1. Which of the following circumstances most likely would cause an auditor to consider whether material misstatements exist in an entity's financial statements?
2. An auditor is testing internal control procedures that are evidenced on an entity's vouchers by matching random numbers with voucher numbers. If a random number matches the number of a voided voucher, that voucher ordinarily should be replaced by another voucher in the random sample if the voucher:
3. In evaluating the reasonableness of an accounting estimate, an auditor most likely would concentrate on key factors and assumptions that are:
4. An auditor may achieve audit objectives related to particular assertions by:
5. Which of the following computer-assisted auditing techniques allows fictitious and real transactions to be processed together without client-operating personnel being aware of the testing process?
6. An auditor should design the written audit plan so that
7. A successor auditor most likely would make specific inquiries of the predecessor auditor regarding
8. Which of the following statements is correct with respect to audits of U.S. issuers?
1. Which component of the COSO framework is concerned with the people of an entity and their overall competence?
2. A bank is considering building a branch on a piece of property it already owns. Which of the following cash flows should NOT be considered in the capital budgeting analysis? The:
3. Which of the following may be used to estimate how inventory warehouse costs are affected by both the number of shipments and the weight of materials handled?
4. The most likely strategy to reduce the breakeven point would be to:
5. A disaster recovery plan usually has all of the following elements EXCEPT:
6. When an operator enters customer account information, the system gives an error prompt that the city and zip code do not match. This is most likely due to what control?
7. If the Federal Reserve wanted to reduce the supply of money as part of an anti-inflation policy, it might:
8. The total market value of all final goods produced by the citizens of a country is called:
1. A material loss should be presented separately as a component of income from continuing operations when it is:
2. Leaf Co. purchased from Oak Co. a $20,000, 8%, 5-year note that required five equal annual year-end payments of $5,009. The note was discounted to yield a 9% rate to Leaf. At the date of purchase, Leaf recorded the note at its present value of $19,485. What should be the total interest revenue earned by Leaf over the life of this note?
3. A lease will be classified as a capital lease if:
4. Lore Co. changed from the cash basis of accounting to the accrual basis of accounting during Year 1. The effect of this change should be reported in Lore's Year 1 financial statements as a:
5. Which of the following information should be disclosed in the summary of significant accounting policies?
6. Which fund may account for a university's internally designated fund, the income from which will be used for a specified purpose?
7. Briar Co. signed a government construction contract providing for a formula price of actual cost plus 10 percent. In addition, Briar was to receive one-half of any savings resulting from the formula price being less than the target price of $2,200,000. Briar's actual costs incurred were $1,920,000. How much should Briar receive from the contract?
8. General capital assets donated to a governmental unit should be recorded:
1. A tax return preparer is subject to a penalty for knowingly or recklessly disclosing corporate tax return information, if the disclosure is made
2. In Year 1, Cape Company recorded book income of $140,000. Included in that amount was $50,000 for meal and entertainment expenses and $40,000 for federal income tax expenses. In Cape's schedule M-1 of Form 1120, which reconciles book income and taxable income, what amount should be reported as taxable income?
3. Peters Co. repairs computers. On February 9, Year 1, Stark Electronics Corp. sold Peters a circuit tester on credit. Peters executed an installment note for the purchase price, a security agreement covering the tester, and a financing statement that Stark filed on February 11, Year 1. On April 13, Year 1, creditors other than Stark filed an involuntary petition in bankruptcy against Peters. What is Stark's status in Peters' bankruptcy?
4. Which of the following best describes the effect of the assignment of an interest in a general partnership?
5. On December 15, Blake Corp. telephoned Reach Consultants, Inc. and offered to hire Reach to design a security system for Blake's research department. The work would require two years to complete. Blake offered to pay a fee of $100,000 but stipulated that the offer must be stated in writing and an acceptance received by Blake no later than December 20.
On December 20, Reach faxed a written acceptance to Blake. Blake's offices were closed on December 20, and Reach's fax was not seen until December 21.
Reach's acceptance contained the following language:
"We accept your $1,000,000 offer. Weaver has been assigned $5,000 of the fee as payment for sums owed Weaver by Reach. Payment of this amount should be made directly to Weaver. On December 22, Blake sent a signed memo to Reach rejecting Reach's December 20 fax but offering to hire Reach for a $75,000 fee. Reach telephoned Blake on December 23 and orally accepted Blake's December 22 offer.
Blake's December 15 offer had to be in writing to be a legitimate offer.
6. The profession's ethical standards most likely would be considered to have been violated when a CPA represents that specific consulting services will be performed for a stated fee, and it is apparent at the time of the representation that:
7. Which of the following will not be discharged in a bankruptcy proceeding?
8. For regular tax purposes, with regard to the itemized deduction for qualified residence interest, home equity indebtedness incurred this year