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Question

1. Which of the following is an underlying condition that in part creates the demand by users for reliable information?
A. Economic transactions are numerous and complex.
B. Decisions are time sensitive.
C. Users are separated from accounting records by distance and time.
D. Financial decisions are important to investors and users.
E. All of the above.

2. When auditing merchandise inventory at year-end, the auditor performs audit procedures to ensure that all goods purchased before year-end are received before the physical inventory count. This audit procedure provides assurance about which management assertion?
A. Cutoff.
B. Existence.
C. Valuation and allocation.
D. Rights and obligations.
E. Occurrence.

3. According to the American Accounting Association (AAA), the definition of auditing includes the following statement
A. An independent appraisal function established within an organization to examine and evaluate its activities.
B. A process of reducing to a socially acceptable level the information risk to users of financial statements.
C. An expression of opinion on the fairness of financial statements.
D. A systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events.