Question 1

Sampling errors are caused when the auditor tests the wrong documentation.

Accepted Answer

A) True 
 B)False  False

Question 2

A test for revenue is:

Accepted Answer

A)  analyzing the gross margin for the current and prior periods. 
B)  analyzing the changes in inventory, accounts receivable, and cash for any indication that their trend differs from that implied by the change in sales year over year. 
C)  analyzing sales returns and allowances for proper disclosure. 
D)  Both a and c. 
A)  analyzing the gross margin for the current and prior periods. 
B)  analyzing the changes in inventory, accounts receivable, and cash for any indication that their trend differs from that implied by the change in sales year over year. 
C)  analyzing sales returns and allowances for proper disclosure. 
D)  Both a and c. D

Question 3

Going concern affects:

Accepted Answer

A)  the scope of the audit. 
B)  the audit opinion. 
C)  the decision whether or not to accept a client. 
D)  All of the above. 
A)  the scope of the audit. 
B)  the audit opinion. 
C)  the decision whether or not to accept a client. 
D)  All of the above. D

Question 4

A sampling unit:

Accepted Answer

A)  is an individual account. 
B)  is an individual transaction. 
C)  is an individual unit. 
D)  can be any of the above depending on the sampling frame. 
A)  is an individual account. 
B)  is an individual transaction. 
C)  is an individual unit. 
D)  can be any of the above depending on the sampling frame.

Question 5

You are assigned to audit accounts payable for a manufacturing client. As part of the planning, your manager sets a tolerable misstatement amount of+/- $125,000. Your review of unpaid invoices indicates an understatement error of $25,253 from a sample of $675,467. The population value of A/P is $5,241,687 at October 31st. The amount of any additional adjustment required by the auditor (rounded) is:

Accepted Answer

A)  $0. 
B)  $131,998. 
C)  $6,998. 
D)  $125,000. 
A)  $0. 
B)  $131,998. 
C)  $6,998. 
D)  $125,000.

Question 6

In deciding on sampling technique, the auditor will:

Accepted Answer

A)  choose sampling with replacement for a smaller sample size. 
B)  choose sampling without replacement for a smaller sample size. 
C)  It doesn't matter which method is used as the auditor can ignore duplicates. 
D)  None of the above. 
A)  choose sampling with replacement for a smaller sample size. 
B)  choose sampling without replacement for a smaller sample size. 
C)  It doesn't matter which method is used as the auditor can ignore duplicates. 
D)  None of the above.

Question 7

A client has a small number of large account balances, with a greater likelihood of over rather than understatement. Which of the following sampling techniques would be most appropriate?

Accepted Answer

A)  Monetary unit sampling. 
B)  Classical variables sampling. 
C)  Attribute sampling. 
D)  All of the above, depending on the circumstances. 
A)  Monetary unit sampling. 
B)  Classical variables sampling. 
C)  Attribute sampling. 
D)  All of the above, depending on the circumstances.

Question 8

Which is the correct order for the tests listed below?

Accepted Answer

A)  Substantive analytical procedures, dual purpose tests, detail tests of balances. 
B)  Detail tests of balances, substantive analytical procedures, dual purpose tests. 
C)  Dual purpose tests, detail tests of balances, substantive analytical procedures. 
D)  None of the above. 
A)  Substantive analytical procedures, dual purpose tests, detail tests of balances. 
B)  Detail tests of balances, substantive analytical procedures, dual purpose tests. 
C)  Dual purpose tests, detail tests of balances, substantive analytical procedures. 
D)  None of the above.

Question 9

The substantive testing is organized around the transaction cycles.

Accepted Answer

A) True 
 B)False

Question 10

Sampling risk:

Accepted Answer

A)  is a function of statistical procedures. 
B)  is a function of the statistical method chosen. 
C)  is a function of the audit, regardless whether statistical methods are used or not. 
D)  Both a and b. 
A)  is a function of statistical procedures. 
B)  is a function of the statistical method chosen. 
C)  is a function of the audit, regardless whether statistical methods are used or not. 
D)  Both a and b.

