Question 1

In determining whether transactions have been recorded,the direction of the audit testing should start from the

Accepted Answer

A)  General ledger balances. 
B)  Adjusted trial balance. 
C)  Original source documents. 
D)  General journal entries. 
A)  General ledger balances. 
B)  Adjusted trial balance. 
C)  Original source documents. 
D)  General journal entries.

Question 2

Analytical procedures may be classified as being primarily which of the following?

Accepted Answer

A)  Tests of controls. 
B)  Substantive procedures. 
C)  Tests of ratios. 
D)  Detailed tests of balances. 
A)  Tests of controls. 
B)  Substantive procedures. 
C)  Tests of ratios. 
D)  Detailed tests of balances.

Question 3

Stan is auditing First Financial Services and would like to use financial ratios to test the ability of First Financial Services to meet its current obligations.Name two ratios that would help Stan in this task.Indicate how each ratio is calculated and what a high ratio would signify to Stan.

Accepted Answer

Answer should include two of the followi

Question 4

To test for unsupported entries in the ledger,the direction of audit testing should start from the

Accepted Answer

A)  Ledger entries. 
B)  Journal entries. 
C)  Externally generated documents. 
D)  Original source documents. 
A)  Ledger entries. 
B)  Journal entries. 
C)  Externally generated documents. 
D)  Original source documents.

Question 5

You are auditing a store that sells merchandise.Some of the store merchandise is held on consignment.Which account balance assertion for inventory should you be most concerned about verifying?

Accepted Answer

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

Question 6

Analytical procedures enable the auditor to predict the balance or quantity of an item under audit.Information to develop this estimate can be obtained from all of the following except:

Accepted Answer

A)  Tracing transactions through the system to determine whether procedures are being applied as prescribed. 
B)  Comparison of financial data with data for comparable prior periods, anticipated results (e.g., budgets and forecasts) and similar data for the industry in which the entity operates. 
C)  Study of the relationships of elements of financial data that would be expected to conform to a predictable pattern based upon the entity's experience. 
D)  Study of the relationships of financial data with relevant nonfinancial data. 
A)  Tracing transactions through the system to determine whether procedures are being applied as prescribed. 
B)  Comparison of financial data with data for comparable prior periods, anticipated results (e.g., budgets and forecasts) and similar data for the industry in which the entity operates. 
C)  Study of the relationships of elements of financial data that would be expected to conform to a predictable pattern based upon the entity's experience. 
D)  Study of the relationships of financial data with relevant nonfinancial data.

Question 7

All audit documentation should have a heading,which includes

Accepted Answer

A)  Name of the client. 
B)  Title of the working paper. 
C)  Client's year-end date. 
D)  All of the above. 
A)  Name of the client. 
B)  Title of the working paper. 
C)  Client's year-end date. 
D)  All of the above.

Question 8

Audit procedures are designed to test management assertions.

Accepted Answer

A) True 
 B)False

Question 9

The audit working papers belong to

Accepted Answer

A)  The client. 
B)  The government. 
C)  The audit firm. 
D)  They are public record documents. 
A)  The client. 
B)  The government. 
C)  The audit firm. 
D)  They are public record documents.

Question 10

Which of the following show the detailed general ledger accounts that make up a financial statement category on the auditor's working trial balance?

Accepted Answer

A)  Account analyses. 
B)  Supporting schedules. 
C)  Control accounts. 
D)  Lead schedules. 
A)  Account analyses. 
B)  Supporting schedules. 
C)  Control accounts. 
D)  Lead schedules.

Question 11

Several factors may influence the reliability of evidence.Identify and describe two of these factors.

Accepted Answer

Answer should include two of the followi

Question 12

Management assertions fall into four main categories.

Accepted Answer

A) True 
 B)False

Question 13

Your audit client is under intense pressure to meet an earnings target.Which transaction assertion for transactions within the purchasing process are you most concerned with?

Accepted Answer

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

Question 14

Which of the following is the least persuasive documentation in support of an auditor's opinion?

