Question 1

The client signs the enquiry letter about claims and possible claims that is sent to the company's law firm for confirmation.

Accepted Answer

A) True 
 B)False  True

Question 2

Lawyers' letters should be written ________.

Accepted Answer

A)  at the interim audit 
B)  anytime before the audit report date 
C)  anytime before the balance sheet date 
D)  at the final stages of the audit work 
A)  at the interim audit 
B)  anytime before the audit report date 
C)  anytime before the balance sheet date 
D)  at the final stages of the audit work D

Question 3

Settlement of litigation when the event giving rise to the claim took place after the balance sheet date requires financial statement disclosure only.

Accepted Answer

A) True 
 B)False  True

Question 4

What are the two types of subsequent events?

Accepted Answer

The two types are (1) subseque

Question 5

A major means by which an auditor obtains evidence about material contingencies is ________.

Accepted Answer

A)  examining documents in the client's possession concerning contingencies 
B)  enquiring and discussing them with management 
C)  obtaining a response from the client's lawyer to the client's letter of enquiry 
D)  reading minutes of shareholders' meeting 
A)  examining documents in the client's possession concerning contingencies 
B)  enquiring and discussing them with management 
C)  obtaining a response from the client's lawyer to the client's letter of enquiry 
D)  reading minutes of shareholders' meeting

Question 6

Why do auditors ask about related party transactions and where do they typically do this?

Accepted Answer

Auditors ask about involvement with rela

Question 7

Having identified related party transactions, the auditor should _______.

Accepted Answer

A)  confirm the terms and amounts of the transactions with the related parties 
B)  inform the audit committee in writing 
C)  consult with a fraud specialist to consider extended procedures 
D)  consider including an emphasis of matter paragraph in the audit opinion 
A)  confirm the terms and amounts of the transactions with the related parties 
B)  inform the audit committee in writing 
C)  consult with a fraud specialist to consider extended procedures 
D)  consider including an emphasis of matter paragraph in the audit opinion

Question 8

Regarding subsequent events, when would pro-forma financial statement be the best disclosure?

Accepted Answer

This type of disclosure is best when the

Question 9

A second-partner review of the working papers and financial statements is performed to ensure that the ________.

Accepted Answer

A)  to-do lists are reviewed and cleared 
B)  audit program procedures are signed off as evidence of completion 
C)  tick-mark notations are cleared 
D)  audit work meets the quality standards of the firm 
A)  to-do lists are reviewed and cleared 
B)  audit program procedures are signed off as evidence of completion 
C)  tick-mark notations are cleared 
D)  audit work meets the quality standards of the firm

Question 10

Auditors draft the letter of representation that will be prepared on company letterhead and signed by the officers of the company.

Accepted Answer

A) True 
 B)False

Question 11

A type of subsequent event that provides new information regarding financial conditions that existed at the date of the balance sheet requires only footnote disclosure.

Accepted Answer

A) True 
 B)False

Question 12

What are the auditors' responsibilities regarding subsequent events?

Accepted Answer

Auditors have an active, procedural resp

Question 13

All revenue accounts designated "miscellaneous" or "other" are generally immaterial in amount and, therefore, not audited.

Accepted Answer

A) True 
 B)False

Question 14

An analysis of the comparative balances of minor expense accounts is often sufficient to decide whether the amounts are fairly presented.

Accepted Answer

A) True 
 B)False

Question 15

The impact of a subsequent event on the audit report depends on whether it is detected before or after the ________.

Accepted Answer

A)  balance sheet date 
B)  audit report date 
C)  year-end date 
D)  dual date 
A)  balance sheet date 
B)  audit report date 
C)  year-end date 
D)  dual date

Question 16

The primary reason an auditor asks that enquiry letters be sent to a client's lawyers is to provide the auditor with ________.

Accepted Answer

A)  the probable outcome of asserted claims and pending or threatened litigation 
B)  corroboration of the information furnished by management about litigation, claims, and assessments 
C)  the lawyer's opinion of the client's historical experiences in recent similar litigation 
D)  a description and evaluation of litigation, claims, and assessments that existed at the balance sheet date 
A)  the probable outcome of asserted claims and pending or threatened litigation 
B)  corroboration of the information furnished by management about litigation, claims, and assessments 
C)  the lawyer's opinion of the client's historical experiences in recent similar litigation 
D)  a description and evaluation of litigation, claims, and assessments that existed at the balance sheet date

Question 17

A loss on uncollectible trade accounts receivable resulting from the bankruptcy of a major customer requires financial statement disclosure only.

Accepted Answer

A) True 
 B)False

Question 18

An auditor is most likely to suspect the existence of undisclosed related parties by noticing _______.

