Question 1

Phase III of the audit primarily relies on which type/s of audit evidence?

Accepted Answer

A)  Physical examination 
B)  Documentation 
C)  Analytical procedures 
D)  All of the above 
A)  Physical examination 
B)  Documentation 
C)  Analytical procedures 
D)  All of the above

Question 2

Which one of the following is NOT a direct outcome of performing analytical procedures?

Accepted Answer

A)  Understand the client's business 
B)  Reduce detailed audit tests 
C)  Identify specific errors in the accounts 
D)  Assess the entity's ability to continue as a going concern 
A)  Understand the client's business 
B)  Reduce detailed audit tests 
C)  Identify specific errors in the accounts 
D)  Assess the entity's ability to continue as a going concern

Question 3

Tests of controls are directed toward the control's:

Accepted Answer

A)  efficiency and effectiveness. 
B)  effectiveness. 
C)  cost benefit ratio. 
D)  efficiency. 
A)  efficiency and effectiveness. 
B)  effectiveness. 
C)  cost benefit ratio. 
D)  efficiency.

Question 4

The primary emphasis in most tests of details of balances is on the:

Accepted Answer

A)  cash flow statement account. 
B)  income statement accounts. 
C)  balance sheet accounts. 
D)  three statements above. 
A)  cash flow statement account. 
B)  income statement accounts. 
C)  balance sheet accounts. 
D)  three statements above.

Question 5

Which one of the following statements is FALSE?

Accepted Answer

A)  Tests of details of balances emphasise the ending balances in the general ledger. 
B)  Tests of controls are concerned with evaluating whether controls are sufficiently effective to justify reducing control risk and thereby reducing analytical review procedures. 
C)  Analytical procedures emphasise the overall reasonableness of transactions and the general ledger balances. 
D)  Substantive tests of transactions emphasise the verification of transactions recorded in the journals and then posted in the general ledger. 
A)  Tests of details of balances emphasise the ending balances in the general ledger. 
B)  Tests of controls are concerned with evaluating whether controls are sufficiently effective to justify reducing control risk and thereby reducing analytical review procedures. 
C)  Analytical procedures emphasise the overall reasonableness of transactions and the general ledger balances. 
D)  Substantive tests of transactions emphasise the verification of transactions recorded in the journals and then posted in the general ledger.

Question 6

Discuss the assumptions and predictions an auditor needs to make when designing an audit program for tests of details of balances. Why are these assumptions and predictions necessary?

Accepted Answer

Since the audit program for tests of det

Question 7

List the nine balance- related audit objectives in the verification of the ending balance in accounts receivable and provide one specific useful audit procedure for each of the objectives.

Accepted Answer

The nine balance- related audit objectiv

Question 8

Contingent liabilities must be:

Accepted Answer

A)  material and imminent, or they should not even be mentioned. 
B)  disclosed in the footnotes. 
C)  recorded on the balance sheet between current and long- term liabilities. 
D)  recorded in the ledger, or no disclosure is required. 
A)  material and imminent, or they should not even be mentioned. 
B)  disclosed in the footnotes. 
C)  recorded on the balance sheet between current and long- term liabilities. 
D)  recorded in the ledger, or no disclosure is required.

Question 9

Events occurring after the date of the balance sheet but before the issuance of the financial statements and auditor's report are referred to as:

Accepted Answer

A)  interim events. 
B)  post- closing events. 
C)  subsequent events. 
D)  preaudit events. 
A)  interim events. 
B)  post- closing events. 
C)  subsequent events. 
D)  preaudit events.

Question 10

There is a trade- off between tests of controls and substantive tests.

Accepted Answer

A) True 
 B)False

Question 11

Phase I of the audit primarily relies on which type/s of audit evidence?

Accepted Answer

A)  Inquiries of client 
B)  Documentation 
C)  Analytical procedures 
D)  All of the above 
A)  Inquiries of client 
B)  Documentation 
C)  Analytical procedures 
D)  All of the above

Question 12

Which of the following is(are) a type(s) of evidence collected during substantive tests of transactions?

Accepted Answer

A)  Documentation 
B)  Reperformance 
C)  Inquiries of the client 
D)  All of the above 
A)  Documentation 
B)  Reperformance 
C)  Inquiries of the client 
D)  All of the above

Question 13

Discuss the purposes of (1) substantive tests of transactions, (2) tests of controls and (3) tests of details of balances. Give an example of each.

Accepted Answer

The purpose of substantive tests of tran

Question 14

There are seven methods of obtaining audit evidence: physical examination, confirmation, documentation, observation, inquiries of the client, reperformance and analytical procedures. For each of the following types of audit tests, indicate the type(s) of evidence gathering procedures that can be used during the test: (1) tests of controls, (2) substantive tests of transactions, (3) analytical procedures and (4) tests of details of balances.

Accepted Answer

1. Tests of controls. Documentation, obs

Question 15

Even when all transaction- related audit objectives are met, the auditor will still rely primarily on substantive tests of balances to meet the following balance- related audit objective:

Accepted Answer

A)  realisable value. 
B)  presentations and disclosure. 
C)  rights and obligations. 
D)  A and C 
A)  realisable value. 
B)  presentations and disclosure. 
C)  rights and obligations. 
D)  A and C

Question 16

Which one of the following audit tests is usually the LEAST costly to perform?