Question 11

What are the initial steps for a test of details of balances when using a sample?

Accepted Answer

A)  Determine the sampling method. 
B)  Determine which assertion is being tested. 
C)  Determine which account is being tested. 
D)  Both b and c. 
A)  Determine the sampling method. 
B)  Determine which assertion is being tested. 
C)  Determine which account is being tested. 
D)  Both b and c.

Question 12

A client has a large number of small account balances, with an equal likelihood of over and understatement. Which of the following sampling techniques would be most appropriate?

Accepted Answer

A)  Monetary unit sampling. 
B)  Classical variables sampling. 
C)  Attribute sampling. 
D)  All of the above, depending on the circumstances. 
A)  Monetary unit sampling. 
B)  Classical variables sampling. 
C)  Attribute sampling. 
D)  All of the above, depending on the circumstances.

Question 13

The term audit objectives refers to:

Accepted Answer

A)  what must be accomplished during the audit of a particular account to be persuaded about management assertions. 
B)  the work that must be performed by the auditor. 
C)  the goal of the overall audit. 
D)  All of the above. 
A)  what must be accomplished during the audit of a particular account to be persuaded about management assertions. 
B)  the work that must be performed by the auditor. 
C)  the goal of the overall audit. 
D)  All of the above.

Question 14

Detail schedules need to tie to the lead schedule.

Accepted Answer

A) True 
 B)False

Question 15

Estimated misstatements are:

Accepted Answer

A)  always recorded by the auditor. 
B)  always recorded by the client. 
C)  may be recorded by the auditor. 
D)  None of the above. 
A)  always recorded by the auditor. 
B)  always recorded by the client. 
C)  may be recorded by the auditor. 
D)  None of the above.

Question 16

You are assigned to audit accounts payable for a manufacturing client. As part of the planning, your manager sets a tolerable misstatement amount of+/- $125,000. Your review of unpaid invoices indicates an understatement error of $25,253 from a sample of $675,467. The population value of A/P is $5,241,687 at October 31st. The remaining unadjusted difference (rounded) is:

Accepted Answer

A)  $6,998. 
B)  $150,253. 
C)  $131,998. 
D)  $12,998. 
A)  $6,998. 
B)  $150,253. 
C)  $131,998. 
D)  $12,998.

Question 17

Which of the following procedures would you perform for an audit of inventory?

Accepted Answer

A)  Determine its existence through physical inspection. 
B)  Count physical inventory and reconcile it to the perpetual inventory. 
C)  Observe how inventory is valued. 
D)  All of the above. 
A)  Determine its existence through physical inspection. 
B)  Count physical inventory and reconcile it to the perpetual inventory. 
C)  Observe how inventory is valued. 
D)  All of the above.

Question 18

Inherent risk is greatest for:

Accepted Answer

A)  accounts with large balances. 
B)  accounts with large numbers of transactions. 
C)  accounts whose balance requires estimation. 
D)  All of the above. 
A)  accounts with large balances. 
B)  accounts with large numbers of transactions. 
C)  accounts whose balance requires estimation. 
D)  All of the above.

Question 19

Investments are a greater risk to auditors now as opposed to in the past because:

Accepted Answer

A)  they can be carried at market value. 
B)  entity risk has increased. 
C)  valuation methods are numerous. 
D)  All of the above. 
A)  they can be carried at market value. 
B)  entity risk has increased. 
C)  valuation methods are numerous. 
D)  All of the above.

Question 20

FASB codification 850-10:

Accepted Answer

A)  requires different treatment for related party transactions. 
B)  requires disclosure of related party transactions. 
C)  requires the same treatment for related party transactions as it does for non related party transactions. 
D)  Both b and c. 
A)  requires different treatment for related party transactions. 
B)  requires disclosure of related party transactions. 
C)  requires the same treatment for related party transactions as it does for non related party transactions. 
D)  Both b and c.