Accepted Answer

A)  large-sales transactions 
B)  abnormally long collection terms for a receivable 
C)  a large number of sales to numbered corporations 
D)  a significant increase in sales over the prior year 
A)  large-sales transactions 
B)  abnormally long collection terms for a receivable 
C)  a large number of sales to numbered corporations 
D)  a significant increase in sales over the prior year

Question 19

An auditor analyzes repairs and maintenance accounts primarily to obtain evidence in support of the audit assertion that all expenditures for ________.

Accepted Answer

A)  repairs and maintenance have been recorded in the proper period 
B)  property and equipment have been recorded in the proper period 
C)  repairs and maintenance have not been charged to capital accounts 
D)  property and equipment have not been charged to expense 
A)  repairs and maintenance have been recorded in the proper period 
B)  property and equipment have been recorded in the proper period 
C)  repairs and maintenance have not been charged to capital accounts 
D)  property and equipment have not been charged to expense

Question 20

In the audit of revenue and expense accounts, a number of accounts will have been audited in connection with related balance sheet accounts. For each of the revenue and expense accounts listed in column A, indicate the related balance sheet account(s). If no account is specifically related, indicate if the account should be analyzed in detail or simply compared to the balance in the previous year.

Accepted Answer

The answer of In the audit of revenue and expense...

The client signs the enquiry letter about claims and possible claims that is sent to the company's law firm for confirmation.

Lawyers' letters should be written ________.

Settlement of litigation when the event giving rise to the claim took place after the balance sheet date requires financial statement disclosure only.

What are the two types of subsequent events?

A major means by which an auditor obtains evidence about material contingencies is ________.

Why do auditors ask about related party transactions and where do they typically do this?

Having identified related party transactions, the auditor should _______.

Regarding subsequent events, when would pro-forma financial statement be the best disclosure?

A second-partner review of the working papers and financial statements is performed to ensure that the ________.

Auditors draft the letter of representation that will be prepared on company letterhead and signed by the officers of the company.

A type of subsequent event that provides new information regarding financial conditions that existed at the date of the balance sheet requires only footnote disclosure.

What are the auditors' responsibilities regarding subsequent events?

All revenue accounts designated "miscellaneous" or "other" are generally immaterial in amount and, therefore, not audited.

An analysis of the comparative balances of minor expense accounts is often sufficient to decide whether the amounts are fairly presented.

The impact of a subsequent event on the audit report depends on whether it is detected before or after the ________.

The primary reason an auditor asks that enquiry letters be sent to a client's lawyers is to provide the auditor with ________.

A loss on uncollectible trade accounts receivable resulting from the bankruptcy of a major customer requires financial statement disclosure only.

An auditor is most likely to suspect the existence of undisclosed related parties by noticing _______.

An auditor analyzes repairs and maintenance accounts primarily to obtain evidence in support of the audit assertion that all expenditures for ________.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

The Purchases, Payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Applying Professional Judgment to Form the Audit Opinion and Issue Theaudit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

Part I the Audit of Accounting Estimates: Basic Material Relating to Accountingestimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud

Filters

Exam 15: Completing the Audit Work

The client signs the enquiry letter about claims and possible claims that is sent to the company's law firm for confirmation.

Lawyers' letters should be written ________.

Settlement of litigation when the event giving rise to the claim took place after the balance sheet date requires financial statement disclosure only.

What are the two types of subsequent events?

A major means by which an auditor obtains evidence about material contingencies is ________.

Why do auditors ask about related party transactions and where do they typically do this?

Having identified related party transactions, the auditor should _______.

Regarding subsequent events, when would pro-forma financial statement be the best disclosure?

A second-partner review of the working papers and financial statements is performed to ensure that the ________.

Auditors draft the letter of representation that will be prepared on company letterhead and signed by the officers of the company.

A type of subsequent event that provides new information regarding financial conditions that existed at the date of the balance sheet requires only footnote disclosure.

What are the auditors' responsibilities regarding subsequent events?

All revenue accounts designated "miscellaneous" or "other" are generally immaterial in amount and, therefore, not audited.

An analysis of the comparative balances of minor expense accounts is often sufficient to decide whether the amounts are fairly presented.

The impact of a subsequent event on the audit report depends on whether it is detected before or after the ________.

The primary reason an auditor asks that enquiry letters be sent to a client's lawyers is to provide the auditor with ________.

A loss on uncollectible trade accounts receivable resulting from the bankruptcy of a major customer requires financial statement disclosure only.

An auditor is most likely to suspect the existence of undisclosed related parties by noticing _______.

An auditor analyzes repairs and maintenance accounts primarily to obtain evidence in support of the audit assertion that all expenditures for ________.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Control Assessment and Testing

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

The Purchases, Payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Applying Professional Judgment to Form the Audit Opinion and Issue Theaudit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

Part I the Audit of Accounting Estimates: Basic Material Relating to Accountingestimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud

Filters