Question 1

Name two account balance management assertions pertaining to inventory and explain why they are considered in an audit.

Accepted Answer

Answers should include two of the follow

Question 2

The sufficiency of evidence refers to the quality of audit evidence.

Accepted Answer

A) True 
 B)False

Question 3

Of the following,the most reliable type of evidence typically is:

Accepted Answer

A)  Confirmation. 
B)  Inspection of records and documents. 
C)  Reperformance. 
D)  Observation. 
A)  Confirmation. 
B)  Inspection of records and documents. 
C)  Reperformance. 
D)  Observation.

Question 4

Which of the following types of audit evidence is the most persuasive?

Accepted Answer

A)  Prenumbered client purchase order forms. 
B)  Client worksheets supporting cost allocations. 
C)  Bank statements obtained from the client. 
D)  Client responses to auditor inquiries. 
A)  Prenumbered client purchase order forms. 
B)  Client worksheets supporting cost allocations. 
C)  Bank statements obtained from the client. 
D)  Client responses to auditor inquiries.

Question 5

Following are several statements regarding accounting records or audit documentation.Which of the statements is correct?

Accepted Answer

A)  Accounting records belong to the client. 
B)  Documentation of an auditor's understanding of client's internal control system is not necessary. 
C)  Audit documents may be regarded as a substitute for the client's accounting records. 
D)  The independent auditor may discard audit documents after two years. 
A)  Accounting records belong to the client. 
B)  Documentation of an auditor's understanding of client's internal control system is not necessary. 
C)  Audit documents may be regarded as a substitute for the client's accounting records. 
D)  The independent auditor may discard audit documents after two years.

Question 6

When using analytical procedures,the auditor first needs to develop an expectation with which to compare recorded results.What is meant by "precision of the expectation," and what factors affect the precision of analytical procedures?

Accepted Answer

The quality of an expectation is referre

Question 7

Of the following,which is the least persuasive type of audit evidence?

Accepted Answer

A)  Documents mailed by outsiders to the auditor. 
B)  Correspondence between the auditor and third party vendors. 
C)  Copies of client sales invoices inspected by the auditor. 
D)  Computations made by the auditor. 
A)  Documents mailed by outsiders to the auditor. 
B)  Correspondence between the auditor and third party vendors. 
C)  Copies of client sales invoices inspected by the auditor. 
D)  Computations made by the auditor.

Question 8

The auditor must use his or her professional judgment to determine the amount of audit evidence to be gathered.

Accepted Answer

A) True 
 B)False

Question 9

Vouching is used primarily to test which of the following assertions about classes of transaction?

Accepted Answer

A)  Occurrence. 
B)  Completeness. 
C)  Authorization. 
D)  Classification. 
A)  Occurrence. 
B)  Completeness. 
C)  Authorization. 
D)  Classification.

Question 10

The classification assertion refers to transactions and events being recorded in the correct accounting period.

Accepted Answer

A) True 
 B)False

Question 11

Audit documents that record the procedures used by the auditor to gather evidence should be

Accepted Answer

A)  Considered the primary support for the financial statements being examined. 
B)  Viewed as the connecting link between the accounting records and the financial statements. 
C)  Designed in an orderly fashion to facilitate the review of audit work by the senior, manager, and partner on the engagement. 
D)  Retained until the audited entity ceases to be a client. 
A)  Considered the primary support for the financial statements being examined. 
B)  Viewed as the connecting link between the accounting records and the financial statements. 
C)  Designed in an orderly fashion to facilitate the review of audit work by the senior, manager, and partner on the engagement. 
D)  Retained until the audited entity ceases to be a client.

