Name: ________________________________ Date:

_________________

Year &Sec. _____________________________ Score:

________________

ACCO 3116 Quiz 1

I. Multiple Choice Questions. Select the best answer.

1. The primary reason for an audit by an independent, external audit is

a. To guarantee that there are no misstatements in the financial statements.
b. To relieve management of responsibility for the financial statements.
c. To provide increased assurance to users as to the fairness of the financial statements
d. To insure that any fraud will be discovered.

2. The communication between an external auditor and client is confidential. Ordinarily,

a. The client is not required to answer an external auditors questions in certain
circumstances.
b. An external auditor is not permitted to testify in a court of a law without the permission
of the client.
c. An external auditor is not required to divulge client information even if demanded by a
subpoena.
d. An external auditor should not disclose information obtained in the course of the
engagement without the clients permission.

3. Documentary evidence is one of the principal types of corroborating information used by

an auditor to substantiate an opinion. Which of the following examples is the most reliable
audit evidence?

a. Time tickets c. Copies of sales invoices

b. Material requisition slips d. Bank statement

4. Which of the following is incorrect regarding accounting estimates?

a. The auditor is responsible for making accounting estimates included in financial
statements.
b. Accounting estimates are often made in conditions of uncertainty regarding the
outcome of events that have occurred or likely to occur and involve the use of
judgment.
c. The risk of material misstatement is greater when accounting estimates are involved
and in some cases the auditor may determine that it is a significant risk that requires
special audit considerations.
d. The auditor should obtain sufficient appropriate audit evidence regarding accounting
estimates.
e.
5. The party responsible for assumptions identified in the preparation of prospective FS is
usually

a. The clients management c. The reporting accountant

b. The clients independent auditor d. A third party lending institution

e.
6. Which of the following is not the function of BSP (Central Bank)?
a. Recommend measures to improve the efficiency and effectiveness of government
operations.
 b. Supervise banks and exercise regulatory powers over non-bank institutions performing
quasi-bank functions
c. Determine the exchange rate of the Philippines
d. Extend discounts, loan and receivable to banking institutions for liquidity purposes.
f.
7. The auditors opinion
a. Guarantees the credibility of the FS
b. Is not an assurance as to the future viability of the entity
c. Is an assurance as to the efficiency with which management has conducted the affairs
of the entity but not effectiveness
d. Certifies the correctness of the financial statement
g.
h.
i.
8. Which of the following types of audits are most similar?

a. Operational audits and compliance c. Compliance audits and

audits independent FS audits
b. Independent FS audits and d. Internal audits and independent FS
operational audits audits

e.
9. A type of audit the purpose of which is to determine whether the auditee is following
specific procedures or rules set down by some higher authority

a. Operational Audit c. Financial Audit

b. Compliance Audit d. Management Audit

e.
10.A technique for regularly and systematically appraising a unit of function and its
effectiveness against corporate and industry standards with the objective of assuring
management that its aim are being carried out and/or identifying conditions capable of
being improved
a. Operational Audit
b. Compliance Audit
c. Financial Audit
d. Management Audit
f.
11.Which of the following statements is correct concerning an auditors responsibility
regarding FS?
a. Making suggestions that are adopted about the form and content of an entity FS
impair an auditors independence.
b. An auditor may draft an entitys FS based on information from managements
accounting system.
c. The fair presentation of audited FS in conformity with GAAP is an implicit part of the
auditors responsibilities.
d. An auditors responsibilities for audited FS are not confined to the expression of the
auditors opinion.
g.
12.I In exceptional circumstances, an auditor may judge it necessary to depart from PSA in
order to more effectively achieve the objective of an audit. When such situation arises, the
auditor is not required to justify the departure.
h.
i. II PSAs need only be applied to material matters.

a. False, False c. True, False

b. True, True d. False, True
 j.
13.I Information Theory is in value information concerning the financial potential losses, that
the auditor is seen to have greater ability to pay.
k. II Motivational Theory is to improve the non-financial and financial data for internal
decision making.

a. False, False c. True, False

b. True, True d. False, True

e.
14.Auditors mostly perform financial statement audits, but sometimes they may also perform
compliance and operational audits.

