This document includes a series of multiple-choice ...

[Pages:145]This document includes a series of multiple-choice questions (MCQs) that were previously used on The Uniform CPA Examination?. These MCQs represent a onetime release of Exam content to the general public intended to provide examples of the types of MCQs used on the Exam.

This document will be accessible from October 1, 2019 through December 31, 2019. These MCQs will not be updated to reflect the impact of any standard-setting or regulatory activity (changes) that occurs after October 1, 2019, which could make them obsolete or technically incorrect. It is your sole responsibility to be aware of changes that may impact these questions and answers. The AICPA undertakes no responsibility to update these questions and answers.

The document includes: 40 MCQs from the Auditing and Attestation (AUD) Section 25 MCQs from the Business Environment and Concepts (BEC) Section 50 MCQs from the Financial Accounting and Reporting (FAR) Section 25 MCQs from the Regulation (REG) Section

Pages 1-41 Pages 42-67 Pages 68-118 Pages 119-144

Each MCQ includes the following attributes: Question Answer choices Item ID (unique question identifier) Key is the correct answer Content coding to the Blueprints effective July 1, 2019 o coding schema = ABC.00X.0YY.0ZZ ABC = Exam section (AUD, BEC, FAR, or REG) 00X = Blueprint Area (001,002,003,004,005 that corresponds to I,II,III,IV, V in the Blueprints) 0YY = Group within the Blueprint Area (001 through 012 that corresponds to A through L in the Blueprint) 0ZZ = Topic within the Blueprint Group (001 through 010 that corresponds to 1 through 10 in the Blueprints) Skill coding to the Blueprints (Remembering and Understanding or Application)

AUD

1

111

1. Which of the following statements is correct concerning both an engagement to compile and an engagement to review a nonissuer's financial statements?

A.The accountant expresses no assurance on the financial statements. B.The accountant should obtain a written management representation letter. C.The accountant need not obtain an understanding of internal control. D.The accountant must be independent in fact and appearance.

Item ID: Key: AUD.CSO.20190701: AUD.SSO.20190701:

24409 C AUD.001.001.003 Remembering and Understanding:1

2

111

2. A compilation of financial statements in accordance with Statements on Standards for Accounting and Review Services is limited to presenting

A.Accounting data that conforms with a special purpose framework other than GAAP. B.Unaudited financial statements that omit substantially all required GAAP disclosures. rmation in the form of financial statements that is the representation of management. D.Supplementary financial information that has been subjected to inquiry and analytical procedures.

Item ID: Key: AUD.CSO.20190701: AUD.SSO.20190701:

8937 C AUD.001.001.003 Remembering and Understanding:1

33 3

3333 333334 33 332333grtygrt3

3

3333

3. According to rules issued under the Sarbanes-Oxley Act, which of the following nonaudit services is an accounting firm permitted to provide for an issuer audit client without impairing the accounting firm's independence?

A.Providing an expert opinion in order to advocate the client's interest in litigation. B.Providing an expert opinion in order to advocate the client's position in a regulatory investigation. C.Providing factual accounts in testimony explaining positions taken during the performance of any

services provided to the client.

D.Providing legal services to the client in a foreign jurisdiction.

Item ID: Key: AUD.CSO.20190701: AUD.SSO.20190701:

10799 C AUD.001.002.002 Application:2

4

4. Before accepting an audit engagement, a CPA should evaluate whether conditions exist that raise questions as to the integrity of management. Which of the following conditions most likely would raise such questions?

A.There are significant differences between the entity's forecasted financial statements and the financial statements to be audited.

B.The CPA will not be permitted to have access to sensitive information regarding the salaries of senior management.

C.There have been substantial inventory write-offs just before the year end in each of the past four years.

D.The CPA becomes aware of the existence of related party transactions while reading the draft financial statements.

Item ID: Key: AUD.CSO.20190701: AUD.SSO.20190701:

9699 B AUD.001.003.001 Application:2

5

5. Which of the following factors most likely would cause a CPA not to accept a new audit engagement?

A.Management reputation for failing to provide schedules to prior auditors on a timely basis. B.The CPA's inability to review the predecessor auditor's working papers. C.Management's unwillingness to make all financial records available to the CPA. D.The CPA's lack of understanding of the entity's operations and industry.

Item ID: Key: AUD.CSO.20190701: AUD.SSO.20190701:

10227 C AUD.001.003.001 Remembering and Understanding:1

6

6. Which of the following factors most likely would cause an accountant not to accept an engagement to compile the financial statements of a nonissuer?

A.A lack of segregation of duties in the entity's accounting and payroll departments.

B.Indications that reports of asset misappropriation are not investigated by management.

C.The entity's intention to omit from the financial statements substantially all of the disclosures required by GAAP.

D.Management's acknowledgement that the financial statements will be included in a written personal financial plan.

Item ID: Key: AUD.CSO.20190701: AUD.SSO.20190701:

24423 B AUD.001.003.001 Application:2

7

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