Accepted Answer

A)  Analytical procedures 
B)  Tests of balances 
C)  Tests of controls 
D)  Substantive tests of transactions 
A)  Analytical procedures 
B)  Tests of balances 
C)  Tests of controls 
D)  Substantive tests of transactions

Question 17

The audit procedure, reperformance, always simultaneously provides evidence about both internal control effectiveness and monetary correctness.

Accepted Answer

A) True 
 B)False

Question 18

Phase IV of the audit primarily relies on which type/s of audit evidence?

Accepted Answer

A)  Analytical procedures 
B)  Inquiries of client 
C)  Documentation 
D)  All of the above 
A)  Analytical procedures 
B)  Inquiries of client 
C)  Documentation 
D)  All of the above

Question 19

In the context of an audit of financial statements, substantive tests are audit procedures that:

Accepted Answer

A)  assess the control risk for each audit objective. 
B)  assess the detection risk of each audit objective. 
C)  test for dollar misstatements. 
D)  test whether transactions are correct. 
A)  assess the control risk for each audit objective. 
B)  assess the detection risk of each audit objective. 
C)  test for dollar misstatements. 
D)  test whether transactions are correct.

Question 20

A procedure designed to test for monetary errors or irregularities directly affecting the correctness of financial statement balances is a:

Accepted Answer

A)  test of control. 
B)  monetary- unit sampling test. 
C)  substantive test. 
D)  test of attributes. 
A)  test of control. 
B)  monetary- unit sampling test. 
C)  substantive test. 
D)  test of attributes.

Phase III of the audit primarily relies on which type/s of audit evidence?

Which one of the following is NOT a direct outcome of performing analytical procedures?

Tests of controls are directed toward the control's:

The primary emphasis in most tests of details of balances is on the:

Which one of the following statements is FALSE?

Discuss the assumptions and predictions an auditor needs to make when designing an audit program for tests of details of balances. Why are these assumptions and predictions necessary?

List the nine balance- related audit objectives in the verification of the ending balance in accounts receivable and provide one specific useful audit procedure for each of the objectives.

Contingent liabilities must be:

Events occurring after the date of the balance sheet but before the issuance of the financial statements and auditor's report are referred to as:

There is a trade- off between tests of controls and substantive tests.

Phase I of the audit primarily relies on which type/s of audit evidence?

Which of the following is(are) a type(s) of evidence collected during substantive tests of transactions?

Discuss the purposes of (1) substantive tests of transactions, (2) tests of controls and (3) tests of details of balances. Give an example of each.

Even when all transaction- related audit objectives are met, the auditor will still rely primarily on substantive tests of balances to meet the following balance- related audit objective:

Which one of the following audit tests is usually the LEAST costly to perform?

The audit procedure, reperformance, always simultaneously provides evidence about both internal control effectiveness and monetary correctness.

Phase IV of the audit primarily relies on which type/s of audit evidence?

In the context of an audit of financial statements, substantive tests are audit procedures that:

A procedure designed to test for monetary errors or irregularities directly affecting the correctness of financial statement balances is a:

Demand for Audit and Assurance Services

Auditors Legal Environment

Audit Quality and Ethics

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Documentation

Materiality and Risk

Internal Control and Control Risk

Fraud Auditing

The Impact of Information Technology on the Audit Process

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Completing Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling

Audit of Transaction Cycles and Financial Statement Balances I

Audit of Transaction Cycles and Financial Statement Balances II

Completing the Audit

Audit Reporting

Other Auditing and Assurance Engagements

Filters

Exam 11: Overall Audit Plan and Audit Program

Phase III of the audit primarily relies on which type/s of audit evidence?

Which one of the following is NOT a direct outcome of performing analytical procedures?

Tests of controls are directed toward the control's:

The primary emphasis in most tests of details of balances is on the:

Which one of the following statements is FALSE?

Discuss the assumptions and predictions an auditor needs to make when designing an audit program for tests of details of balances. Why are these assumptions and predictions necessary?

List the nine balance- related audit objectives in the verification of the ending balance in accounts receivable and provide one specific useful audit procedure for each of the objectives.

Contingent liabilities must be:

Events occurring after the date of the balance sheet but before the issuance of the financial statements and auditor's report are referred to as:

There is a trade- off between tests of controls and substantive tests.

Phase I of the audit primarily relies on which type/s of audit evidence?

Which of the following is(are) a type(s) of evidence collected during substantive tests of transactions?

Discuss the purposes of (1) substantive tests of transactions, (2) tests of controls and (3) tests of details of balances. Give an example of each.

Even when all transaction- related audit objectives are met, the auditor will still rely primarily on substantive tests of balances to meet the following balance- related audit objective:

Which one of the following audit tests is usually the LEAST costly to perform?

The audit procedure, reperformance, always simultaneously provides evidence about both internal control effectiveness and monetary correctness.

Phase IV of the audit primarily relies on which type/s of audit evidence?

In the context of an audit of financial statements, substantive tests are audit procedures that:

A procedure designed to test for monetary errors or irregularities directly affecting the correctness of financial statement balances is a:

Demand for Audit and Assurance Services

Auditors Legal Environment

Audit Quality and Ethics

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Documentation

Materiality and Risk

Internal Control and Control Risk

Fraud Auditing

The Impact of Information Technology on the Audit Process

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Completing Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling

Audit of Transaction Cycles and Financial Statement Balances I

Audit of Transaction Cycles and Financial Statement Balances II

Completing the Audit

Audit Reporting

Other Auditing and Assurance Engagements

Filters