Accepted Answer

A)  Schedules of details of physical inventory counts conducted by the client. 
B)  Notation of auditor's inferences drawn from ratios and trends. 
C)  Notation of appraisers' conclusions documented in the auditor's working papers. 
D)  Lists of negative confirmation requests for which no response was received by the auditor. 
A)  Schedules of details of physical inventory counts conducted by the client. 
B)  Notation of auditor's inferences drawn from ratios and trends. 
C)  Notation of appraisers' conclusions documented in the auditor's working papers. 
D)  Lists of negative confirmation requests for which no response was received by the auditor.

Question 15

An auditor's analytical procedures performed during the overall review stage indicated that the client's accounts receivable balance had doubled since the end of the prior year.However,the allowance for doubtful accounts as a percentage of accounts receivable remained about the same.Which of the following client explanations most likely would satisfy the auditor?

Accepted Answer

A)  The client liberalized its credit standards in the current year and sold much more merchandise to customers with poor credit ratings. 
B)  Twice as many accounts receivable were written off in the prior year than in the current year. 
C)  A greater percentage of accounts receivable were currently listed in the "more than 90 days overdue" category than in the prior year. 
D)  The client opened a second retail outlet in the current year and its credit sales approximately equaled the older, established outlet. 
A)  The client liberalized its credit standards in the current year and sold much more merchandise to customers with poor credit ratings. 
B)  Twice as many accounts receivable were written off in the prior year than in the current year. 
C)  A greater percentage of accounts receivable were currently listed in the "more than 90 days overdue" category than in the prior year. 
D)  The client opened a second retail outlet in the current year and its credit sales approximately equaled the older, established outlet.

In determining whether transactions have been recorded,the direction of the audit testing should start from the

Analytical procedures may be classified as being primarily which of the following?

Stan is auditing First Financial Services and would like to use financial ratios to test the ability of First Financial Services to meet its current obligations.Name two ratios that would help Stan in this task.Indicate how each ratio is calculated and what a high ratio would signify to Stan.

To test for unsupported entries in the ledger,the direction of audit testing should start from the

You are auditing a store that sells merchandise.Some of the store merchandise is held on consignment.Which account balance assertion for inventory should you be most concerned about verifying?

Analytical procedures enable the auditor to predict the balance or quantity of an item under audit.Information to develop this estimate can be obtained from all of the following except:

All audit documentation should have a heading,which includes

Audit procedures are designed to test management assertions.

The audit working papers belong to

Which of the following show the detailed general ledger accounts that make up a financial statement category on the auditor's working trial balance?

Several factors may influence the reliability of evidence.Identify and describe two of these factors.

Management assertions fall into four main categories.

Your audit client is under intense pressure to meet an earnings target.Which transaction assertion for transactions within the purchasing process are you most concerned with?

Which of the following is the least persuasive documentation in support of an auditor's opinion?

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

In determining whether transactions have been recorded,the direction of the audit testing should start from the

Analytical procedures may be classified as being primarily which of the following?

Stan is auditing First Financial Services and would like to use financial ratios to test the ability of First Financial Services to meet its current obligations.Name two ratios that would help Stan in this task.Indicate how each ratio is calculated and what a high ratio would signify to Stan.

To test for unsupported entries in the ledger,the direction of audit testing should start from the

You are auditing a store that sells merchandise.Some of the store merchandise is held on consignment.Which account balance assertion for inventory should you be most concerned about verifying?

Analytical procedures enable the auditor to predict the balance or quantity of an item under audit.Information to develop this estimate can be obtained from all of the following except:

All audit documentation should have a heading,which includes

Audit procedures are designed to test management assertions.

The audit working papers belong to

Which of the following show the detailed general ledger accounts that make up a financial statement category on the auditor's working trial balance?

Several factors may influence the reliability of evidence.Identify and describe two of these factors.

Management assertions fall into four main categories.

Your audit client is under intense pressure to meet an earnings target.Which transaction assertion for transactions within the purchasing process are you most concerned with?

Which of the following is the least persuasive documentation in support of an auditor's opinion?

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