a. Independent auditors c. Government auditors

b. Internal auditors d. None of the above

e.
15.I Compliance audit determine the efficiency of economy and effectiveness of an entitys
operating activities.
f. II FS audit determine whether the client is following specified procedures set by higher
authority such as policy and procedures.

a. False, False c. False, True

b. True, True d. True, False
 e.

f.

g.
16.Which of the following is not allowed by the Code of Ethics for Professional Accountants?
a. A professional accountant in public practice may issue to client or, response to an
unsolicited request, to a non-client a factual and objectively worded of the services
provided.
b. A firm or CPA practitioner can continue to use the term accredited or any similar
words or phrase calculated to convey the same meaning if the claimed accreditation
has not expired.
c. The use of the name of an international accounting firm affiliation/correspondence is
generally allowed.
d. Booklets and other documents bearing the name of a professional accountant and
giving technical information for the assistance of staff or clients may be issued to such
persons, other professional accountants or other interested parties.
e. None of the above
h.
17.The following is a qualification of an applicant for CPA licensure examination, except
a. Holder of BSA degree
b. At least 21 years of age
c. Of good moral character
d. Filipino citizen
e. None of the above
i.
18.Which of the following is not a qualification of a member of the BOA?
a. Must be of good moral character and must not have been convicted of crimes involving
moral turpitude.
b. Duly registered CPA with at least 10 years of work experience in the practice of public
accounting
c. Natural-born citizen and resident of the Philippines
d. Must not be a director of officer of the APO at the time of his appointment.
e. All of the above
j.
19.Philippine Accountancy Act of 2004 is what Republic Act?
a. Republic Act 9698
b. Republic Act 9892
c. Republic Act 9298
d. Republic Act 9296
e. None of the above
k.
20.The members of the BOA shall be appointed by
a. Philippine Institute of CPAs
b. Association of CPA in Public Practice
c. Professional Regulatory Board
d. President of the Philippines
e. None of the above
l.
21.Which of the following is not one of the specified objectives of the Accountancy Act of
2004?
a. Promulgation of accounting and auditing standards
b. Standardization and regularization of accounting education
c. Examination for registration of CPAs.
d. Supervision, control and regularization of accounting practice.
e. All of the above
 m.
22.Which of the following is not a requisite in applying for the CPA licensure examinations?
a. Good moral character
b. BSA degree holder
c. Not been convicted of any criminal offense involving moral turpitude.
d. Filipino citizen
e. None of the above
n.
23.Advertising as defined in the Code of Ethics for Professional Accountants, means
a. The communication to the public of facts about a professional accountant which are not
designated for the deliberate promotion of that professional accountant.
b. The approach to a potential client for purpose of offering professional services.
c. The communication to the public of information as to services or skills provided by
professional accountants in public practice view a procuring professional business.
d. Any of the given choices.
e. None of the above
o.
24.Which of the following is allowed by the Code of Ethics for the Professional Accountants?
a. A professional accountant in public practice may issue client or, in response to an
unsolicited request, to a non-client a factual and objectively worded of the services
provided.
b. Publicity on behalf of the client in which the emphasis on the publicity is directed
towards the objective, to be achieve for the client.
c. Booklets and other documents bearing the name of professional accountant and giving
technical information for the assistance of staff clients may be issued to such persons,
other professional accountants or other interested parties.
d. The use of the name of an international accounting firm affiliation/correspondence is
generally allowed.
e. All of the above.
p.
25.In general sense, advertising and publicity in any medium are acceptable provided that
a. It has as its objective the notification to the public or such sectors of the public as are
concern, of matter of fact in a manner that is not false, misleading or deceptive.
b. It is in good taste
c. It is professionally dignified
d. It avoids frequent repetition of, and any undue prominence being given to the name of
the firm or professional accountant in public practice.
e. All of the above
q.
26.The following shall not be allowed and prohibited advertising and publicity, except
a. Self-laudatory statements.
b. Discrediting, disparaging or attacking other firms or CPA practitioners
