FREE Bachelor of Science in Accountancy: Audit Questions and Answers

Question 1

The kind of control that is intended to stop, catch, and fix important misstatements before the action takes place is called a:

Accepted Answer

Preventative Control

Answer

Detective Control

Answer

Monitoring Control

Answer

Risk Assessment

Question 2

Which form of statement does the auditor tackle from the bottom up?

Accepted Answer

Completeness

Answer

Cutoff

Answer

Understandability and Classification

Answer

Existence and Occurrence

Question 3

For BDE Company, the ratio of accounts payable turnover grew from year 3 to year 4. What might be the cause of this?

Accepted Answer

Cost of goods sold increased from year 3 to year 4 but accounts payable remained the same.

Answer

Total liabilities increased from year 3 to year 4

Answer

The company took on a significant long term debt to purchase another company

Answer

Accounts payable in year 4 increased from year 3

Question 4

An Emphasis-of-Matter Paragraph should be inserted to the auditors' report when:

Accepted Answer

There is a going concern uncertainty

Answer

There is large cash disbursements relating to investment in assets

Answer

The company has material misstatements in the financial statements

Answer

The company is purchasing another company

Question 5

True or False: Even if an auditor does not find any false statements during an audit, a serious flaw or material weakness may still exist within a corporation.

Accepted Answer

True

Answer

False

Question 6

A nonissuer's internal control problems should be reported as soon as possible if:

Accepted Answer

60 days after the report release date

Answer

30 days after the report release date

Answer

60 days after the deficiency is discovered

Answer

30 days after the deficiency is discovered

Question 7

According to the PCAOB standard, issuer auditors must do the

Accepted Answer

Integrated Audit

Answer

Internal Audit

Answer

Review

Answer

Financial Statement Audit only