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Q:
The low value of the dollar benefits the U.S. economy in many ways.
Q:
The terms strategic management and strategic planning are synonymous in this text.
Q:
Europeans are especially motivated by pay-for-performance, commission salaries, and objective measurement and reward systems.
Q:
Organizations should prepare contingency plans just for unfavorable events.
Q:
Most large companies have abandoned the functional structure in favor of decentralization.
Q:
Since a combination strategy bears no risk, many organizations pursue a combination of two or more strategies simultaneously.
Q:
A low value of the dollar means lower exports and higher imports.
Q:
Resource allocation is included in strategy-formulation activities.
Q:
In socialist countries such as France, Belgium, and the United Kingdom, the only grounds for immediate dismissal from work is a criminal offense.
Q:
Contingency plans are alternative plans that can be put into effect if certain key events do not occur as expected.
Q:
A functional structure can be effective at eliminating short-term and narrow thinking.
Q:
The overall aim of the Balanced Scorecard is to balance financial objectives with strategic objectives.
Q:
Motor vehicle firms in the United States are vulnerable when the value of the dollar falls.
Q:
Even though useful, strategic planning has been cast aside by corporate America since the early 1990s.
Q:
In the United States, an amicable relationship is often mandatory before conducting business.
Q:
There is no one ideal strategy-evaluation system for all organizations.
Q:
Tasks and activities are grouped together by business function in a divisional organizational structure.
Q:
"If it ain't broke, don't fix it" refers to managing by crisis.
Q:
An increase in interest rates is directly related to an increase in discretionary income and an increase in the demand for discretionary goods.
Q:
Optimizing for tomorrow the trends of today is the purpose of strategic management.
Q:
Punctuality is generally revered in all cultures of the world.
Q:
Small organizations require a more elaborate and detailed strategy-evaluation system because they are still evolving.
Q:
Medium-sized firms tend to be divisionally structured, whereas large firms tend to use an SBU (strategic business unit) or matrix structure.
Q:
Strategic objectives include larger market share, quicker on-time delivery than rivals, shorter design-to-market times than rivals, lower costs than rivals, and wider geographic coverage than rivals.
Q:
Economic factors do not have much impact on the attractiveness of strategies.
Q:
Strategic management focuses on integrating management, marketing, finance/accounting, production/operations, research and development, and information systems to achieve organizational success.
Q:
Time spent with the family and the quality of relationships are more important in some cultures than the personal achievement and accomplishments espoused by the traditional U.S. manager.
Q:
The test of an effective evaluation system is its complexity.
Q:
Exchanging members of conflicting parties so each can gain an appreciation of the other's point of view exemplifies a confrontation approach.
Q:
Strategic objectives include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins, and improved cash flow.
Q:
Consumer spending rebounded nicely in 2011 from 2010.
Q:
The smile is one form of communication that works the same worldwide.
Q:
Timely approximate information is generally more desirable as a basis for strategy evaluation than accurate information that does not depict the present.
Q:
Holding a meeting at which conflicting parties present their views and work through their differences is part of the defusion technique of managing conflict.
Q:
Objectives provide direction and allow for organizational synergy.
Q:
The I/O approach to competitive advantage advocates that internal factors are more important than external factors in a firm achieving competitive advantage.
Q:
What is a trademark?
Q:
Which of the following statements is most likely to be true regarding a contract implied in fact?
A.It is also known as a quasi contract.
B.It is a contract in which one party promises to do an act if the other party does something.
C.The terms of the contract have been fully performed.
D.It is created when the parties enter into the agreement by their actions rather than because they have actually discussed the matter.
Q:
A) Explain how auditors use the audit risk model when planning an audit.
B) Describe the audit risk model and each of its components.
Q:
Describe the purpose of
i) a forecast
ii) a projection, and
iii) prospective financial statements
Q:
What type of opinion does the auditor provide with respect to FOFI (future-oriented financial information)? An opinion about the
A) underlying assumptions.
B) achievability of the forecast.
C) statistical nature of projections.
D) plausibility of forecasts.
