Exam 10: Substantive Tests of Transactions and Balances

The audit working papers often include a client-prepared, aged trial balance of accounts receivable as at balance date. This ageing is best used by the auditor to:

Which of the following is necessary to audit balances in an on-line IT system in an environment of destructive updating?

When evaluating the risk of material misstatement with regards to defalcations involving receivables (a credit entry to accounts receivable for amounts not received), the auditor would expect an experienced bookkeeper to most likely Debit which of the following accounts?

During a client's stocktake you select a sample of items from the floor, count them and trace the quantities to the inventory summary sheet. Which financial report assertion is this audit procedure related to?

An auditor will usually trace the details of the test counts of inventory items selected from the factory floor while observing the inventory stocktake through to a final inventory schedule. This audit procedure is undertaken to Provide evidence of which assertion(s)?

An auditor is testing sales transactions. One step is to trace a sample of debit entries from the accounts receivable subsidiary ledger back to the supporting sales invoices. What would the auditor intend to establish by this step?

In violation of company policy, Warren Ltd erroneously capitalised the cost of painting its warehouse. The auditor examining Warren's financial report would most likely detect this when:

Reviewing interest expense to identify payments to debt-holders not listed on the debt analysis schedule is a procedure that can be used to provide evidence for which audit assertion for loans payable:

Which of the following audit procedures is least likely to detect an unrecorded liability?

During the process of confirming receivables as of 30 June 2012, a positive confirmation was returned indicating the 'balance owed as of 30 June was paid on 9 July 2012.' The auditor would most likely:

A primary advantage of using generalised audit software in the audit of an advanced IT system is that it enables the auditor to:

Once an auditor has determined that accounts receivable at year-end have increased due to slow collections in a 'tight money' environment, the auditor would be likely to:

Your client's inventory turnover has decreased from 8.2 times to 5.6 times during the year. Based on this decrease, which financial report assertion would you be least concerned with?

An auditor reviews the credit ratings of customers with overdue outstanding accounts receivable balances. The auditor's most likely purpose is to obtain evidence concerning management's assertions about:

During the current financial year, the client company began dealing with certain distributors on a consignment basis (goods were delivered to the distributor but not deemed sold until the distributor had on-sold them). Which of the Following audit procedures is least likely to bring this new fact to the auditor's attention?

Tests designed to detect purchases made just before the end of the year that have been recorded in the subsequent year would provide assurance about management's assertion of:

Substantive testing is typically used to audit shareholders' equity because:

When a client company does not maintain its own share records, the auditor should obtain written confirmation from the transfer agent and registrar concerning:

The negative form of accounts receivable confirmation request is useful except when:

While undertaking the audit of the debtors' balance, you use your audit software to extract from the accounts receivable master file a report which shows those debtors with a positive balance owing that is overdue by more than 30 days. At Which of the following account balance assertions is this report aimed?