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ACC 492 Week 4 Individual Multiple Choice
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Download answer at https://www.examtutorials.com/course/acc-492-week-4-individual-multiple-choice/
<b>Week 4 Multiple Choice Questions</b>1. A CPA found that the company has not capitalized a material amount of leases in the financial statements. When considering the materiality of this departure from GAAP, the CPA would choose between which reporting options?a. Unqualified opinion or disclaimer of opinion.b. Unqualified opinion or qualified opinion.c. Emphasis paragraph with unqualified opinion or an adverse opinion.d. Qualified opinion or adverse opinion.2. An auditor determined that the company is suffering financial difficulty and the going concern status is seriously in doubt. Even though the company has placed adequate disclosures in the financial statements, the auditor must choose between which of the following audit report alternatives?a. Unqualified report with a going-concern explanatory paragraph or disclaimer of opinion.b. Standard unqualified report or a disclaimer of opinion.c. Qualified opinion or adverse opinion.d. Standard unqualified report or adverse opinion.3. A company accomplished an early extinguishment of debt, and the auditors believe that literal application of <i>SFAS No. 98 </i>would cause recognition of a loss that would materially distort the financial statements and cause them to be misleading. Given these facts, the auditor would probably choose which reporting option?a. Explain the situation and give an adverse opinion.b. Explain the situation and give a disclaimer of opinion.c. Explain the situation and give an unqualified opinion, relying on Rule 203 of the AICPA Code of Professional Conduct.d. Give the standard unqualified audit report.4. Which of these situations would require an auditor to append an explanatory paragraph about consistency to an otherwise unqualified audit report?a. Company changed its estimated allowance for uncollectible accounts receivable.b. Company corrected a prior mistake in accounting for interest capitalization.c. Company sold one of its subsidiaries and consolidated six subsidiaries this year compared to seven last year.d. Company changed its inventory costing method from FIFO to LIFO.5. Wolfe became the new auditor for Royal Corporation, succeeding Mason, who audited the financial statements last year. Wolfe needs to report on Royal’s comparative financial statements and should write in his report an explanation about another auditor having audited the prior yeara. Only if Mason’s opinion last year was qualified.b. Describing the prior audit and the opinion but not naming Mason as the predecessor auditor.c. Describing the audit but not revealing the type of opinion Mason gave.d. Describing the audit and the opinion and naming Mason as the predecessorauditor.6. When other independent auditors are involved in the current audit of parts of the company’s business, the principal auditor can write an audit report that (two answers)a. Mentions the other auditor, describes the extent of the other auditor’s work, and gives an unqualified opinion.b. Does not mention the other auditor and gives an unqualified opinion in a standard unqualified report.c. Places primary responsibility for the audit report on the other auditors.d. Names the other auditors, describes their work, and presents only the principal auditor’s report.7. An “emphasis-of-a-matter” paragraph inserted in a standard audit report causes the report to be characterized as a(n)a. Unqualified opinion report.b. Divided responsibility report.c. Adverse opinion report.d. Disclaimer of opinion.8. Under which of the following conditions can a disclaimer of opinion <i>never </i>be given?a. Going-concern problems are highly material and significant.b. The company does not let the auditor have access to evidence about important accounts.c. The auditor owns stock in the company.d. The auditor has found that the company has used the NIFO (next-in, first-out) inventory costing method.9. Where will you find an auditor’s own responsibility for expressing the opinion on financial statements?a. Stated explicitly in the introductory paragraph of the standard unqualified report.b. Unstated but understood in the introductory paragraph of the standard unqualified report.c. Stated explicitly in the opinion paragraph of the standard unqualified report.d. Stated explicitly in the scope paragraph of the standard unqualified report.10. Company A hired Sampson & Delila, CPAs, to audit the financial statements of Company B and deliver the audit report to Megabank. Which is the client?a. Megabank.b. Sampson & Delila.c. Company A.d. Company B. https://www.examtutorials.com/course/acc-492-week-4-individual-multiple-choice/ |
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