Q:
A public accountant has been engaged to conduct an examination of future-oriented financial information. Which of the following procedures would be included in the examination?
A) creation of assumptions that fit the projected information
B) developing the hypotheses with the assistance of management
C) assessment of internal controls over the development of internal future-oriented information, such as budgets
D) assessing the plausibility of hypotheses
Q:
Prior to accepting an engagement to examine a financial forecast or projection included in a prospectus or other public offering document, the public accountant should
A) obtain an understanding of the controls over preparation of internal forecasts such as budgets.
B) increase the risk profile of the client with respect to management integrity.
C) ensure that management will provide sufficient evidence to conduct the engagement.
D) inform the client that the engagement may not detect errors in the client's forecasts.
Q:
With respect to working on an engagement to examine a financial forecast or projection included in a prospectus or other public offering document, the public accountant and the client should agree upon
A) allocation of the responsibility of creating the assumptions to the public accountant.
B) the period of time to be covered.
C) delegation of forecast preparation to the public accountant.
D) the fact that the forecast may not be prepared in accordance with standards.
Q:
Special use prospective financial statements are intended for
A) internal management only.
B) any third party.
C) third parties with whom negotiations are being conducted directly by the responsible party.
D) the relevant provincial securities commissions.
Q:
ABC Company is considering three different alternatives with respect to expansion. To assist with the decision process, the company has requested PA to perform simulations and prepare prospective financial information using several sets of assumptions. Some of these assumptions are likely, while others are less likely. What type of information is being prepared? A(n)
A) forecast.
B) projection.
C) prospective financial statement.
D) prospectus.
Q:
Financial information prepared using one or more assumptions (hypotheses) that do not necessarily reflect the most likely course of action in management's judgment is called a(n)
A) forecast.
B) projection.
C) prospective financial statement.
D) prospectus.
Q:
ABC Company has requested PA to prepare prospective financial information to assist with the acquisition of a bank loan. The prospective financial information is being prepared using management's best estimate of future sales and expenses. The type of information being prepared is a(n)
A) forecast.
B) projection.
C) prospective financial statement.
D) prospectus.
Q:
Prospective financial information prepared using assumptions reflecting management's judgment as to the most probable courses of action for the entity is called a(n)
A) forecast.
B) projection.
C) prospective financial statement.
D) prospectus.
Q:
What is the title of a compilation report?
A) Opinion
B) Criteria Schedule
C) Engagement Report
D) Notice to Reader
Q:
Always Quick Manufacturing Limited is a small business that manufactures metal and plastic components for a variety of industries. The bulk of the business is in the computing industry, although the occasional contract is for the automotive industry.
Jose, the owner, would like to expand the business so that he can bid on larger contracts. This requires an investment of about $500,000 to finance capital assets and about $300,000 for a working capital loan. Jose has financed the business himself to this point, and has been given some alternatives by the bank.
The alternatives pertain to which assets are used as guarantees, and whether Jose also guarantees the loans personally (as he has substantial personal assets). The bank also stated that if Jose personally guarantees the loan, the company will only require a review engagement, whereas if the loan is only secured by corporate assets, then an audit of the company will be required.
Jose understands the differences among the guarantees, but is not sure about the difference between a review and audit engagement. Presently, the company financial statements are prepared using a compilation engagement.
Required:
Explain to Jose the difference between a review and audit engagement in the context of his present compilation engagement.
Q:
Identify the reporting standards for compilation engagements.
Q:
Describe the professional standards that must be followed when undertaking a compilation engagement as specified by the CICA Handbook.
Q:
Yvan is preparing the audit plan for Share the Wealth, a non-profit organization. Share the Wealth is a large Montreal based organization and receives corporate donations and also has many stores that collect and re-sell costume jewelry and clothing. The purpose of the organization is to build recreation areas for children in less fortunate areas of the city.
Share the Wealth was started by two sisters. One of the sisters is still actively involved in the organization, but the other sister has been devoting less time to the organization since she has had triplets.