Question 12

The third general auditing standard requires that due professional care be exercised in the performance of the examination and the preparation of the report.Due professional care deals with what is done by the independent auditor and how well it is done.For example,due care in the matter of audit documents requires that audit documents'

Accepted Answer

A)  Format be neat and orderly and include both a permanent file and a general file. 
B)  Content be sufficient to provide support for the auditor's report, including the auditor's representation as to compliance with auditing standards. 
C)  Ownership be determined by the legal statutes of the state where the auditor practices. 
D)  Preparation be the responsibility of assistants whose work is reviewed by seniors, managers, and partners. 
A)  Format be neat and orderly and include both a permanent file and a general file. 
B)  Content be sufficient to provide support for the auditor's report, including the auditor's representation as to compliance with auditing standards. 
C)  Ownership be determined by the legal statutes of the state where the auditor practices. 
D)  Preparation be the responsibility of assistants whose work is reviewed by seniors, managers, and partners.

Question 13

Which assertions may be tested for the "transactions and events" category of management assertions?

Accepted Answer

A)  Existence, completeness, rights and obligations, accuracy, cutoff and classification. 
B)  Occurrence, completeness, rights and obligations, accuracy, cutoff and classification. 
C)  Occurrence, completeness, authorization, accuracy, cutoff and classification. 
D)  Existence, rights and obligations, accuracy, authorization, and completeness. 
A)  Existence, completeness, rights and obligations, accuracy, cutoff and classification. 
B)  Occurrence, completeness, rights and obligations, accuracy, cutoff and classification. 
C)  Occurrence, completeness, authorization, accuracy, cutoff and classification. 
D)  Existence, rights and obligations, accuracy, authorization, and completeness.

Question 14

Auditors obtain evidence about the client's inventory through,among other procedures,observing the counting of inventory.What are some limitations "observation" has as an audit procedure?

Accepted Answer

Observation is limited to the

Question 15

Who is responsible for the financial statements?
 What does the term "assertions" mean?
 Identify the assertion categories and the specific assertions for each category.

Accepted Answer

Management is responsible for the fair p

Question 16

Which of the following tends to be most predictable for purposes of analytical procedures applied as substantive procedures?

Accepted Answer

A)  Relationships involving balance sheet accounts. 
B)  Transactions subject to management discretion. 
C)  Relationships involving income statement accounts. 
D)  Data subject to audit testing in the prior year. 
A)  Relationships involving balance sheet accounts. 
B)  Transactions subject to management discretion. 
C)  Relationships involving income statement accounts. 
D)  Data subject to audit testing in the prior year.

Question 17

The following statements were made in a discussion of audit evidence between two CPAs.Which statement is not valid concerning audit evidence?

Accepted Answer

A)  "I am seldom convinced beyond all doubt with respect to all aspects of the statements being examined." 
B)  "I would not undertake that procedure because at best the results would only be persuasive and I'm looking for convincing evidence." 
C)  "I evaluate the degree of risk involved in deciding the kind of evidence I will gather." 
D)  "I evaluate the usefulness of the evidence I can obtain against the cost of obtaining it." 
A)  "I am seldom convinced beyond all doubt with respect to all aspects of the statements being examined." 
B)  "I would not undertake that procedure because at best the results would only be persuasive and I'm looking for convincing evidence." 
C)  "I evaluate the degree of risk involved in deciding the kind of evidence I will gather." 
D)  "I evaluate the usefulness of the evidence I can obtain against the cost of obtaining it."

Question 18

Analytical procedures are

Accepted Answer

A)  Never required. 
B)  Required for planning, substantive testing, and overall review of the financial statements. 
C)  Required for planning and overall review of the financial statements. 
D)  Required during planning only. 
A)  Never required. 
B)  Required for planning, substantive testing, and overall review of the financial statements. 
C)  Required for planning and overall review of the financial statements. 
D)  Required during planning only.

Question 19

Which assertions may be tested for the "presentation and disclosure" category of management assertions?

