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The use of unobservable inputs such as a pricing model or discounted cash flow is an example of a level ________ estimate.

▸ 1

▸ 2

▸ 3

▸ 1 and 3
Many of the auditor's audit procedures in the audit of cash center around the client's bank confirmations.

▸ true

▸ false
The capital acquisition and repayment cycle includes the payment of interest on debt and dividends to shareholders.

▸ true

▸ false
One of the reasons that auditors verify equipment differently from current assets is the amount of any given equipment acquisition is often material.

▸ true

▸ false
The most common audit test to verify equipment additions is to

▸ examine vendors' invoices.

▸ perform an inventory of the fixed assets.

▸ confirm the additions with the vendors.

▸ trace the vendor invoices to the cash disbursements journal.
The method used to measure the estimated total misstatement amount in a population when there is both a recorded value and an audited value for each item in the sample is

▸ difference estimation.

▸ mean-per-unit estimation.

▸ ratio estimation.

▸ monetary unit sampling.
Auditors perform test of controls and substantive tests of transactions for several reasons. Which of the following is not one of those reasons?

▸ for larger public company audits, to conclude the control is operating effectively

▸ to reduce assessed control risk and thereby reduce tests of details of balances

▸ to determine whether the exception rate in the population is sufficiently low

▸ to use rate of occurrence tests in the tests of details of balances
Controls specific to IT include all of the following except for

▸ adequately designed input screens.

▸ pull-down menu lists.

▸ validation tests of input accuracy.

▸ separation of duties.
A CPA firm notifies their audit client of a material weakness in internal controls in the warehouse storing inventories. Subsequently, the client discovers a large theft of inventory in the warehouse. In this case, the CPA firm would have the defense of contributor negligence.

▸ true

▸ false
There is a public perception that auditors guarantee the accuracy of the financial statements they have audited and guarantee the financial viability of the business.

▸ true

▸ false
Don Crosby, a partner in a national CPA firm, has just learned that his self-sufficient daughter has accepted a position as the CFO of Sunglasses, Inc., a current client within the office with which he is employed. Explain the independence ramifications on 1) Don's independence, 2) his office, and 3) the firm's independence.
Under PCAOB standards,

▸ the standard unmodified opinion audit report is referred to as an unqualified opinion audit report.

▸ the scope paragraph states that the financial statements are the responsibility of management.

▸ internal controls of a public company must be audited every five years.

▸ the scope paragraph is the same as the scope paragraph for private companies.
Internal colonialism refers to people from one country invading another country, and in the process changing or destroying the native culture.

▸ true

▸ false
How often is the General Social Survey (GSS) on Victimization conducted?

every year

every 3 years

every 5 years

every 7 years
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