Question 1

The auditor is likely to accumulate more evidence when the audit is for a company:

Accepted Answer

The answer of The auditor is likely to accumulate more...

Question 2

Observation is normally more reliable than physical examination.

Accepted Answer

A) True 
 B)False

Question 3

Tolerable misstatement is the maximum combined total of all misstatements in the financial statements that the auditor is willing to allow, or tolerate, when issuing a standard unmodified opinion.

Accepted Answer

A) True 
 B)False

Question 4

Certain types of misstatements are likely to be more important than other types to users, even if the dollar amounts are the same. Which of the following demonstrates this?

Accepted Answer

The answer of Certain types of misstatements are likely to...

Question 5

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Watch client employees count inventory to determine whether company procedures are being followed.

Accepted Answer

A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance 
A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance

Question 6

Auditors may assess inherent risk and control risk:

Accepted Answer

The answer of Auditors may assess inherent risk and control...

Question 7

Which is usually included in the engagement letter?

Accepted Answer

The answer of Which is usually included in the engagement...

Question 8

Which of the following statements regarding analytical procedures is not correct?

Accepted Answer

A)  Analytical procedures are required on all audits. 
B)  For certain accounts with small balances, analytical procedures alone may be sufficient evidence. 
C)  Analytical tests emphasize a comparison of client internal controls to IFRS. 
D)  Analytical procedures can be used as substantive tests. 
A)  Analytical procedures are required on all audits. 
B)  For certain accounts with small balances, analytical procedures alone may be sufficient evidence. 
C)  Analytical tests emphasize a comparison of client internal controls to IFRS. 
D)  Analytical procedures can be used as substantive tests.

Question 9

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Count inventory items and record the amount in the audit files.

Accepted Answer

A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance 
A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance

Question 10

A successor auditor may perform which of the following for a new audit client?

Accepted Answer

The answer of A successor auditor may perform which of...

Question 11

The corporate minutes are the official record of the meetings of the board of directors and stockholders. The minutes typically include authorizations related to:

Accepted Answer

The answer of The corporate minutes are the official record...

Question 12

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Trace postings from the sales journal to the general ledger accounts.

Accepted Answer

A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance 
A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance

Question 13

The phrase 'reasonable assurance' in the auditor's report is intended to inform users that auditors:

Accepted Answer

A)  act as insurers of the accuracy of the statements. 
B)  base their conclusions about the statements on professional judgment. 
C)  certify the material presented in the statements by management. 
D)  guarantee fair presentation of the financial statements. 
A)  act as insurers of the accuracy of the statements. 
B)  base their conclusions about the statements on professional judgment. 
C)  certify the material presented in the statements by management. 
D)  guarantee fair presentation of the financial statements.

Question 14

Which of the following forms of evidence is most reliable?

Accepted Answer

A)  Internal memo explaining the issuance of a credit memo. 
B)  Confirmation of accounts receivable balance received from a customer. 
C)  Copy of month- end adjusting entries. 
D)  General ledger account balances. 
A)  Internal memo explaining the issuance of a credit memo. 
B)  Confirmation of accounts receivable balance received from a customer. 
C)  Copy of month- end adjusting entries. 
D)  General ledger account balances.

Question 15

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence:
-Trace column totals from the cash disbursements journal to the general ledger.

Accepted Answer

A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance 
A)  physical examination 
B)  observation 
C)  confirmation 
D)  inspection 
E)  analytical procedures
F) inquiry of the client
G) recalculation
H) reperformance

Question 16

What is the primary means of dealing with risk in planning decisions related to audit evidence?

Accepted Answer

A)  Selection of more effective tests of details of balances. 
B)  Application of the audit risk model. 
C)  Establishing a lower preliminary judgment about materiality. 
D)  Allocating materiality judgment to segments. 
A)  Selection of more effective tests of details of balances. 
B)  Application of the audit risk model. 
C)  Establishing a lower preliminary judgment about materiality. 
D)  Allocating materiality judgment to segments.

Question 17

Investigating new clients with a focus on assessing the auditor's potential relationship with that new client is a critical element in determining:

Accepted Answer

A)  financial risk. 
B)  inherent risk. 
C)  acceptable audit risk. 
D)  statistical risk. 
A)  financial risk. 
B)  inherent risk. 
C)  acceptable audit risk. 
D)  statistical risk.

Question 18

The FASB definition of materiality emphasizes what class of financial statement users?

Accepted Answer

A)  Informed investors. 
B)  Potential investors. 
C)  Regulators. 
D)  Reasonable persons. 
A)  Informed investors. 
B)  Potential investors. 
C)  Regulators. 
D)  Reasonable persons.

Question 19

Auditors are ________ to decide on the combined amount of misstatements in the financial statements that they would consider material early in the audit.