c. Giving too much emphasis on competitive differences
d. Publishing services in billboard
e. All of the above
r.
27.The following are objectives of CPE program, except
a. To raise and maintain the professionals capacity for delivering professional services.
b. To attain and maintain the highest standard and quality in the practice of his
profession.
c. To comply with the requirements of the professional regulatory board.
d. To promote general welfare of the public.
e. All of the above
s.
 28.I. A foreign CPA who is an internationally recognized expert or with specialization in any
branch of accountancy ad his service is essential for the advancement of accountancy in
the Philippines.
II. A foreign CPA engaged as professor, lecturer or critic in fields essential to accountancy
education in the Philippines and his engagement is confined to teaching only.
a. False, False
b. False, True
c. True, False
d. True, True
t.
29.A candidate in CPA licensure examination, must have the grade of?
a. General average of seventy five percent (75%) in all the subject
b. General average of sixty five percent (65%) in all the subject
c. General average of seventy five percent (75%), with no grades lower than sixty five
percent (65%) in all subjects.
d. General average of sixty five percent (65%), with no grades lower than seventy five
percent (65%) in all subjects.
e. None of the above
u.
30.Which of the following is not normally a service rendered by public accountants?
a. Management Consultation service
b. Attest function
c. Internal auditing
d. Taxation
31.The primary duty to enforce the provision of RA 9298 and its IRR rests with
a. PRC
b. BOA
c. PRC and BOA
d. AASC
v.
32.The Accountancy Law provides that all working papers during an audit shall be the
property of the auditor. These working papers shall include the following, except:
a. Schedules and memoranda made by the CPA and his staff
b. Working papers prepared and submitted by the client
c. Excerpts or copies of documents furnished the auditor
d. Reports submitted by the CPA to the client
33.Who is not permitted by law to practice accountancy?
a. Corporation whose stockholders are all CPAs
b. Partnership of CPAs
c. Individual CPA practitioner
d. Partnership of CPAs with some non-CPA staff
w.
34.Which of the following is not one of the grounds for proceedings against a CPA?
a. Gross negligence or incompetence in the practice of his profession
b. Engaging in public practice while being employed in a private enterprise
c. Insanity
d. Immoral or dishonorable conduct.
x.
35.The BOA shall submit to the PRC the ratings obtained by each candidate within how many
days after the examination?
a. 5 days
b. 3 days
c. 10 days
d. 15 days
y.
36. Which of the following is not one of the penalties that can be imposed by the Board of
Accountancy?
a. Fine and imprisonment
b. Revocation of CPA certificate
c. Reprimand
d. Suspension of CPA certificate
z.
37.Which of the following is not one of the specified objectives of the Accountancy Act of
2004?
a. Examination for registration of CPAs
b. Supervision, control and regulation of accounting practice
c. Standardization and regulation of accounting education.
d. Promulgation of accounting and auditing standards.
aa.
38.The following sectors represented by the PICPA to the membership of AASC have one
representative except
a. Government
b. Public practice
c. Commerce and industry
d. Academe
ab.
39.All of the following situations except one, a person is deemed to be engaged in
professional accounting practice. Which of them is the exception?
a. Performing audits or verification of financial transactions and records for more than
one client.
b. Employed as the department chairman that supervises the BSA program of an
educational institution
c. Employment as controller of a private business enterprises and such employment
requires that the holder thereof should be CPA.
d. Appointment in the government where first grade civil service eligibility is a
prerequisite.
ac.
40.As define in RA 9298, it is an organization engaged in the practice of public accountancy,
consisting of sole proprietor, either alone or with one or more staff members.
a. Firm
b. Individual CPA
c. Partnership
d. Sector
ad.
41.Which of the following best describes high level of assurance?
a. It refers to the professional accountant having obtained evidence based on procedures
agreed upon between the practitioner and the intended users to be satisfied that
findings be reported to the intended users.
b. It refers to the professional accountant having obtained sufficient external and internal
appropriate evidence to be satisfied that the subject matter is plausible in the
circumstances.
c. It refers to the professional accountant having obtained sufficient appropriate evidence
to conclude that the subject matter conforms in all material respects with identified
suitable criteria.
