Exam Details

  • Exam Code
    :CPA-TEST
  • Exam Name
    :Certified Public Accountant Test: Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, Regulation
  • Certification
    :AICPA Certifications
  • Vendor
    :AICPA
  • Total Questions
    :1241 Q&As
  • Last Updated
    :Jun 30, 2025

AICPA AICPA Certifications CPA-TEST Questions & Answers

  • Question 881:

    In auditing a client's retained earnings account, an auditor should determine whether there are any restrictions on retained earnings that result from loans, agreements, or state law. This procedure is designed to corroborate management's financial statement assertions with respect to:

    A. Transactions and events.

    B. Account balances.

    C. Presentation and disclosure.

    D. Audit risk and materiality.

  • Question 882:

    The primary responsibility of a bank acting as registrar of capital stock is to:

    A. Ascertain that dividends declared do not exceed the statutory amount allowable in the state of incorporation.

    B. Account for stock certificates by comparing the total shares outstanding to the total in the shareholders subsidiary ledger.

    C. Act as an independent third party between the board of directors and outside investors concerning mergers, acquisitions, and the sale of treasury stock.

    D. Verify that stock is issued in accordance with the authorization of the board of directors and the articles of incorporation.

  • Question 883:

    When a client company does not maintain its own stock records, the auditor should obtain written confirmation from the transfer agent and registrar concerning:

    A. Restrictions on the payment of dividends.

    B. The number of shares issued and outstanding.

    C. Guarantees of preferred stock liquidation value.

    D. The number of shares subject to agreements to repurchase.

  • Question 884:

    An auditor should trace corporate stock issuances and treasury stock transactions to the:

    A. Numbered stock certificates.

    B. Articles of incorporation.

    C. Transfer agent's records.

    D. Minutes of the board of directors.

  • Question 885:

    Which of the following statements extracted from a client's lawyer's letters concerning litigation, claims, and assessments most likely would cause the auditor to request clarification?

    A. "I believe that the possible liability to the company is nominal in amount."

    B. "I believe that the action can be settled for less than the damages claimed."

    C. "I believe that the plaintiff's case against the company is without merit."

    D. "I believe that the company will be able to defend this action successfully."

  • Question 886:

    In auditing accounts payable, an auditor's procedures most likely would focus primarily on management's assertion of:

    A. Existence.

    B. Understandability and classification.

    C. Completeness.

    D. Valuation and allocation.

  • Question 887:

    Which of the following questions would an auditor most likely include on an internal control questionnaire for notes payable?

    A. Are assets that collateralize notes payable critically needed for the entity's continued existence?

    B. Are two or more authorized signatures required on checks that repay notes payable?

    C. Are the proceeds from notes payable used for the purchase of noncurrent assets?

    D. Are direct borrowings on notes payable authorized by the board of directors?

  • Question 888:

    The most likely result of ineffective internal control policies and procedures in the revenue cycle is that:

    A. Irregularities in recording transactions in the subsidiary accounts could result in a delay in goods shipped.

    B. Omission of shipping documents could go undetected, causing an understatement of inventory.

    C. Final authorization of credit memos by personnel in the sales department could permit an employee defalcation scheme.

    D. Fictitious transactions could be recorded, causing an understatement of revenues and overstatement of receivables.

  • Question 889:

    An auditor should request that an audit client send a letter of inquiry to those attorneys who have been consulted concerning litigation, claims, or assessments. The primary reason for this request is to provide:

    A. The opinion of a specialist as to whether loss contingencies are possible, probable, or remote.

    B. A description of litigation, claims, and assessments that have a reasonable possibility of unfavorable outcomes.

    C. An objective appraisal of management's controls adopted for identifying and evaluating legal matters.

    D. The corroboration of the information furnished by management concerning litigation, claims, and assessments.

  • Question 890:

    Which of the following is not an audit procedure that the independent auditor would perform concerning litigation, claims, and assessments?

    A. Obtain assurance from management that it has disclosed all unasserted claims that the lawyer has advised are probable of assertion and must be disclosed.

    B. Confirm directly with the client's lawyer that all claims have been recorded in the financial statements.

    C. Inquire of and discuss with management the controls adopted for identifying, evaluating, and accounting for litigation, claims, and assessments.

    D. Obtain from management a description and evaluation of litigation, claims, and assessments existing at the balance sheet date.

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