CPA - Certified Public Accountant

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Example Questions

During a period of high inflation, which of the following groups in society would be most likely to gain? All of the following are the rates used in net present value analysis, except for the: Which of the following is true about an auditor's responsibility with respect to accounting estimates? The net present value method of capital budgeting assumes that cash flows are reinvested at: If demand is unit elastic: Which of the following factors most likely would influence an auditor's determination of the auditability of an entity's financial statements? In which of the following situations would a principal auditor least likely make reference to another auditor who audited a subsidiary of the entity? The annual financial statements of a publicly held company have been audited, and its interim financial statements have been reviewed. Which of the following is true about the application of professional standards to this review? To decrease the money supply, the Fed might: Absent a specific provision in its articles of incorporation, a corporation's board of directors has the unilateral power to do all of the following, except: Which of the following reporting options is least likely with regard to supplementary information that is required by GAAP? During the first quarter of the calendar year, Worth Co. had income before taxes of $100,000, and its effective income tax rate was 15%. Worth's effective annual income tax rate for the previous year was 30%. Worth expects that its effective annual income tax rate for the current year will be 25%. The statutory tax rate for the current year is 35%. In its first quarter interim income statement, what amount of income tax expense should Worth report? The imputed interest rate used in the residual income approach for performance measurement and evaluation can best be characterized as the: Proper segregation of duties reduces the opportunities to allow any employee to be in a position to both: An auditor generally tests the segregation of duties related to inventory by: In a member managed LLC, the apparent authority of a member to bind the LLC in dealing with third parties: Product demands become more elastic the: An audit performed in accordance with OMB Circular A-133 will expand the auditor's responsibilities beyond generally accepted auditing standards. The auditor's expanded responsibilities include: Which of the following are true regarding communication requirements an auditor must follow when providing tax services to an audit client who is an issuer under the Sarbanes-Oxley Act of 2002? An auditor wishes to perform tests of controls on a client's cash disbursements procedures. If the controls leave no audit trail of documentary evidence, the auditor most likely will test the procedures by: An auditor was unable to obtain audited financial statements or other evidence supporting an entity's investment in a foreign subsidiary. Between which of the following opinions should the entity's auditor choose? The auditor with final responsibility for an engagement and one of the assistants have a difference of opinion about the results of an auditing procedure. If the assistant believes it is necessary to be disassociated from the matter's resolution, the CPA firm's procedures should enable the assistant to: Which of the following controls would be most effective in assuring that the proper custody of assets in the investing cycle is maintained? The in-charge auditor most likely would have a supervisory responsibility to explain to the staff assistants: An auditor most likely would inspect loan agreements under which an entity's inventories are pledged to support management's financial statement assertion of completeness with respect to: An auditor should design the written audit plan so that: The adverse effects of events causing an auditor to believe there is substantial doubt about an entity's ability to continue as a going concern would most likely be mitigated by evidence relating to the: Which of the following professional services would be considered an attest engagement? In assessing the objectivity of internal auditors, an independent auditor should: Payroll Data Co. (PDC) processes payroll transactions for a retailer. Cook, CPA, is engaged to express an opinion on a description of PDC's internal controls placed in operation as of a specific date. These controls are relevant to the retailer's internal control, so Cook's report may be useful in providing the retailer's independent auditor with information necessary to plan a financial statement audit. Cook's report should: Determining the appropriate level of working capital for a firm requires: An auditor includes a separate paragraph in an otherwise unmodified report to emphasize that the entity being reported on had significant transactions with related parties. The inclusion of this separate paragraph: An accountant has been asked to issue a review report on the balance sheet of a nonissuer without reporting on the related statements of income, retained earnings, and cash flows. The accountant may issue the requested review report only if: Which of the following is not true with respect to the control activities of an entity? The standard report issued by an accountant after reviewing the financial statements of a nonissuer should state that: On December 31, 20X2, the Board of Directors of Maxy Manufacturing, Inc. committed to a plan to discontinue the operations of its Alpha division. Maxy estimated that Alpha's 20X3 operating loss would be $500,000 and that the fair value of Alpha's facilities was $300,000 less than their carrying amounts. The estimate for 20X3 turned out to be correct. Alpha's 20X2 operating loss was $1,400,000, and the division was actually sold for $400,000 less than its carrying amount. Maxy's effective tax rate is 30%. In its 20X3 income statement, what amount should Maxy report as loss from discontinued operations? What is the primary disadvantage of using return on investment (ROI) rather than residual income (RI) to evaluate the performance of investment center managers? A CPA wishes to determine how various publicly-held companies have complied with the disclosure requirements of a new financial accounting standarD. Which of the following information sources would the CPA most likely consult for this information? In using the work of a specialist, an auditor referred to the specialist's findings in the auditor's report. This would be an appropriate reporting practice if the: For which of the following audit tests would a CPA most likely use attribute sampling? Using microcomputers in auditing may affect the methods used to review the work of staff assistants because: In a competitive market an increase in the minimum wage will likely have the following effects: An auditor who is testing IT controls in a payroll system would most likely use test data that contain conditions such as: An entity engaged a CPA to determine whether the client's web sites meet defined criteria for standard business practices and controls over transaction integrity and information protection. In performing this engagement, the CPA should comply with the provisions of: According to Michael Porter, which of the following are the two major categories of business activities? Which of the following statements is correct regarding the declaration of a stock dividend by a corporation having only one class of par value stock? The concept of materiality would be least important to an auditor when considering the: In performing a count of negotiable securities, an auditor records the details of the count on a security count worksheet. What other information is usually included on this worksheet? An independent accountant's report is based on a review of interim financial information. If this report is presented in a registration statement, a prospectus should include a statement clarifying that the: Limitations of the information provided by total asset turnover include:

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