Question 1

Audit documents record the results of the auditor's evidence-gathering procedures.When preparing audit documents,the auditor should remember that

Accepted Answer

A)  Audit documents should be kept on the client's premises so that the client can have access to them for reference purposes. 
B)  Audit documents should be the primary support for the financial statements being examined. 
C)  Audit documents should be considered as a substitute for the client's accounting records. 
D)  Audit documents should be designed to facilitate the review and supervision of work done by auditors assigned to the engagement. 
A)  Audit documents should be kept on the client's premises so that the client can have access to them for reference purposes. 
B)  Audit documents should be the primary support for the financial statements being examined. 
C)  Audit documents should be considered as a substitute for the client's accounting records. 
D)  Audit documents should be designed to facilitate the review and supervision of work done by auditors assigned to the engagement.

Question 2

Explain the occurrence and completeness assertions.How does failure to meet each assertion affect the financial statements?

Accepted Answer

The occurrence assertion relates to whet

Question 3

The auditor notices significant fluctuations in key elements of the company's financial statements.If management is unable to provide an acceptable explanation,the auditor should

Accepted Answer

A)  Consider the matter a scope limitation. 
B)  Perform additional audit procedures to investigate the matter further. 
C)  Intensify the examination with the expectation of detecting management fraud. 
D)  Withdraw from the engagement. 
A)  Consider the matter a scope limitation. 
B)  Perform additional audit procedures to investigate the matter further. 
C)  Intensify the examination with the expectation of detecting management fraud. 
D)  Withdraw from the engagement.

Question 4

Footing is an example of

Accepted Answer

A)  Recalculation. 
B)  Confirmation. 
C)  Inquiries. 
D)  Analytical procedures. 
A)  Recalculation. 
B)  Confirmation. 
C)  Inquiries. 
D)  Analytical procedures.

Question 5

The audit testing hierarchy is considered to be more effective and more efficient.Why?

Accepted Answer

Effectiveness: The auditor's understandi

Question 6

You are auditing a manufacturing company that has a large production facility.Some of the production equipment is held through lease agreements.Which of the following is the account balance assertion you would be most concerned about?

Accepted Answer

A)  Existence or occurrence. 
B)  Completeness. 
C)  Rights and obligations. 
D)  Accuracy. 
A)  Existence or occurrence. 
B)  Completeness. 
C)  Rights and obligations. 
D)  Accuracy.

Question 7

As a result of analytical procedures conducted during the planning phase,the independent auditor determines that the gross profit percentage has declined from 30% in the preceding year to 20% in the current year.The auditor should

Accepted Answer

A)  Express an opinion that is qualified due to the inability of the client company to continue as a going concern. 
B)  Evaluate management's performance in causing this decline. 
C)  Require footnote disclosure. 
D)  Consider the possibility of an error in the financial statements. 
A)  Express an opinion that is qualified due to the inability of the client company to continue as a going concern. 
B)  Evaluate management's performance in causing this decline. 
C)  Require footnote disclosure. 
D)  Consider the possibility of an error in the financial statements.

Question 8

Which of the following statements concerning audit evidence is correct?

Accepted Answer

A)  Appropriate evidence supporting management's assertions should be convincing rather than persuasive. 
B)  Effective internal controls contribute little to the reliability of the evidence created within the entity. 
C)  The cost of obtaining evidence is not an important consideration to an auditor in deciding what evidence should be obtained. 
D)  A client's accounting data cannot be considered sufficient audit evidence to support the financial statements. 
A)  Appropriate evidence supporting management's assertions should be convincing rather than persuasive. 
B)  Effective internal controls contribute little to the reliability of the evidence created within the entity. 
C)  The cost of obtaining evidence is not an important consideration to an auditor in deciding what evidence should be obtained. 
D)  A client's accounting data cannot be considered sufficient audit evidence to support the financial statements.

Question 9

A confirmation is used to

Accepted Answer

A)  Verify the inventory count is correct. 
B)  Verify that a control is being observed. 
C)  Verify a representation from a third party. 
D)  Verify that a specific trend is correct. 
A)  Verify the inventory count is correct. 
B)  Verify that a control is being observed. 
C)  Verify a representation from a third party. 
D)  Verify that a specific trend is correct.

Question 10

Which of the following is not a typical analytical procedure?

Accepted Answer

A)  Study of relationships of the financial information with relevant nonfinancial information. 
B)  Comparison of the financial information with similar information regarding the industry in which the entity operates. 
C)  Comparison of recorded amounts of major disbursements with appropriate invoices. 
D)  Comparison of the financial information with budgeted amounts. 
A)  Study of relationships of the financial information with relevant nonfinancial information. 
B)  Comparison of the financial information with similar information regarding the industry in which the entity operates. 
C)  Comparison of recorded amounts of major disbursements with appropriate invoices. 
D)  Comparison of the financial information with budgeted amounts.

Question 11

Audit evidence includes only written information used by the auditor in arriving at an opinion about the fairness of financial statements.

Accepted Answer

A) True 
 B)False

Question 12

In testing plant and equipment balances,an auditor may physically inspect new additions listed on the summary of plant and equipment transactions for the year.This procedure is designed to obtain evidence concerning management's assertions about classes of transactions and events,and specifically,which assertion?

