CPA-TEST Online Practice Questions and Answers
If information accompanying the basic financial statements in an auditor-submitted document has been subjected to auditing procedures, the auditor may include in the auditor's report on the financial statements an opinion that the accompanying information is fairly stated in:
A. Accordance with generally accepted auditing standards.
B. Conformity with generally accepted accounting principles.
C. All material respects in relation to the basic financial statements taken as a whole.
D. Accordance with attestation standards expressing a conclusion about management's assertions.
Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of subsequent events?
A. Recomputing a sample of large-dollar transactions occurring after year-end for arithmetic accuracy.
B. Investigating changes in stockholders' equity occurring after year-end.
C. Inquiring of the entity's legal counsel concerning litigation, claims, and assessments arising after yearend.
D. Confirming bank accounts established after year-end.
Which of the following would an auditor most likely use in determining the auditor's preliminary judgment about materiality?
A. The anticipated sample size of the planned substantive tests.
B. The entity's annualized interim financial statements.
C. The results of the internal control questionnaire.
D. The contents of the management representation letter.
Before applying substantive tests to the details of asset accounts at an interim date, an auditor should assess:
A. Control risk at a low level.
B. Inherent risk at a high level.
C. The difficulty in controlling the incremental audit risk.
D. Materiality for the accounts tested as insignificant.
Which of the following audit procedures is best for identifying unrecorded trade accounts payable?
A. Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period.
B. Investigating payables recorded just prior to and just subsequent to the balance sheet date to determine whether they are supported by receiving reports.
C. Examining unusual relationships between monthly accounts payable balances and recorded cash payments.
D. Reconciling vendors' statements to the file of receiving reports to identify items received just prior to the balance sheet date.
Which of the following procedures most likely would not be an internal control procedure designed to reduce the risk of errors in the billing process?
A. Comparing control totals for shipping documents with corresponding totals for sales invoices.
B. Using computer programmed controls on the pricing and mathematical accuracy of sales invoices.
C. Matching shipping documents with approved sales orders before invoice preparation.
D. Reconciling the control totals for sales invoices with the accounts receivable subsidiary ledger.
Which of the following might be considered the most expansionary set of fiscal policies?
A. Increase government purchases, increase in taxes.
B. Increase government purchases, decrease in taxes.
C. Decrease in taxes, increase in the money supply.
D. Increase in government purchases, increase in the money supply.
If a nation has superior conditions in which to grow coffee beans and firms are able to grow them at very low costs, which of the four major factors that Michael Porter has indicated impact the global competitive environment would allow this nation to fare better with respect to global competitive advantage?
A. Conditions of the factors of production.
B. Conditions of domestic demand.
C. Related and supporting industries.
D. Firm strategy, structure, and rivalry.
Which one of the following represents methods for converting accounts receivable to cash?
A. Trade discounts, collection agencies, and credit approval.
B. Factoring, pledging, and electronic funds transfers.
C. Cash discounts, collection agencies, and electronic funds transfers.
D. Trade discounts, cash discounts, and electronic funds transfers.
Tom and Joan Moore, both CPAs, filed a joint 1994 federal income tax return showing $70,000 in taxable income. During 1994, Tom's daughter Laura, age 16, resided with Tom. Laura had no income of her own and was Tom's dependent. Determine the amount of income or loss, if any that should be included on page one of the Moores’ 1994 Form 1040. In 1994, Joan received $3,500 as beneficiary of the death benefit, which was provided by her brother's employer. Joan's brother did not have a nonforfeitable right to receive the money while living.
A. $0
B. $500
C. $900
D. $1,000
E. $1,250
F. $1,300
G. $1,500
H. $2,000
I. $2,500
J. $3,000
K. $10,000
L. $25,000
M. $50,000
N. $55,000
O. $75,000