4) When a qualified or adverse opinion is issued, the qualifying paragraph is inserted: A) between t

4) When a qualified or adverse opinion
is issued, the qualifying paragraph is inserted: A) between the introductory
and scope paragraphs.

B)
between the scope and opinion paragraphs.

C) after the opinion paragraph, as a
fourth paragraph. D) immediately after the address, as the first paragraph.
5) The independent auditor must issue a
qualified opinion when which of the financial(s) are missing?

A)
Balance Sheet
II.
Income Statement

III.
Statement of Cash Flows A) I only

B)
II only C) III only

D)
I, II, and III

6) If the financial statements include
an income statement and a balance sheet but exclude the statement of cash
flows, the auditors:

A) can issue an unqualified report.

B) should issue a qualified opinion due to the departure
from GAAP.

C)
should issue a qualified opinion because the missing statement of cash flows
constitutes a scope limitation.

D)
should include the statement of cash flows, modify the report and issue an
unqualified opinion.

7) Which of the following is incorrect
concerning scope limitations?

A) If client imposed the auditor should
be concerned about client trying to prevent discovery of a material
misstatement.

B) An unqualified opinion can result if
auditors can perform alternative procedures and are satisfied that the
information is fairly stated.
C) The most common circumstance imposed
scope restriction is due to the client changing their auditors.

D) The most common circumstance imposed
scope limitation is when the auditor is appointed after the balance sheet date.

8)
When a scope limitation exists in an audit which type of report modification
can result? A)

Qualified Opinion

Qualified Scope

Disclaimer Opinion No

Paragraph Only

Paragraph Only

Scope Paragraph

Yes

No

Yes

B)

Qualified Opinion

Qualified Scope

Disclaimer Opinion No

Paragraph Only

Paragraph Only

Scope Paragraph

No

No

Yes

C)

Qualified Opinion

Qualified Scope

Disclaimer Opinion No

Paragraph Only

Paragraph Only

Scope Paragraph

Yes

Yes

No

D)

Qualified Opinion

Qualified Scope

Disclaimer Opinion No

Paragraph Only

Paragraph Only

Scope Paragraph

No

No

No

9)
When a pervasive scope limitation exists which paragraphs will be included in
the independent auditors report?

A)

Introductory

Scope

Opinion

Explanatory

Yes

Yes

Yes

Yes

B)

Introductory

Scope

Opinion

Explanatory

Yes

No

Yes

Yes

C)

Introductory

Scope

Opinion

Explanatory

Yes

No

Yes

No

D)

Introductory

Scope

Opinion

Explanatory

No

No

Yes

No

10) What type of audit opinion does
the independent auditor issue when the following financial statements are not
presented?

A)

Statement of Cash

Balance Sheet

Income Statement

Flows

Qualified

Qualified

Qualified

B)

Statement of
Cash

Balance Sheet

Income Statement

Flows

Disclaimer

Disclaimer

Qualified

C)

Statement of
Cash

Balance Sheet

Income Statement

Flows

Adverse

Adverse

Adverse

D)

Statement of Cash

Balance Sheet

Income Statement

Flows

Adverse

Adverse

Qualified

11)
Subsequent to the close of Spacely Sprockets fiscal year ending October 31,
2012, a major debtor has declared bankruptcy due to a series of events. The
receivable is significantly material in relation to the financial statements,
and recovery is doubtful. The debtor had confirmed the full amount due to
Spacely Sprocket at the balance sheet date. Because the account was confirmed
at the balance sheet date, Spacely refuses to disclose any information in
relation to this subsequent event. The CPA believes that all other accounts
were stated fairly at the balance sheet date. In addition, Spacely changed
their method of inventory valuation from FIFO to LIFO. This change was
disclosed in Note X to the financial statements. Accordingly, what type of
opinion should be expressed?

A) Unqualified with an explanatory
paragraph.
B) Qualified due to a GAAP departure.

C) Qualified due to a scope limitation.

D) A combination of B and C.

12) For the report containing a
disclaimer for lack of independence, the disclaimer is in the: A) third or
opinion paragraph.

B)
second or scope paragraph. C) first and only paragraph.

D)
fourth or explanatory paragraph.

13) When an adverse opinion is issued, a
scope paragraph would be:

A)
qualified.

B) unchanged.

C) deleted.

D) expanded to identify the additional
procedures which the auditor performed.

 

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