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CPA-Test – Certified Public Accountant Test: Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, Regulation

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Showing 16–18 of 20 questions

Question 16 (Auditing and Attestation)

In determining the number of documents to select for a test to obtain assurance that all sales returns have been properly authorized, an auditor should consider the tolerable rate of deviation from the control activity. The auditor should also consider the:

I. Likely rate of deviations.

II. Allowable risk of assessing control risk too high.

Select an option, then click Submit answer.

  • ○

    I only.
  • ○

    II only.
  • ○

    Both I and II.
  • ○

    Either I or II.
  • ○

    Likely rate of deviations.
    II. Allowable risk of assessing control risk too high.
Question 17 (Business Environment and Concept)

For the next 2 years, a lease is estimated to have an operating net cash inflow of $7,500 per annum, before adjusting for $5,000 per annum tax basis lease amortization, and a 40% tax rate. The present value of an ordinary annuity of $1 per year at 10% for 2 years is $1.74. What is the lease's after-tax present value using a 10% discount factor?

Select an option, then click Submit answer.

  • ○

    $2,610
  • ○

    $4,350
  • ○

    $9,570
  • ○

    $11,310
Question 18 (Business Environment and Concept)

When determining net present value in an inflationary environment, adjustments should be made to:

Select an option, then click Submit answer.

  • ○

    Increase the discount rate, only.
  • ○

    Increase the estimated cash inflows and increase the discount rate.
  • ○

    Increase the estimated cash inflows but not the discount rate.
  • ○

    Decrease the estimated cash inflows and increase the discount rate.