Question 1

Match between columns
                        Premises: Client representation letters
Cancelled checks
Confirmation of lease terms from lessor
Explanation of accounting treatment
Comparison of client balances with budgets
Examination of inventories
Evidence created through electronic means
Recalculation of journal totals

Accepted Answer

The Answer of Analytical Evidence and Documentary Evidence and Electronic is...

Question 2

An auditor can use computer audit software to do all of the following except:

Accepted Answer

A)  select a sample of accounts receivable for confirmation. 
B)  reperform a variety of calculations such as totaling the accounts receivable subsidiary ledger or inventory file. 
C)  perform the calculations and comparisons used in tracing procedures. 
D)  submit test data to the client's programs to determine that computer aspects of internal controls are functioning. 
E)  scan a file to determine that all documents in a series have been accounted for. 
A)  select a sample of accounts receivable for confirmation. 
B)  reperform a variety of calculations such as totaling the accounts receivable subsidiary ledger or inventory file. 
C)  perform the calculations and comparisons used in tracing procedures. 
D)  submit test data to the client's programs to determine that computer aspects of internal controls are functioning. 
E)  scan a file to determine that all documents in a series have been accounted for.

Question 3

Evidence need not be relevant to management's financial statement assertions.

Accepted Answer

A) True 
 B)False

Question 4

Listed below are the eight types of corroborating evidence.
A.Analytical Evidence
B.Documentary Evidence
C.Electronic Evidence
D.Confirmations
E.Mathematical Evidence
F.Physical Evidence
G.Written Representations
H.Oral Evidence
Following is a list of examples.
REQUIRED: Using the letters given above, indicate the type of corroborating evidence that relates to each listed example.
1.Client representation letters
2.Cancelled checks
3.Confirmation of lease terms from lessor
4.Explanation of accounting treatment
5.Comparison of client balances with budgets
6.Examination of inventories
7.Evidence created through electronic means
8.Recalculation of journal totals

Accepted Answer

1.G
3.D
5.

Question 5

Match between columns
                        Premises: All sales transactions that have been recorded actually occurred during the period.
The details of sales transactions support their presentation in the financial statements.
All sales are correctly valued at their historical cost and correctly journalized,summarized, and posted.
Accounts receivable at the balance sheet date represents legal claims of the entity on customers for payment.
All sales transactions that occurred during the period have been recorded.

Accepted Answer

The Answer of Existence or occurrence and Completeness and Rights is...

Question 6

Working papers provide all of the following except:

Accepted Answer

A)  a means for coordinating the audit. 
B)  the principal support for the financial statements. 
C)  evidence that the audit was made in accordance with GAAS. 
D)  the principal support for the auditor's report. 
E)  a means for supervising the audit. 
A)  a means for coordinating the audit. 
B)  the principal support for the financial statements. 
C)  evidence that the audit was made in accordance with GAAS. 
D)  the principal support for the auditor's report. 
E)  a means for supervising the audit.

Question 7

Because of the effects of circulation, some audit evidence is more reliable than other audit evidence. Which of the following is generally considered to be the most reliable?

Accepted Answer

A)  Purchase requisitions. 
B)  Suppliers' invoices. 
C)  Receipted bank deposit slips. 
D)  Cutoff bank statements. 
E)  Paid checks. 
A)  Purchase requisitions. 
B)  Suppliers' invoices. 
C)  Receipted bank deposit slips. 
D)  Cutoff bank statements. 
E)  Paid checks.

Question 8

Which of the following would not be considered underlying accounting data?

Accepted Answer

A)  sales invoices 
B)  the general ledger 
C)  books of original entry 
D)  accounting manuals 
E)  accounts receivable ledger 
A)  sales invoices 
B)  the general ledger 
C)  books of original entry 
D)  accounting manuals 
E)  accounts receivable ledger

Question 9

The title of a certain working paper is "Proposed Adjusting Entries." The use of the word "proposed" indicates that:

Accepted Answer

A)  these are reclassifying entries. 
B)  the listed adjustments are not considered necessary. 
C)  the auditor should not adjust the accounting records. 
D)  the listed adjustments are not considered material. 
E)  the client disagrees with the adjustments listed. 
A)  these are reclassifying entries. 
B)  the listed adjustments are not considered necessary. 
C)  the auditor should not adjust the accounting records. 
D)  the listed adjustments are not considered material. 
E)  the client disagrees with the adjustments listed.

Question 10

Vouching and tracing are synonyms.

Accepted Answer

A) True 
 B)False

Question 11

The working trial balance serves as the connecting link between the client's general ledger and the financial statements.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following procedures consists of seeking information from knowledgeable persons, both financial and nonfinancial, throughout the entity or outside the entity?

Accepted Answer

A)  Inquiry. 
B)  Confirmation. 
C)  Recalculation. 
D)  Reperformance. 
E)  Analytical procedures. 
A)  Inquiry. 
B)  Confirmation. 
C)  Recalculation. 
D)  Reperformance. 
E)  Analytical procedures.

