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Thread: FREE CFA Level 1 sample questions everyday for December 2010 candidates

  1. #101
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    Q#22 Answer: (C)
    Information regarding extraordinary items and unusual or infrequent events is typically found in the Management Discussion & Analysis section.
    ================================================== =====================================
    Today's question (Questions and answers provided by Elan Guides)

    Q23. An audit is most likely described as:

    A. A review of the financial statements by an internal auditor of the entity to check their accuracy.
    B. An independent review of an entity’s financial statements.
    C. A review of the financial statements by a senior director of the entity with the purpose of stating an opinion on their fairness and reliability.
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  2. #102
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    [QUOTE=Shailesh Otari;1140]Q#22 Answer: (C)
    Information regarding extraordinary items and unusual or infrequent events is typically found in the Management Discussion & Analysis section.
    ================================================== =====================================
    Today's question (Questions and answers provided by Elan Guides)

    Q23. An audit is most likely described as:

    A. A review of the financial statements by an internal auditor of the entity to check their accuracy.
    B. An independent review of an entity

  3. #103
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    I think it is B - Independent authority verifying

  4. #104
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    Quote Originally Posted by Shailesh Otari View Post
    Q#22 Answer: (C)
    Information regarding extraordinary items and unusual or infrequent events is typically found in the Management Discussion & Analysis section.
    ================================================== =====================================
    Today's question (Questions and answers provided by Elan Guides)

    Q23. An audit is most likely described as:

    A. A review of the financial statements by an internal auditor of the entity to check their accuracy.
    B. An independent review of an entity’s financial statements.
    C. A review of the financial statements by a senior director of the entity with the purpose of stating an opinion on their fairness and reliability.
    ================================================== =====================================
    Ans:- Its A.

  5. #105
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    Nyathi

    Q23: Answer is B.

    A. The wrong part is 'Internal auditor' This extinguishes the element of independence. Audit is ordinarily referring to the external audit not internal audit when it comes to published accounts.
    B. This is the correct answer. The independent review is the key.
    C. The wrong part is 'Senior Official' the audit can not be left to employees or officials linked or connected to the company.

  6. #106
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    Quote Originally Posted by nnyathi View Post
    Q23: Answer is B.

    A. The wrong part is 'Internal auditor' This extinguishes the element of independence. Audit is ordinarily referring to the external audit not internal audit when it comes to published accounts.
    B. This is the correct answer. The independent review is the key.
    C. The wrong part is 'Senior Official' the audit can not be left to employees or officials linked or connected to the company.
    Excellent explanation Nyathi!

  7. #107
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    Really Excellent explanation ...nnyathi

  8. #108
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    Q#23 Answer: (B)
    An audit is an independent review of an entity’s financial statements that enables the auditor to state an opinion on their fairness and reliability.
    ================================================== =====================================
    Today's question (Questions and answers provided by Elan Guides)

    Q24. According to the accounting equation, a firm’s assets are least likely equal to:

    A. Liabilities + Beginning Retained Earnings – Ending Retained Earnings – Dividends declared
    B. Ending Retained Earnings + Contributed Capital + Liabilities
    C. Liabilities + Contributed Capital + Beginning Retained Earnings + Revenues – Expenses – Dividends declared

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  9. #109
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    The answer would be A


    Quote Originally Posted by Shailesh Otari View Post
    Q#23 Answer: (B)
    An audit is an independent review of an entity’s financial statements that enables the auditor to state an opinion on their fairness and reliability.
    ================================================== =====================================
    Today's question (Questions and answers provided by Elan Guides)

    Q24. According to the accounting equation, a firm’s assets are least likely equal to:

    A. Liabilities + Beginning Retained Earnings – Ending Retained Earnings – Dividends declared
    B. Ending Retained Earnings + Contributed Capital + Liabilities
    C. Liabilities + Contributed Capital + Beginning Retained Earnings + Revenues – Expenses – Dividends declared

    ================================================== =====================================

  10. #110
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    Lets discuss audit - An audit is an "independent" assessment of the books of account reviewed by an auditor whether external or internal with a motive to disclose the fact that the financial statements are showing "True and Fair View" and also it is free from any material misstatements. It also shows how fair is the management in presenting its financial statements to its financial users. Also note that an audit is always an assurance not a guarantee.
    Here option number A is almost correct but it is not always internal auditors who checks the accuracy, sometimes it is mandatory audit done exclusively by the external or the statutory auditors. So option A is someway bias, hence ruled out. Option C is incorrect for sure as the senior directors of the entity presents the financial statement in the most accurate way for the purpose of audit to the auditors. They are not involved in the conduct of the audit. They are definitely involved in the creation and the presentation of the financial statements. Option B is Correct on the basis of the above. No explanations required.
    Please advise if my understanding is incorrect.

    - Vivek

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