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CPA Practice Exam with complete solutions 2024_2025.
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CPA Practice Exam with complete solutions 2024_2025.
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CPA Practice Exam with completesolutions 2024/2025
When a CPA examines a client's projected financial statements, the CPA's report
should: - ANSWER-state that the CPA performed procedures to evaluate
management's assumptions.
Davis, CPA, accepted an engagement to audit the financial statements of Tech
Resources, a nonpublic entity. Before the completion of the audit, Tech requested
Davis to change the engagement to a compilation of financial statements. Before
Davis agrees to change the engagement, Davis is required to consider the:
additional audit effort necessary to complete the audit.
reason given for Tech's request. - ANSWER-Both I and II
The GAO standards list several threats to independence. The threat of familiarity
is defined as: - ANSWER-when, due to a long or close relationship with
management or other personnel, the auditor will be too sympathetic or accepting
of work.
Which of the following representations does an accountant make implicitly when
issuing the standard report for the compilation of a nonissuer's financial
statements? - ANSWER-The accountant is independent with respect to the entity.
Heath Co.'s current ratio is 4:1. Which of the following transactions would
normally increase its current ratio? - ANSWER-Selling inventory on account
According to the AICPA Code of Professional Conduct, what would a covered
member most appropriately do upon learning that another member of an attest
, engagement team is considering employment with the client? - ANSWER-Notify
an appropriate person in the firm.
Which of the following factors most likely would assist an independent auditor in
assessing the objectivity of the internal auditor? - ANSWER-The organizational
status of the director of internal audit
If the business environment is experiencing a recession, the auditor most likely
would focus increased attention on which of the following accounts? - ANSWER-
Allowance for doubtful accounts
An auditor is reporting on condensed financial statements for an annual period
that are derived from the audited financial statements of an issuer. The auditor's
opinion should indicate whether the information in the condensed financial
statements is fairly stated in all material respects: - ANSWER-in relation to the
complete financial statements.
An auditor observes the mailing of monthly statements to a client's customers
and reviews evidence of follow-up on errors reported by the customers. This test
of controls most likely is performed to support management's financial statement
assertion of: - ANSWER-existence.
North Co., a privately held entity, asked its tax accountant, King, a CPA in public
practice, to review and generate North's interim financial statements on King's
microcomputer when King prepared North's quarterly tax return. King should not
submit these financial statements to North unless, as a minimum, King complies
with the provisions of: - ANSWER-Statements on Standards for Accounting and
Review Services.
An auditor's report would be designated an audit of a special-purpose financial
statement when it is issued in connection with: - ANSWER-a basis of accounting
that the entity uses to comply with an agreement between the entity and one or
more third parties other than the auditor.
An auditor most likely would not rely on controls if the payroll department
supervisor is responsible for: - ANSWER-authorizing payroll rate changes for all
employees.
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