auditor is a CPA. C) indicate if the auditor is a proprietorship, partnership, or incorporated. D) indicate the type of audit opinion issued.

True or False Questions 1. The Educational requirements for becoming a CPA are a four-part, computer-based examination with components on auditing and attestation, financial accounting and reporting, regulation, and business environment and concepts. False 2. The primary role of the United States General Accounting Office is the enforcement of the federal tax laws as defined by Congress and interpreted by the courts. False 3. Experience requirement for becoming a CPA are varies from state to state with some states requiring no experience, while other states require up to two years of audit experience True

4. GAO are often called external auditors or independent auditors to distinguish them from internal auditors. False 5. The primary role of the United States General Accounting Office audits much of the financial information prepared by various federal government agencies before it is submitted to Congress. True 6. GAO are responsible for auditing the published historical financial statements of all publicly traded companies, most other reasonably large companies, and organizations False many smaller companies and noncommercial

7. External auditors are employed by all types of organizations to audit for management, much as the GAO does for Congress. False 8. Auditing standards require that the audit report must be titled and that the title must indicate if the auditor is a CPA. False 9. The opinion paragraph of the standard unqualified audit report states that the audit is designed to obtain reasonable assurance whether the statements are free of material misstatement False 10. The audit report date on a standard unqualified report indicates the last day of the fiscal period False

11. The opinion paragraph is the final paragraph in the standard report states the auditor’s conclusions based on the results of the audit True 12. the standard audit report consists of three paragraphs, introductory paragraph, scope paragraph, and explanatory paragraph True