Question 1

Working papers 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 books of account and the financial statements. 
C)  Designed to meet the circumstances of the particular engagement. 
D)  Destroyed when 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 books of account and the financial statements. 
C)  Designed to meet the circumstances of the particular engagement. 
D)  Destroyed when the audited entity ceases to be a client.

Question 2

Which of the following statements is generally correct about audit evidence?

Accepted Answer

A)  The auditor's direct personal knowledge, obtained through observation and inspection, is more persuasive than information obtained indirectly from independent outside sources. 
B)  To be appropriate, audit evidence must be sufficient. 
C)  Accounting data alone may be considered sufficient appropriate audit evidence to issue an unqualified opinion on financial statements. 
D)  Appropriateness of audit evidence refers to the amount of corroborative evidence to be obtained. 
A)  The auditor's direct personal knowledge, obtained through observation and inspection, is more persuasive than information obtained indirectly from independent outside sources. 
B)  To be appropriate, audit evidence must be sufficient. 
C)  Accounting data alone may be considered sufficient appropriate audit evidence to issue an unqualified opinion on financial statements. 
D)  Appropriateness of audit evidence refers to the amount of corroborative evidence to be obtained.

Question 3

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 4

Which of the following is true about analytical procedures?

Accepted Answer

A)  Performing analytical procedures results in the most reliable form of evidence. 
B)  Analytical procedures are tests of controls used to evaluate the quality of a client's internal control. 
C)  Analytical procedures are used for planning, but they should not be used to obtain evidence as to the reasonableness of specific account balances. 
D)  Analytical procedures are used in risk assessment, as a substantive procedure for specific accounts, and near the completion of the audit of the audited financial statements. 
A)  Performing analytical procedures results in the most reliable form of evidence. 
B)  Analytical procedures are tests of controls used to evaluate the quality of a client's internal control. 
C)  Analytical procedures are used for planning, but they should not be used to obtain evidence as to the reasonableness of specific account balances. 
D)  Analytical procedures are used in risk assessment, as a substantive procedure for specific accounts, and near the completion of the audit of the audited financial statements.

Question 5

The professional standards consider calculating depreciation expense a "routine" transaction.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not an assertion relating to classes of transactions?

Accepted Answer

A)  Accuracy. 
B)  Sufficiency. 
C)  Cutoff. 
D)  Classification. 
A)  Accuracy. 
B)  Sufficiency. 
C)  Cutoff. 
D)  Classification.

Question 7

The primary purpose of a letter of representations is to obtain additional evidence about specific accounts.

Accepted Answer

A) True 
 B)False

Question 8

Adjusting journal entries are ordinarily recorded by the client, while reclassifying journal entries need not be recorded.

Accepted Answer

A) True 
 B)False

Question 9

The date on which no information may be deleted from audit documentation is the

Accepted Answer

A)  Client's year-end. 
B)  Documentation completion date. 
C)  Last date of significant fieldwork. 
D)  All of these are incorrect in that no information may ever be deleted from audit documentation. 
A)  Client's year-end. 
B)  Documentation completion date. 
C)  Last date of significant fieldwork. 
D)  All of these are incorrect in that no information may ever be deleted from audit documentation.

Question 10

Which of the following is not considered to be an analytical procedure?

Accepted Answer

A)  Comparisons of financial statement amounts with source documents. 
B)  Comparisons of financial statement amounts with nonfinancial data. 
C)  Comparisons of financial statement amounts with budgeted amounts. 
D)  Comparisons of financial statement amounts with comparable prior year amounts. 
A)  Comparisons of financial statement amounts with source documents. 
B)  Comparisons of financial statement amounts with nonfinancial data. 
C)  Comparisons of financial statement amounts with budgeted amounts. 
D)  Comparisons of financial statement amounts with comparable prior year amounts.

Question 11

Which of the following ultimately determines the specific audit procedures necessary to provide independent auditors with a reasonable basis for the expression of an opinion?

Accepted Answer

A)  The audit time budget. 
B)  The auditors' judgment. 
C)  Generally accepted accounting quality standards. 
D)  The auditors' working papers. 
A)  The audit time budget. 
B)  The auditors' judgment. 
C)  Generally accepted accounting quality standards. 
D)  The auditors' working papers.

Question 12

The permanent file section of the working papers that is kept for each audit client most likely contains:

Accepted Answer

A)  Review notes pertaining to questions and comments regarding the audit work performed. 
B)  A schedule of time spent on the engagement by each individual auditor. 
C)  Correspondence with the client's legal counsel concerning pending litigation. 
D)  Narrative descriptions of the client's accounting procedures and controls. 
A)  Review notes pertaining to questions and comments regarding the audit work performed. 
B)  A schedule of time spent on the engagement by each individual auditor. 
C)  Correspondence with the client's legal counsel concerning pending litigation. 
D)  Narrative descriptions of the client's accounting procedures and controls.

Question 13

To be effective, analytical procedures performed near the end of the audit should be performed by

Accepted Answer

A)  The partner performing the quality review of the audit. 
B)  A beginning staff accountant who has had no other work related to the engagement. 
C)  A manager or partner who has a comprehensive knowledge of the client's business and industry. 
D)  The CPA firm's quality control manager. 
A)  The partner performing the quality review of the audit. 
B)  A beginning staff accountant who has had no other work related to the engagement. 
C)  A manager or partner who has a comprehensive knowledge of the client's business and industry. 
D)  The CPA firm's quality control manager.

