AICPA CPA-TEST Online Practice Questions and Exam Preparation

AICPA CPA-TEST Online Questions & Answers

• Question 101:

  In 1990, ABC Corp., a closely held corporation, was formed by Adams, Frank, and Berg as incorporators and stockholders. Adams, Frank, and Berg executed a written voting agreement which provided that they would vote for each other as directors and officers. In 1994, stock in the corporation was offered to the public. This resulted in an additional 300 stockholders. After the offering, Adams holds 25%, Frank holds 15%, and Berg holds 15% of all issued and outstanding stock. Adams, Frank, and Berg have been directors and officers of the corporation since the corporation was formed. Regular meetings of the board of directors and annual stockholders meetings have been held. For this question refer to the formation of ABC Corp. and the rights and duties of its stockholders, directors, and officers. ABC Corp.'s day-to-day business ordinarily would be operated by its:

  A. Directors.
  B. Stockholders.
  C. Officers.
  C. Officers.

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  Choice "c" is correct. Stockholders have no day-to-day control; management power of a corporation is vested in the directors, but they usually delegate day-to-day management duties to the officers.

• Question 102:

  Analytical procedures used in planning an audit should focus on:

  A. Reducing the scope of tests of controls and substantive tests.
  B. Providing assurance that potential material misstatements will be identified.
  C. Enhancing the auditor's understanding of the client's business.
  D. Assessing the adequacy of the available audit evidence.
  C. Enhancing the auditor's understanding of the client's business.

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  Choice "c" is correct. Analytical procedures used in planning the audit should focus on enhancing the auditor's understanding of the client's business and the transactions and events that have occurred since the last audit date. Choice "a" is incorrect. Analytical procedures used in planning do not reduce tests of controls or substantive tests. Choice "b" is incorrect. Analytical procedures used in planning are not designed to identify material misstatements. Choice "d" is incorrect. Audit evidence has not yet been gathered during the planning process, so its adequacy cannot be assessed.

• Question 103:

  Considering the SCOR Model of supply chain operations, which of the following key management processes does assessing the ability of the suppliers to supply resources fall into?

  A. Plan.
  B. Source.
  C. Make.
  D. Deliver.
  A. Plan.

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  Choice "a" is correct. The process of planning consists of developing a way to properly balance aggregate demand and aggregate supply within the goals and objectives of the firm and plan for the necessary infrastructure. Assessing the ability of the suppliers to supply resources is part of the "plan" process. Choices "b", "c", and "d" are incorrect, per the above Explanation.

• Question 104:

  What information should a public company present about revenues from its reporting segments?

  A. Disclose separately the amount of sales to unaffiliated customers and the amount of intracompany sales.
  B. Disclose as a combined amount sales to unaffiliated customers and intracompany sales between geographic areas.
  C. Disclose separately the amount of sales to unaffiliated customers but not the amount of intracompany sales between geographic areas.
  D. No disclosure of revenues from foreign operations need be reported.
  A. Disclose separately the amount of sales to unaffiliated customers and the amount of intracompany sales.

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  Choice "a" is correct. Unaffiliated customers sales and intracompany sales must be disclosed separately.

• Question 105:

  Which of the following audit procedures is best for identifying unrecorded trade accounts payable?

  A. Examining unusual relationships between monthly accounts payable balances and recorded cash payments.
  B. Reconciling vendors' statements to the file of receiving reports to identify items received just prior to the balance sheet date.
  C. Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period.
  D. Investigating payables recorded just prior to and just subsequent to the balance sheet date to determine whether they are supported by receiving reports.
  C. Reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period.

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  Choice "c" is correct. Unrecorded trade accounts payable are best identified by reviewing cash disbursements recorded subsequent to the balance sheet date to determine whether the related payables apply to the prior period. Choice "a" is incorrect. There is not usually a predictable relationship between accounts payable and cash payments, because management can pay cash or incur additional liabilities at its discretion. Choice "b" is incorrect. Reconciling vendors' statements to the file of receiving reports would not identify unrecorded payables, as the vendor statement would still agree with the receiving report even if the payable were not recorded. Choice "d" is incorrect. Investigating payables already recorded would not help identify unrecorded trade payables.

• Question 106:

  APB Opinion No. 28, Interim Financial Reporting, concluded that interim financial reporting should be viewed primarily in which of the following ways?

