Reynolds Audit Quiz 1 review – Flashcards
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According to AU-C 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Generally Accepted Auditing Standards, "presumptively mandatory requirements" in the auditing standards use which word?
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Should (The auditor must comply with a presumptively mandatory requirement in all cases in which the requirement is relevant except in rare cases. The standards use the word "should" to indicate this requirement.)
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Which of the following statements correctly defines the term "reasonable assurance"?
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a high but not absolute level of assurance to allow auditor to detect material misstatements
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. Which of the following is a management assertion regarding account balances at the period end? A. Transactions and events that have been recorded have occurred and pertain to the entity. /react-text B. Transactions and events have been recorded in the proper accounts. /react-text C. The entity holds or controls the rights to assets, and liabilities are obligations of the entity. /react-text D. Amounts and other data related to the transactions and events have been recorded appropriately.
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C. The entity holds or controls the rights to assets and liabilities are obligations of the entity.
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Which of the following best describes the reason an independent auditor reports on financial statements?
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Different interests may exist between the entity preparing the statements and the person using the statements, and thus outside assurance is needed to enhance the credibility of the statements.
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Notes that are included with financial statements are the responsibility of the
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company management
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Which of the following assertions is most closely related to the audit objective to verify that all sales have been recorded?
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completeness
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in testing the existence assertion for an asset, an auditor ordinarily works from the
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accounting records of the supporting evidence
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Which of the following best characterizes an auditor's exercise of professional skepticism?
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Having an attitude that includes a questioning mind
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When a PCAOB auditing standard indicates that an auditor "could" perform a specific procedure, how should the auditor decide whether and how to perform the procedure?
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By exercising professional judgment in the circumstances
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Who establishes generally accepted auditing standards?
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Auditing standards board and the public company accounting oversight board
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An independent auditor must have which of the following?
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The ability to exercise sound professional judgment
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An attest engagement is one in which a CPA is engaged to
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Issue an examination, a review, or an agreed-upon procedures report on subject matter, or an assertion about subject matter that is the responsibility of another party.
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A financial statement audit is designed to
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Obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to fraud or error.
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Which of the following statements is true concerning an auditor's responsibilities regarding financial statements?
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An auditor's responsibilities for audited financial statements are confined to the expression of the auditor's opinion.
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An audit of the financial statements of Camden Corporation is being conducted by an external auditor. The external auditor is expected to
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Express an opinion as to the fairness of camdens financial statements