Question 13

In verifying the balance of Cash in Midtown Bank, Ann Moore began by footing the bank reconciliation prepared by the client. Next, she verified outstanding checks by tracing them to the check register. In addition, she compared the ending bank balance with the balance shown on the bank confirmation obtained directly from the bank. Ann also reviewed the bank statement for any unusual charges or credits. Finally, Ann asked the treasurer if there had been a proper cutoff of bank transactions at the balance sheet date.
REQUIRED: Identify the types of corroborating information obtained by Ann Moore and indicate the action that produced the evidence.

Accepted Answer

None

Question 14

Inspecting tangible resources provides the auditor with direct personal knowledge of their existence and physical condition.

Accepted Answer

A) True 
 B)False

Question 15

The auditor is primarily concerned about the implications of electronic documentation in account balances and transaction classes related to significant business processes.

Accepted Answer

A) True 
 B)False

Question 16

The five management assertions outlined in generally accepted auditing standards include all of the following except:

Accepted Answer

A)  rights and obligations. 
B)  materiality. 
C)  existence and occurrence. 
D)  presentation and disclosure. 
E)  valuation or allocation. 
A)  rights and obligations. 
B)  materiality. 
C)  existence and occurrence. 
D)  presentation and disclosure. 
E)  valuation or allocation.

Question 17

The types of tests included in an audit program include all of the following except tests of:

Accepted Answer

A)  extensions. 
B)  balances. 
C)  accounting estimates. 
D)  controls. 
E)  presentation and disclosure. 
A)  extensions. 
B)  balances. 
C)  accounting estimates. 
D)  controls. 
E)  presentation and disclosure.

Question 18

Reperformance consists of client personnel repeating the execution of procedures or controls while being observed by auditor.

Accepted Answer

A) True 
 B)False

Question 19

You are the senior auditor on a particular engagement. The new staff assistant who has been assigned to work on the cash area is about to begin constructing her first audit work paper.
REQUIRED: Briefly list and discuss the "essential points" used in the preparation of working papers that you would like the staff assistant to follow in completing her assignment.

Accepted Answer

Each working paper should contain the fo

Question 20

Use of the auditing procedure confirming should normally involve all of the following except:

Accepted Answer

A)  direct evidence being obtained from outsiders. 
B)  client initiation of the request. 
C)  written request and an oral response. 
D)  auditor control of the mailing. 
E)  responses received by the auditor. 
A)  direct evidence being obtained from outsiders. 
B)  client initiation of the request. 
C)  written request and an oral response. 
D)  auditor control of the mailing. 
E)  responses received by the auditor.

An auditor can use computer audit software to do all of the following except:

Evidence need not be relevant to management's financial statement assertions.

Working papers provide all of the following except:

Because of the effects of circulation, some audit evidence is more reliable than other audit evidence. Which of the following is generally considered to be the most reliable?

Which of the following would not be considered underlying accounting data?

The title of a certain working paper is "Proposed Adjusting Entries." The use of the word "proposed" indicates that:

Vouching and tracing are synonyms.

The working trial balance serves as the connecting link between the client's general ledger and the financial statements.

Which of the following procedures consists of seeking information from knowledgeable persons, both financial and nonfinancial, throughout the entity or outside the entity?

Inspecting tangible resources provides the auditor with direct personal knowledge of their existence and physical condition.

The auditor is primarily concerned about the implications of electronic documentation in account balances and transaction classes related to significant business processes.

The five management assertions outlined in generally accepted auditing standards include all of the following except:

The types of tests included in an audit program include all of the following except tests of:

Reperformance consists of client personnel repeating the execution of procedures or controls while being observed by auditor.

Use of the auditing procedure confirming should normally involve all of the following except:

Auditing and the Public Accounting

Financial Statement Audits and

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Audit Sampling in Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Auditing Investments and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters

Exam 6: Audit Evidence, Audit Objectives,

An auditor can use computer audit software to do all of the following except:

Evidence need not be relevant to management's financial statement assertions.

Working papers provide all of the following except:

Because of the effects of circulation, some audit evidence is more reliable than other audit evidence. Which of the following is generally considered to be the most reliable?

Which of the following would not be considered underlying accounting data?

The title of a certain working paper is "Proposed Adjusting Entries." The use of the word "proposed" indicates that:

Vouching and tracing are synonyms.

The working trial balance serves as the connecting link between the client's general ledger and the financial statements.

Which of the following procedures consists of seeking information from knowledgeable persons, both financial and nonfinancial, throughout the entity or outside the entity?

Inspecting tangible resources provides the auditor with direct personal knowledge of their existence and physical condition.

The auditor is primarily concerned about the implications of electronic documentation in account balances and transaction classes related to significant business processes.

The five management assertions outlined in generally accepted auditing standards include all of the following except:

The types of tests included in an audit program include all of the following except tests of:

Reperformance consists of client personnel repeating the execution of procedures or controls while being observed by auditor.

Use of the auditing procedure confirming should normally involve all of the following except:

Auditing and the Public Accounting

Financial Statement Audits and

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Audit Sampling in Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Auditing Investments and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters