Chapter 6

I. Multiple choice

1. Which of the following is not an advantages of a single proprietorship form of

organization?
A. The practitioner is his own boss and is independent.
B. He does not keep regular office hours.
C. He can earn more than a mere salaried employee can.
D. He must rely on his own judgment in making decision.

2. Which of the following is not an assurance engagement?

A. Information system reliability service.
B. Business performance measurement.
C. Risk assessment service.
D. Managementconsulting service.

3. Which of the following may not be an appropriate from of the subject matter of an
assurance engagement?
A. Historical financial information.
B. Systems and processes.
C. Behavior.
D. Non physical characteristics of a facility.

4. The subject matter of an assurance engagement can take the following forms except
A. Historical or prospective financial statements.
B. Performance of an entity that could indicate efficiency and effectiveness.
C. The entity’s internal control.
D. Evaluation of a capital investment proposal.

5. Which of the following is responsible for the fairness of the representations made in
financial statements?
A. Client’s management.
B. Independent auditor.
C. Audit committee.
D. PICPA

6. Which of the following is not an advantage of a partnership form of organization?

A. The practice has greater stability and continuity.
B. Responsibility, risks and cost of practice can be shared.
C. Opportunity for specialization is increased.
D. Personal differences between partners may be arise.
II. True or false

7. Assurance engagement should not exhibit an engagement process?

A. True.
B. False. Appropriate professional fees.

8. Competence is encouraged by having a large number of professionals with related

interest associated in one firm, which facilitates a professional attitude and makes
continuing professional education more meaningful?
A. True.
B. False.

9. Public accounting firms are usually organized as only partnerships.

A. True.
B. False. As partnership and sole proprietorships.

10. Staff auditors work under the direction of audit managers and assist them in
administrating the audit.
A. True.
B. False. In charge auditor