Share the Wealth has a total of 8 stores in the city where individuals can drop off donations and where customers can also purchase the second hand clothing and costume jewelry. Share the Wealth has a total of 12 employees who work in the different stores across the city. Depending on the schedule and availability, the employees will randomly be assigned to a store for the week.
Required:
Provide three procedures that Yvan should consider when performing the review engagement of Share the Wealth?
Q:
A financial statement review emphasizes four broad areas, one of which is to "Perform analytical procedures." State the other three areas emphasized.
Q:
Which one of the following is a professional standard that must be followed by an accountant when conducting a compilation engagement?
A) work being adequately planned and properly executed
B) having adequate technical training and proficiency in auditing
C) obtaining an adequate understanding of the business and its industry
D) documenting the processes used to compile and record transactions
Q:
You are a public accountant retained by the manager of a cooperative retirement village to do "write-up work." You are expected to prepare unaudited financial statements with each page marked "unaudited" and accompanied by a disclaimer of opinion stating no audit was made. In performing the work, you discover that there are no invoices to support $25,000 of the manager's claimed disbursements. The manager informs you that all the disbursements are proper. What should you do?
A) Submit the expected statements but omit $25,000 of unsupported disbursements
B) Include the unsupported disbursements in the statements since you are not expected to make an audit
C) Obtain, from the manager, a written statement that you informed him of the missing invoices and include his assurance that the disbursements are proper
D) Obtain further information about the $25,000 unsupported items and withdraw if the situation is not satisfactorily resolved
Q:
A public accounting firm can issue a compilation report
A) only if the partners are independent.
B) only if all the partners and the staff in the office performing the engagement are independent.
C) if the partners have no material or direct immaterial interest in client.
D) even if it is not independent.
Q:
Which of the following items includes criteria for accepting a compilation engagement?
A) evaluation of whether the financial statements are in accordance with ASPE
B) no reason to believe that the financial statements are false or misleading
C) completion of an independence threat analysis, ensuring that there are no threats to independence
D) completion of a client risk analysis, with the conclusion that risks are low
Q:
The accountant is working on an engagement with respect to the client's financial statements. Which of the following engagements would omit an assessment of the client's accounting policies' compliance with GAAP?
A) Review
B) Compilation
C) Audit
D) Attestation
Q:
Which one of the following procedures would most likely be conducted by an accountant during a compilation engagement?
A) Enquire of management with respect to the purpose of new capital assets.
B) Compare gross profit on a year-by-year basis over the last five years.
C) Circularize negative accounts receivable confirmations.
D) Assemble and re-calculate the financial statement allocations.
Q:
Which one of the following engagements would most likely be a compilation engagement? An engagement with respect to financial statements
A) attached to a personal tax return.
B) for a large public company.
C) for a company that has a large bank loan.
D) that accompany future oriented information to obtain financing.
Q:
A compilation presents information, in the form of financial statements, that is the representation of management. The public accountant who prepares the compilation undertakes to express
A) limited assurance on the statements.
B) minimal assurance on the statements.
C) no assurance on the statements.
D) full assurance on the statements.
Q:
Richard is performing a compilation engagement. Richard is concerned that the information is
A) arithmetically correct.
B) accurate.
C) complete.
D) in accordance with ASPE.
Q:
Which of the following techniques would be conducted by a practitioner when conducting a review of compliance with agreements and regulations?
A) use of a specialist to ensure that the terms of the agreement are complied with
B) inquire about how the client monitors its compliance with the provisions
C) testing control procedures throughout the year that pertain to the provisions of the agreement
D) discussions with client's legal counsel to identify any legal liabilities with respect to potential violations of the agreements
Q:
The fact that a client has a material accounting departure for failure to follow ASPE would require the accountant to disclose that fact in a separate reservation paragraph, when the accountant is performing
A) a compilation.
B) a review and an audit.
C) either a compilation or a review.
D) neither a compilation nor a review, only an audit.
Q:
The statement that "nothing came to our attention which would indicate that these statements are not fairly presented" expresses which of the following?
A) disclaimer of an opinion
B) negative assurance
C) negative confirmation
D) piecemeal opinion
Q:
Why is it important for the review engagement report to state that the review is not an audit?