Sampling errors are caused when the auditor tests the wrong documentation.

A test for revenue is:

Going concern affects:

A sampling unit:

In deciding on sampling technique, the auditor will:

A client has a small number of large account balances, with a greater likelihood of over rather than understatement. Which of the following sampling techniques would be most appropriate?

Which is the correct order for the tests listed below?

The substantive testing is organized around the transaction cycles.

Sampling risk:

What are the initial steps for a test of details of balances when using a sample?

A client has a large number of small account balances, with an equal likelihood of over and understatement. Which of the following sampling techniques would be most appropriate?

The term audit objectives refers to:

Detail schedules need to tie to the lead schedule.

Estimated misstatements are:

Which of the following procedures would you perform for an audit of inventory?

Inherent risk is greatest for:

Investments are a greater risk to auditors now as opposed to in the past because:

FASB codification 850-10:

An Introduction to Auditing

Overview of an Integrated Audit

The Auditors Role in Society

Legal Environment Affecting Audits Pt Iii Executing an Integrated Audit

Client Acceptance and Continuance and Preliminary Engagement Procedures

Audit Planning and Risk Assessment

Internal Control, Understanding the Clients Internal Control Over Financial Reporting and Auditing Design Effectiveness

Planning and Testing Operating Effectiveness of Internal Control Over Financial Reporting

Auditing Revenue Process: Sales, Billing and Collection in the Health-Care Provider and Retailing Industries

Completing the Integrated Audit and Reporting

The Acquisition and Payments Cycle and Related Accounts: Purchases, Cash Disbursements and Other Related Activities in the Automotive Industry

Auditing Human Resources Cycle Process: Personnel and Payroll in Service Industries

Auditing Inventory Processes: Tracking and Costing Products in the Land Development and Home Building Industry

Assets, Liabilities and Equity Related to the Financing Cycle

Topics Beyond the Integrated Audit

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Exam 9: Substantive Procedures and the Financial Statement Audit

Sampling errors are caused when the auditor tests the wrong documentation.

A test for revenue is:

Going concern affects:

A sampling unit:

In deciding on sampling technique, the auditor will:

A client has a small number of large account balances, with a greater likelihood of over rather than understatement. Which of the following sampling techniques would be most appropriate?

Which is the correct order for the tests listed below?

The substantive testing is organized around the transaction cycles.

Sampling risk:

What are the initial steps for a test of details of balances when using a sample?

A client has a large number of small account balances, with an equal likelihood of over and understatement. Which of the following sampling techniques would be most appropriate?

The term audit objectives refers to:

Detail schedules need to tie to the lead schedule.

Estimated misstatements are:

Which of the following procedures would you perform for an audit of inventory?

Inherent risk is greatest for:

Investments are a greater risk to auditors now as opposed to in the past because:

FASB codification 850-10:

An Introduction to Auditing

Overview of an Integrated Audit

The Auditors Role in Society

Legal Environment Affecting Audits Pt Iii Executing an Integrated Audit

Client Acceptance and Continuance and Preliminary Engagement Procedures

Audit Planning and Risk Assessment

Internal Control, Understanding the Clients Internal Control Over Financial Reporting and Auditing Design Effectiveness

Planning and Testing Operating Effectiveness of Internal Control Over Financial Reporting

Auditing Revenue Process: Sales, Billing and Collection in the Health-Care Provider and Retailing Industries

Completing the Integrated Audit and Reporting

The Acquisition and Payments Cycle and Related Accounts: Purchases, Cash Disbursements and Other Related Activities in the Automotive Industry

Auditing Human Resources Cycle Process: Personnel and Payroll in Service Industries

Auditing Inventory Processes: Tracking and Costing Products in the Land Development and Home Building Industry

Assets, Liabilities and Equity Related to the Financing Cycle

Topics Beyond the Integrated Audit

Filters