d. It refers to the professional accountant having obtained sufficient evidence to conclude
that he has no knowledge of any required modifications to be made in the financial
statements in order for them to conform of prescribed criteria.
ae.
42.Which statement is incorrect regarding an engagement to perform agreed-upon
procedures?
 a. An auditor is engaged to carry out those procedures of an audit nature to which the
auditor and the entity and any appropriate third parties have agreed and to report on
factual findings.
b. The recipients of the report must form their own conclusions from the report by the
auditor.
c. The report is restricted to those parties that have agreed to the procedures to be
performed.
d. The report on factual findings is expressed in the form of negative assurance.
af.
43.Which of the following engagements provides third parties the highest level of assurance
about the clients financial statements?
a. Audit
b. Review
c. Agreed-upon procedures
d. Compilation
ag.
44.The independent auditor lends credibility to clients financial statements by
a. Maintaining a clear-cut distinction between managements representations and the
auditors representation.
b. Testifying under oath about clients financial statements.
c. Stating in the auditors management letter that the examination was made in
accordance with generally accepted auditing standards.
d. Attaching an auditors opinion to the clients financial statements.
ah.
45.A concept relating to the accumulation of the audit evidence necessary for the auditor to
conclude that there are no material misstatements in the financial statements taken as a
whole.
a. Reasonable assurance
b. Positive assurance
c. Moderate assurance
d. Negative assurance
ai.
46.Which statement is correct regarding assurance engagements?
a. It is an engagement in which a practitioner expresses a conclusion design to enhance
the degree of confidence of the intended users other than the responsible party about
the outcome of the evaluation or measurement of the subject matter against criteria.
b. All engagements performed by professional accountants are assurance engagements.
c. Whether a particular engagement will depend upon whether it exhibits all the following
elements three party relationships, a subject matter and a suitable criterion.
d. All of the above statements are correct.
aj.
47.Assurance services are best described as
a. Services designed for the improvement of operations, resulting in better outcomes.
b. Independent professional services that improve the quality of information or its context
for decision makers.
c. The assembly of financial statements based on assumptions of a reasonable party.
d. Services designed to express an opinion on historical financial statements based on the
results of an audit.
ak.
48.Assurance services least likely involve
a. Improving the quality of information for decision purposes.
b. Improving the quality of the decision model used.
c. Improving the relevance of information.
d. Implementing a system that improves the processing of information.
al.
49.The following are assurance engagements, except
 a. Reasonable Assurance engagement
b. Other assurance engagement
c. Limited assurance engagement
d. Tax services
am.
50.Engagements frequently performed by professional accountants that are not assurance
engagement include the following, except
a. Agreed upon procedures
b. Reasonable assurance engagement
c. MAS
d. Compilation of FS
an.
51.The subject matter of an assurance engagement may take many forms, including
a. Financial performance or condition
b. Behavior
c. Systems and processes
d. All of the above
ao.
52.The Framework of PSA (PSA 120) does not apply to
a. Agreed upon procedures
b. Consultancy
c. Review
d. Compilation
ap.
53.These are the benchmark used to evaluate or measure the subject matter of an assurance.
a. Criteria
b. GAAP
c. Assertions
d. Conclusions
aq.
54.I Independence of mind is the avoidance of facts and circumstances that are so
significant that a reasonable and informed third party, having knowledge of all relevant
information, including applied, would reasonably conclude a firm's, or a member of the
assurance teams', integrate, objectivity or professional skepticism had been compromised.
ar.
as. II Independence in appearance is a state of mind that permits the provision of an
opinion unaffected by influence that compromise professional judgment, allowing an
individual to act with integrity, and to exercise objectivity and professional skepticism.
a. I is True, II is False
b. I is False, II is True
c. Both statement is True
d. Both statement is False
at.
55.A Professional Identification Card bearing the registration number, date of issuance, expiry
date, duly signed by the chairperson of the commission, shall be issued to every registrant
renewable every
a. 2 years
b. 3 years
c. 4 years
d. 5 years
au.
av.
aw.
ax.
ay.
az.

ba.
bb.

bc.