Accepted Answer

A)  Existence, rights and obligations, cutoff and classification, completeness, accuracy and valuation. 
B)  Occurrence, rights and obligations, existence, accuracy and valuation, cutoff and classification. 
C)  Occurrence, completeness, classification and understandability, cutoff and classification. 
D)  Occurrence, rights and obligations, completeness, classification and understandability, accuracy and valuation. 
A)  Existence, rights and obligations, cutoff and classification, completeness, accuracy and valuation. 
B)  Occurrence, rights and obligations, existence, accuracy and valuation, cutoff and classification. 
C)  Occurrence, completeness, classification and understandability, cutoff and classification. 
D)  Occurrence, rights and obligations, completeness, classification and understandability, accuracy and valuation.

Question 20

In deciding to implement analytical procedures,what are some factors the auditor will consider in determining a tolerable difference between the expectation and the recorded amount?

Accepted Answer

The size of the tolerable difference dep

Name two account balance management assertions pertaining to inventory and explain why they are considered in an audit.

The sufficiency of evidence refers to the quality of audit evidence.

Of the following,the most reliable type of evidence typically is:

Which of the following types of audit evidence is the most persuasive?

Following are several statements regarding accounting records or audit documentation.Which of the statements is correct?

When using analytical procedures,the auditor first needs to develop an expectation with which to compare recorded results.What is meant by "precision of the expectation," and what factors affect the precision of analytical procedures?

Of the following,which is the least persuasive type of audit evidence?

The auditor must use his or her professional judgment to determine the amount of audit evidence to be gathered.

Vouching is used primarily to test which of the following assertions about classes of transaction?

The classification assertion refers to transactions and events being recorded in the correct accounting period.

Audit documents that record the procedures used by the auditor to gather evidence should be

Which assertions may be tested for the "transactions and events" category of management assertions?

Auditors obtain evidence about the client's inventory through,among other procedures,observing the counting of inventory.What are some limitations "observation" has as an audit procedure?

Who is responsible for the financial statements? What does the term "assertions" mean? Identify the assertion categories and the specific assertions for each category.

Which of the following tends to be most predictable for purposes of analytical procedures applied as substantive procedures?

The following statements were made in a discussion of audit evidence between two CPAs.Which statement is not valid concerning audit evidence?

Analytical procedures are

Which assertions may be tested for the "presentation and disclosure" category of management assertions?

In deciding to implement analytical procedures,what are some factors the auditor will consider in determining a tolerable difference between the expectation and the recorded amount?

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning,Types of Audit Tests,and Materiality

Risk Assessment

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,and Internal Auditing Services

Filters

Exam 5: Evidence and Documentation

Name two account balance management assertions pertaining to inventory and explain why they are considered in an audit.

The sufficiency of evidence refers to the quality of audit evidence.

Of the following,the most reliable type of evidence typically is:

Which of the following types of audit evidence is the most persuasive?

Following are several statements regarding accounting records or audit documentation.Which of the statements is correct?

When using analytical procedures,the auditor first needs to develop an expectation with which to compare recorded results.What is meant by "precision of the expectation," and what factors affect the precision of analytical procedures?

Of the following,which is the least persuasive type of audit evidence?

The auditor must use his or her professional judgment to determine the amount of audit evidence to be gathered.

Vouching is used primarily to test which of the following assertions about classes of transaction?

The classification assertion refers to transactions and events being recorded in the correct accounting period.

Audit documents that record the procedures used by the auditor to gather evidence should be

Which assertions may be tested for the "transactions and events" category of management assertions?

Auditors obtain evidence about the client's inventory through,among other procedures,observing the counting of inventory.What are some limitations "observation" has as an audit procedure?

Who is responsible for the financial statements? What does the term "assertions" mean? Identify the assertion categories and the specific assertions for each category.

Which of the following tends to be most predictable for purposes of analytical procedures applied as substantive procedures?

The following statements were made in a discussion of audit evidence between two CPAs.Which statement is not valid concerning audit evidence?

Analytical procedures are

Which assertions may be tested for the "presentation and disclosure" category of management assertions?

In deciding to implement analytical procedures,what are some factors the auditor will consider in determining a tolerable difference between the expectation and the recorded amount?

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning,Types of Audit Tests,and Materiality

Risk Assessment

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,and Internal Auditing Services

Filters