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QUESTION 1 AUD
In planning an audit, the auditor’s knowledge about the design of relevant internal control activities should be used to
A. Identify the types of potential misstatements that could occur.
B. Assess the operational efficiency of internal control.
C. Determine whether controls have been circumvented by collusion.
D. Document the assessed level of control risk.
QUESTION 2 FAR
Rein, Inc. reported $40,000 as deferred tax assets and $53,000 as deferred tax liabilities at the beginning of Year 2. At the end of Year 2, Rein reported $58,000 as deferred tax assets and $65,000 as deferred tax liabilities. What should Rein report as deferred income tax expense or benefit at the end of Year 2?
A. $6,000 tax expense
B. $6,000 tax benefit
C. $7,000 tax expense
D. $7,000 tax benefit
QUESTION 3 AUD
Which of the following would not be an appropriate use of confirmations?
A. Confirming accounts receivable balances with customers.
B. Confirming inventories on hand with third-party warehouses.
C. Confirming loan terms and amounts with lenders.
D. Confirming authorization for major transactions with directors.
QUESTION 4 REG
The filing of an involuntary bankruptcy petition under the Federal Bankruptcy Code
A. Terminates liens on exempt property
B. Terminates all security interests in property in the bankruptcy estate.
C. Stops the debtor from incurring new debts.
D. Stops the enforcement of judgment liens against property in the bankruptcy estate.
QUESTION 5 BEC
Which of the following reports most likely would provide assurance on internal controls over the confidentiality of client data at a service organization?
A. SOC 1 Type 1
B. SOC 1 Type 2
C. SOC 2 Type 1
D. SOC 2 Type 2