Question 14

Audit documentation should be sufficient to allow which individual to understand the audit work performed, the evidence obtained, and the significant conclusions?

Accepted Answer

A)  A certified public accountant. 
B)  A partner in a CPA firm. 
C)  An experienced auditor. 
D)  The controller at the company being audited. 
A)  A certified public accountant. 
B)  A partner in a CPA firm. 
C)  An experienced auditor. 
D)  The controller at the company being audited.

Question 15

Working papers of continuing audit interest usually are filed with the administrative working papers.

Accepted Answer

A) True 
 B)False

Question 16

The use of lead schedules is designed to increase the detail of the working trial balance.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is a basic approach often used by auditors to evaluate the reasonableness of accounting estimates?

Accepted Answer

A)  Confirmation. 
B)  Observation. 
C)  Reviewing subsequent events or transactions. 
D)  Analyzing corporate organizational structure. 
A)  Confirmation. 
B)  Observation. 
C)  Reviewing subsequent events or transactions. 
D)  Analyzing corporate organizational structure.

Question 18

For each of the audit procedures listed below select the type of audit procedure, if any, that the auditor performed. A type of audit procedure may be selected once or not at all.

Accepted Answer

A. 5. Inspection of tangible a

Question 19

Failure to detect material dollar errors in the financial statements is a risk which the auditors primarily mitigate by:

Accepted Answer

A)  Performing substantive procedures. 
B)  Performing tests of controls. 
C)  Assessing control risk. 
D)  Obtaining a client representation letter. 
A)  Performing substantive procedures. 
B)  Performing tests of controls. 
C)  Assessing control risk. 
D)  Obtaining a client representation letter.

Question 20

The auditors of Smith Electronics wish to limit the audit risk of material misstatement in the test of accounts receivable to 5 percent. They believe that inherent risk is 100%, and there is a 40% risk that material misstatement could have bypassed the client's system of internal control. What is the maximum detection risk the auditors should specify in their substantive procedures of details of accounts receivable?

Accepted Answer

A)  5%. 
B)  12.5%. 
C)  42.7%. 
D)  60%. 
A)  5%. 
B)  12.5%. 
C)  42.7%. 
D)  60%.

Working papers that record the procedures used by the auditor to gather evidence should be:

Which of the following statements is generally correct about audit evidence?

Which of the following is not a typical analytical procedure?

Which of the following is true about analytical procedures?

The professional standards consider calculating depreciation expense a "routine" transaction.

Which of the following is not an assertion relating to classes of transactions?

The primary purpose of a letter of representations is to obtain additional evidence about specific accounts.

Adjusting journal entries are ordinarily recorded by the client, while reclassifying journal entries need not be recorded.

The date on which no information may be deleted from audit documentation is the

Which of the following is not considered to be an analytical procedure?

Which of the following ultimately determines the specific audit procedures necessary to provide independent auditors with a reasonable basis for the expression of an opinion?

The permanent file section of the working papers that is kept for each audit client most likely contains:

To be effective, analytical procedures performed near the end of the audit should be performed by

Audit documentation should be sufficient to allow which individual to understand the audit work performed, the evidence obtained, and the significant conclusions?

Working papers of continuing audit interest usually are filed with the administrative working papers.

The use of lead schedules is designed to increase the detail of the working trial balance.

Which of the following is a basic approach often used by auditors to evaluate the reasonableness of accounting estimates?

For each of the audit procedures listed below select the type of audit procedure, if any, that the auditor performed. A type of audit procedure may be selected once or not at all.

Failure to detect material dollar errors in the financial statements is a risk which the auditors primarily mitigate by:

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of Cpas

Planning the Audit; Linking Audit Procedures to Risk

Internal Control

Consideration of Internal Control in an Information Technology Environment

Audit Sampling

Cash and Financial Investments

Accounts Receivable, Notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property, Plant, and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Report

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Filters

Exam 5: Audit Evidence and Documentation

Working papers that record the procedures used by the auditor to gather evidence should be:

Which of the following statements is generally correct about audit evidence?

Which of the following is not a typical analytical procedure?

Which of the following is true about analytical procedures?

The professional standards consider calculating depreciation expense a "routine" transaction.

Which of the following is not an assertion relating to classes of transactions?

The primary purpose of a letter of representations is to obtain additional evidence about specific accounts.

Adjusting journal entries are ordinarily recorded by the client, while reclassifying journal entries need not be recorded.

The date on which no information may be deleted from audit documentation is the

Which of the following is not considered to be an analytical procedure?

Which of the following ultimately determines the specific audit procedures necessary to provide independent auditors with a reasonable basis for the expression of an opinion?

The permanent file section of the working papers that is kept for each audit client most likely contains:

To be effective, analytical procedures performed near the end of the audit should be performed by

Audit documentation should be sufficient to allow which individual to understand the audit work performed, the evidence obtained, and the significant conclusions?

Working papers of continuing audit interest usually are filed with the administrative working papers.

The use of lead schedules is designed to increase the detail of the working trial balance.

Which of the following is a basic approach often used by auditors to evaluate the reasonableness of accounting estimates?

For each of the audit procedures listed below select the type of audit procedure, if any, that the auditor performed. A type of audit procedure may be selected once or not at all.

Failure to detect material dollar errors in the financial statements is a risk which the auditors primarily mitigate by:

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of Cpas

Planning the Audit; Linking Audit Procedures to Risk

Internal Control

Consideration of Internal Control in an Information Technology Environment

Audit Sampling

Cash and Financial Investments

Accounts Receivable, Notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property, Plant, and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Report

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Filters