  A. As useful only if activity is spread evenly throughout the year.
  B. As if the interim period were an annual accounting period.
  C. As reporting for an integral part of an annual period.
  D. As reporting under a comprehensive basis of accounting other than GAAP.
  C. As reporting for an integral part of an annual period.

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  Choice "c" is correct. Interim financial reporting should be viewed as reporting for an integral part of an annual period. Choices "a", "b", and "d" are incorrect, per the above rule.

• Question 107:

  Government Auditing Standards published by the Government Accountability Office:

  A. Only apply to audits of governments.
  B. Only apply to audits of governments receiving federal financial assistance.
  C. Primarily apply to audits of federal financial assistance.
  D. Only apply to audits of federal financial assistance programs operated by state and local governments.
  C. Primarily apply to audits of federal financial assistance.

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  Choice "c" is correct. Generally Accepted Government Auditing Standards primarily apply to audits of federal financial assistance but have been adopted by some states for audits of state financial assistance. Choice "a" is incorrect. Government Auditing Standards will apply to federal financial assistance received by governments, not-for-profit organizations, or other organizations. GAGAS may also extend to other financial assistance depending on whether those standards have been adopted by the state providing the assistance. Choice "b" is incorrect. Government Auditing Standards will apply to federal financial assistance received by governments, not-for-profit organizations, or other organizations, not only to governments. Choice "d" is incorrect. Government Auditing Standards will apply to federal financial assistance received by governments, not-for-profit organizations, or other organizations, not only to governments.

• Question 108:

  Processing data through the use of simulated files provides an auditor with information about the operating effectiveness of controls. One of the techniques involved in this approach makes use of:

  A. Controlled reprocessing.
  B. An integrated test facility.
  C. Input validation.
  D. Program code checking.
  B. An integrated test facility.

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  Choice "b" is correct. An integrated test facility runs test transactions through the "live" system and posts to simulated (dummy) files to provide an auditor with information about the operating effectiveness of controls. Choice "a" is incorrect. Controlled reprocessing of transactions is a less common term used for parallel processing where the auditor writes a program to "reprocess" some or all of the client's live data. It does not involve the use of simulated files. Choice "c" is incorrect. Input validation is a general description of any test that ensures that the input was accurate. It does not involve the use of simulated files. Choice "d" is incorrect. Program code checking is the review of the client's program source code by a qualified auditor/IT specialist. It does not involve the use of simulated files.

• Question 109:

  The audit work performed by each assistant should be reviewed to determine whether it was adequately performed and to evaluate whether the:

  A. Auditor's system of quality control has been maintained at a high level.
  B. Results are consistent with the conclusions to be presented in the auditor's report.
  C. Audit procedures performed are approved in the professional standards.
  D. Audit has been performed by persons having adequate technical training and proficiency as auditors.
  B. Results are consistent with the conclusions to be presented in the auditor's report.

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  Choice "b" is correct. Review of assistants' work is necessary to determine whether it was performed in a satisfactory manner and to determine whether the work supports the conclusions presented in the auditor's report. Choice "a" is incorrect. The responsibility of a firm to establish review procedures (a system of quality control) is distinct from the auditor's responsibility to adequately plan and supervise the work on a particular engagement. Quality control standards relate to the conduct of the firm's audit practice as a whole; GAAS relates to the conduct of individual audits. Choice "c" is incorrect. Specific audit procedures are performed based on the auditor's judgment and would not necessarily be approved in the professional standards. Choice "d" is incorrect. Review of an assistant's work would not necessarily be indicative of that assistant's technical training and proficiency. The review process is to determine whether the audit is being performed in a satisfactory manner.

• Question 110:

  An auditor who is testing IT controls in a payroll system would most likely use test data that contain conditions such as:

  A. Deductions not authorized by employees.
  B. Overtime not approved by supervisors.
  C. Time tickets with invalid job numbers.
  D. Payroll checks with unauthorized signatures.
  C. Time tickets with invalid job numbers.

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  Choice "c" is correct. Test data often contains invalid information (such as invalid job numbers) that is used to test EDP controls. Choices "a", "b", and "d" are incorrect. While approvals and authorizations should all be tested, they are not IT controls and would not be tested through use of test data.