Accepted Answer

A)  permitted 
B)  required 
C)  strongly encouraged 
D)  not allowed 
A)  permitted 
B)  required 
C)  strongly encouraged 
D)  not allowed

Question 20

Below are 10 documents typically examined during an audit. Classify each document as either internal or external.
-Subsidiary accounts receivable records.

Accepted Answer

The answer of Below are 10 documents typically examined during...

The auditor is likely to accumulate more evidence when the audit is for a company:

Observation is normally more reliable than physical examination.

Tolerable misstatement is the maximum combined total of all misstatements in the financial statements that the auditor is willing to allow, or tolerate, when issuing a standard unmodified opinion.

Certain types of misstatements are likely to be more important than other types to users, even if the dollar amounts are the same. Which of the following demonstrates this?

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Watch client employees count inventory to determine whether company procedures are being followed.

Auditors may assess inherent risk and control risk:

Which is usually included in the engagement letter?

Which of the following statements regarding analytical procedures is not correct?

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Count inventory items and record the amount in the audit files.

A successor auditor may perform which of the following for a new audit client?

The corporate minutes are the official record of the meetings of the board of directors and stockholders. The minutes typically include authorizations related to:

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Trace postings from the sales journal to the general ledger accounts.

The phrase 'reasonable assurance' in the auditor's report is intended to inform users that auditors:

Which of the following forms of evidence is most reliable?

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Trace column totals from the cash disbursements journal to the general ledger.

What is the primary means of dealing with risk in planning decisions related to audit evidence?

Investigating new clients with a focus on assessing the auditor's potential relationship with that new client is a critical element in determining:

The FASB definition of materiality emphasizes what class of financial statement users?

Auditors are ________ to decide on the combined amount of misstatements in the financial statements that they would consider material early in the audit.

Below are 10 documents typically examined during an audit. Classify each document as either internal or external. -Subsidiary accounts receivable records.

The Demand for Audit, Cpa Profession, Audit Reports and Other Assurance Services

Professional Ethics, Legal Liability, Audit Responsibilities and Objectives

Internal Control, Control Risk, Section 404 Audits, Fraud Auditing, and the Impact of Information Technology on the Audit Process

Overall Audit Strategy, Audit Program, Audit of the Sales and Collection Cycle, Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable, Audit Sampling for Tests of Details of Balances, and Audit of the Acquisition and Payment Cycle

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts, Audit of the Payroll and Personnel Cycle, Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition, Repayment, Audit of Cash and Financial Instruments, and Completing the Audit

Other Assurance Services, Internal and Governmental Financial Auditing and Operations Auditing

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Exam 3: Audit Evidence, Audit Planning, Analytical Procedures, Materiality and Risk

The auditor is likely to accumulate more evidence when the audit is for a company:

Observation is normally more reliable than physical examination.

Tolerable misstatement is the maximum combined total of all misstatements in the financial statements that the auditor is willing to allow, or tolerate, when issuing a standard unmodified opinion.

Certain types of misstatements are likely to be more important than other types to users, even if the dollar amounts are the same. Which of the following demonstrates this?

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Watch client employees count inventory to determine whether company procedures are being followed.

Auditors may assess inherent risk and control risk:

Which is usually included in the engagement letter?

Which of the following statements regarding analytical procedures is not correct?

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Count inventory items and record the amount in the audit files.

A successor auditor may perform which of the following for a new audit client?

The corporate minutes are the official record of the meetings of the board of directors and stockholders. The minutes typically include authorizations related to:

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Trace postings from the sales journal to the general ledger accounts.

The phrase 'reasonable assurance' in the auditor's report is intended to inform users that auditors:

Which of the following forms of evidence is most reliable?

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: -Trace column totals from the cash disbursements journal to the general ledger.

What is the primary means of dealing with risk in planning decisions related to audit evidence?

Investigating new clients with a focus on assessing the auditor's potential relationship with that new client is a critical element in determining:

The FASB definition of materiality emphasizes what class of financial statement users?

Auditors are ________ to decide on the combined amount of misstatements in the financial statements that they would consider material early in the audit.

Below are 10 documents typically examined during an audit. Classify each document as either internal or external. -Subsidiary accounts receivable records.

The Demand for Audit, Cpa Profession, Audit Reports and Other Assurance Services

Professional Ethics, Legal Liability, Audit Responsibilities and Objectives

Internal Control, Control Risk, Section 404 Audits, Fraud Auditing, and the Impact of Information Technology on the Audit Process

Overall Audit Strategy, Audit Program, Audit of the Sales and Collection Cycle, Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable, Audit Sampling for Tests of Details of Balances, and Audit of the Acquisition and Payment Cycle

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts, Audit of the Payroll and Personnel Cycle, Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition, Repayment, Audit of Cash and Financial Instruments, and Completing the Audit

Other Assurance Services, Internal and Governmental Financial Auditing and Operations Auditing

Filters