Reference no: EM132712519

Question 1. As used in PSA 560, the term "subsequent events" refers to

a. Events occurring the date of the financial statement.

b. Events occurring after the date of the auditor's report

c. Events occurring between the date of the financial statements and the date of the auditor's report.

d. Both events occurring between the date of the Financial Statements and the date of the auditor's report, and facts discovered after the date of the auditor's report.

Question 2. Which of the following statements best describes a positive request for confirmation of an Accounts Receivable balance?

a. The customer will be asked to indicate to the auditor the current balance in the account.

b. The customer will be asked to respond to the confirmation request only if the balance indicated in the request is incorrect.

c. The customer will be asked to inform the auditor whether the balance indicated in the request is correct and to respond regardless of whether such stated balance is correct.

d. The customer will be asked to indicate to the auditor the balance in his/her account only if it is positive (i.e., greater than zero).

Question 3. The auditor is required to obtain reasonable assurance about whether the financial statements are free of materials misstatement, whether due to fraud or error. In all cases when reasonable assurance cannot be obtained, the auditor's report shall contain a/an

a. Unmodified opinion

b. Qualified or adverse opinion

c. Qualified or disclaimer of opinion

d. Disclaimer of opinion

Question 4. Accepting an engagement to examine an entity's financial protection most likely would be appropriate if the projection were to be distributed to

a. All employees who work for the entity.

b. Potential stockholders who request a prospectus or a registration statement.

c. A bank with which the entity is negotiating for a loan.

d. All stockholders of record as of the report date.

Question 5. On January 2, 2020, the TANYA CO. received a notice from its primary suppliers that effective immediately all wholesale prices would be increased 10%. On the basis of the notice, TANYA revalued its December 31, 2019 inventory to reflect the higher costs. As a result, the statement of the financial position reflects inventory stated at an amount is higher that its net realizable value. The inventory constituted a material proportion of total assets; however, the effect of the revaluation was material to current assets but not to total assets or net income. In reporting on the company's financial statements for the year ended December 31, 2019 in which inventory is valued at the adjusted amount, the auditor would most likely

a. Express an unmodified opinion provided the nature of the adjustments and the amounts involve are disclosed in notes to the financial statements.

b. Express a qualified opinion.

c. Disclaim an opinion.

d. Express an adverse opinion.