Accepted Answer

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

Question 13

Tracing is used primarily to test which of the following assertions about classes of transactions?

Accepted Answer

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

Question 14

Why is appropriateness important for audit evidence?
 What qualities must evidence have to be considered appropriate?

Accepted Answer

Appropriateness is a measure of the qual

Question 15

Procedures specifically outlined in an audit program are designed primarily to

Accepted Answer

A)  Assess risk for planning purposes. 
B)  Detect all errors or fraudulent activities. 
C)  Test internal control systems. 
D)  Gather evidence about management's assertions. 
A)  Assess risk for planning purposes. 
B)  Detect all errors or fraudulent activities. 
C)  Test internal control systems. 
D)  Gather evidence about management's assertions.

Question 16

The permanent audit file usually includes

Accepted Answer

A)  Working trial balance. 
B)  Organizational chart. 
C)  Audit plan. 
D)  Audit programs. 
A)  Working trial balance. 
B)  Organizational chart. 
C)  Audit plan. 
D)  Audit programs.

Question 17

For an auditor,how are management assertions useful?

Accepted Answer

The assertions provide a framework withi

Question 18

The auditor generally gives most emphasis to ratio and trend analysis in the examination of the

Accepted Answer

A)  Statement of Changes in Stockholders' Equity and Retained Earnings. 
B)  Income Statement. 
C)  Balance Sheet. 
D)  Statement of Cash Flows. 
A)  Statement of Changes in Stockholders' Equity and Retained Earnings. 
B)  Income Statement. 
C)  Balance Sheet. 
D)  Statement of Cash Flows.

Question 19

Analytical procedures used in planning an audit should focus on identifying

Accepted Answer

A)  Material weaknesses in internal control. 
B)  The predictability of financial data from individual transactions. 
C)  The various assertions that are embodied in the financial statements. 
D)  Areas that may represent specific risks relevant to the audit. 
A)  Material weaknesses in internal control. 
B)  The predictability of financial data from individual transactions. 
C)  The various assertions that are embodied in the financial statements. 
D)  Areas that may represent specific risks relevant to the audit.

Question 20

According to the text,what are the two functions of working papers?

Accepted Answer

Working papers provide support for the a

Audit documents record the results of the auditor's evidence-gathering procedures.When preparing audit documents,the auditor should remember that

Explain the occurrence and completeness assertions.How does failure to meet each assertion affect the financial statements?

The auditor notices significant fluctuations in key elements of the company's financial statements.If management is unable to provide an acceptable explanation,the auditor should

Footing is an example of

The audit testing hierarchy is considered to be more effective and more efficient.Why?

You are auditing a manufacturing company that has a large production facility.Some of the production equipment is held through lease agreements.Which of the following is the account balance assertion you would be most concerned about?

As a result of analytical procedures conducted during the planning phase,the independent auditor determines that the gross profit percentage has declined from 30% in the preceding year to 20% in the current year.The auditor should

Which of the following statements concerning audit evidence is correct?

A confirmation is used to

Which of the following is not a typical analytical procedure?

Audit evidence includes only written information used by the auditor in arriving at an opinion about the fairness of financial statements.

Tracing is used primarily to test which of the following assertions about classes of transactions?

Why is appropriateness important for audit evidence? What qualities must evidence have to be considered appropriate?

Procedures specifically outlined in an audit program are designed primarily to

The permanent audit file usually includes

For an auditor,how are management assertions useful?

The auditor generally gives most emphasis to ratio and trend analysis in the examination of the

Analytical procedures used in planning an audit should focus on identifying

According to the text,what are the two functions of working papers?

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

Audit documents record the results of the auditor's evidence-gathering procedures.When preparing audit documents,the auditor should remember that

Explain the occurrence and completeness assertions.How does failure to meet each assertion affect the financial statements?

The auditor notices significant fluctuations in key elements of the company's financial statements.If management is unable to provide an acceptable explanation,the auditor should

Footing is an example of

The audit testing hierarchy is considered to be more effective and more efficient.Why?

You are auditing a manufacturing company that has a large production facility.Some of the production equipment is held through lease agreements.Which of the following is the account balance assertion you would be most concerned about?

As a result of analytical procedures conducted during the planning phase,the independent auditor determines that the gross profit percentage has declined from 30% in the preceding year to 20% in the current year.The auditor should

Which of the following statements concerning audit evidence is correct?

A confirmation is used to

Which of the following is not a typical analytical procedure?

Audit evidence includes only written information used by the auditor in arriving at an opinion about the fairness of financial statements.

Tracing is used primarily to test which of the following assertions about classes of transactions?

Why is appropriateness important for audit evidence? What qualities must evidence have to be considered appropriate?

Procedures specifically outlined in an audit program are designed primarily to

The permanent audit file usually includes

For an auditor,how are management assertions useful?

The auditor generally gives most emphasis to ratio and trend analysis in the examination of the

Analytical procedures used in planning an audit should focus on identifying

According to the text,what are the two functions of working papers?

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