A) to make sure that the public accountant is not sued
B) to clarify that only review engagement procedures were used during the engagement
C) to make users aware that a review provides a lower level of assurance
D) so that the user does not ask any unnecessary questions about the engagement
Q:
When is negative assurance used during a review engagement?
A) when the standards applicable to a review engagement have been met
B) if a qualification is required during the review engagement
C) when the criteria associated with a review engagement have not been satisfied
D) when the practitioner is unable to set appropriate criteria for the review engagement
Q:
When conducting a review engagement, how is materiality calculated?
A) materiality is not calculated as a lower level of assurance is being provided
B) the concept of significance is used, rather than the concept of materiality
C) always as a percentage of net income before income taxes
D) in the same manner as an audit engagement
Q:
When would the public accountant conduct audit procedures during a review engagement? When
A) junior staff are assigned to the engagement.
B) required to assess plausibility.
C) it is a first time review engagement.
D) a higher level of assurance is required for the bank.
Q:
An accountant who reviews the financial statements of an entity should issue a report stating that a review
A) does not constitute an audit.
B) provides negative assurance that the internal control structure is functioning as designed.
C) provides only limited assurance that the financial statements are fairly presented.
D) is substantially more in scope than a compilation.
Q:
When assessing the plausibility of the financial statements for a review engagement, the auditor will use which of the following criteria for auditing a small, privately held company?
A) standards of efficiency and effectiveness
B) the audit objectives associated with the audit of financial statements
C) an acceptable reporting framework such as ASPE
D) an enterprise risk management framework, to help detect fraud
Q:
You have just recently become a member of your local non-profit housing co-op by moving into the largest unit. The Board of Directors has asked that you handle the review engagement, but you are concerned about independence. What is a practical way for you to stay in the co-op but also perform the review engagement?
A) Request a bylaw stating that the accountant cannot vote for Board members.
B) Do a compilation rather than a review engagement.
C) Have all the preparation work for the review engagement completed by a Board member.
D) Include a paragraph in the review engagement report stating that you are not independent.
Q:
As part of the conduct of a review engagement, which of the following procedures would be appropriate for assessing the ending value of accounts payable?
A) sending zero balance confirmations to frequently used suppliers
B) use of negative confirmations to suppliers with material balances
C) comparison of the accounts payable balances by supplier to the prior year
D) examination of invoices received after the year end to ensure that they were recorded in the proper period
Q:
As part of the conduct of a review engagement, which of the following procedures would be appropriate for assessing the ending value of inventory?
A) discussion with management with respect to the costing method used
B) observation of the inventory count
C) observation of the warehouse, paying particular attention to dusty and damaged goods
D) confirmation with customers that are holding consignment inventory with respect to quantity and condition of the inventory
Q:
As part of the conduct of a review engagement, which of the following would be a typical procedure used for the assessment of the ending accounts receivable balance?
A) circularization of positive confirmations to all balances exceeding materiality
B) comparison of the age of the accounts receivable to the prior year
C) use of negative confirmations on all large balances
D) detailed examination of all accounts over 120 days to assess the bad debt allowance
Q:
As part of the review engagement for a small manufacturing company, which of the following would be a typical review procedure for the sales cycle?
A) review of internal controls over the granting of credit
B) examination of sales documents to ensure credit approval is documented
C) recalculation of the taxes and extensions on a sample of invoices
D) comparison of sales and gross profit to the prior year
Q:
Before performing a review of an entity's financial statements, an accountant should
A) complete a series of inquiries concerning the entity's procedures for recording, classifying, and summarizing transactions.
B) apply analytical procedures to provide limited assurance that no material modifications should be made to the financial statements.
C) obtain a sufficient level of knowledge of the accounting principles and practices of the industry in which the entity operates.
D) inquire whether management has omitted substantially all of the disclosures required by generally accepted accounting principles.
Q:
A review engagement includes
A) obtaining an understanding of the internal controls.
B) tests of controls or transactions.
C) inquiry, analytical procedures and discussion.
D) independent confirmation or physical examination.