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1

Generally accepted accounting principles (GAAP) are distinguished from generally accepted auditing standards (GAAS) in that:
A)GAAP are the principles for presentation of financial statements and underlying transactions, while GAAS are the standards auditors should follow when conducting an audit.
B)GAAP are the principles auditors follow when conducting an audit, while GAAS are the standards for presentation of financial statements and underlying transactions.
C)GAAP are promulgated by the SEC, while GAAS are promulgated by the FASB.
D)When GAAP are violated, sufficiently strong GAAS may make up for most GAAP deficiencies.
2

When GAAS do not provide "hard and fast rules," they provide subjective guidance which allows auditors to:
A)Tailor their audit to procedures requested by management.
B)Only apply those standards that are important to the audit.
C)Accurately interpret the profession's Code of Professional Conduct.
D)Use adequate professional judgment when applying the standards.
3

The Sarbanes-Oxley Act requires that auditors of publicly traded companies in the United States perform an integrated audit that includes providing an audit report on a company’s
A)Financial statements--Yes; Compliance with laws and regulations--Yes
B)Financial statements--Yes; Compliance with laws and regulations--No
C)Financial statements--No; Compliance with laws and regulations--Yes
D)Financial statements--No; Compliance with laws and regulations--No
4

The Generally Accepted Auditing Standards of fieldwork pertain most directly to:
A)The planning of the audit.
B)The required training and proficiency of the auditors.
C)Due professional care in the performance of the audit.
D)Improving internal control as a result of the audit.
5

The primary difference between financial statement errors and fraud is that:
A)Errors are intentional misstatements by management, while fraud involves unintentional mistakes or omissions.
B)Errors are unintentional mistakes or omissions, while fraud involves intentional misstatements.
C)There is no difference as errors and fraud have the same meaning.
D)Errors are more likely to provide an indication that an illegal act has occurred.
6

Auditor responsibility for identifying "direct effect" illegal acts differs from their responsibility for detecting:
A)Errors.
B)Indirect effect illegal acts.
C)Fraud.
D)Management fraud.
7

The level of assurance provided by an audit of detecting a material misstatement is referred to as:
A)Absolute assurance.
B)High assurance.
C)Negative assurance.
D)Reasonable assurance.
8

Which of the following is not a function of the Public Company Accounting Oversight Board?
A)Conduct inspections of registered public accounting firms.
B)Establish or adopt auditing standards.
C)Promulgate accounting principles.
D)Register public accounting firms that prepare audit reports of publicly traded companies.
9

If the scope of the auditors procedures in conducting an audit are significantly limited by management, the audit opinion will most likely be a(n):
A)Adverse opinion.
B)Qualified opinion.
C)Scope limitation opinion.
D)Disclaimer of opinion.
10

Of those categories of accounting principles listed, which has the highest level of authority?
A)Other accounting literature.
B)Promulgations of statutory rulings.
C)Pronouncements of bodies composed of expert accountants, not exposed for public comment.
D)Widely recognized practices and pronouncements.







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