Question 1

Control risk is the risk that an auditor expresses an inappropriate audit opinion when a financial report is materially misstated.

Accepted Answer

A) True 
 B)False

Question 2

The accuracy of cost of sales and expenses is verified by:

Accepted Answer

A)  vouching recorded amounts to supporting documentation. 
B)  sending confirmation requests to the client's creditors. 
C)  tracing supporting documentation to the accounting records. 
D)  All of the above 
A)  vouching recorded amounts to supporting documentation. 
B)  sending confirmation requests to the client's creditors. 
C)  tracing supporting documentation to the accounting records. 
D)  All of the above

Question 3

Occurrence is not typically a significant assertion as the primary objective in testing for occurrence is to ensure that costs and expenses are not overstated.

Accepted Answer

A) True 
 B)False

Question 4

Sales revenue is typically not significant due to its size.

Accepted Answer

A) True 
 B)False

Question 5

An example of a substantive test always performed for costs and expenses is obtaining detailed analysis of selected accounts and tracing the details to the source data.

Accepted Answer

A) True 
 B)False

Question 6

Explain the nature of and motivations for various approaches for companies to manipulate their profits through the use of expenses.

Accepted Answer

There are various approaches that compan

Question 7

Substantive procedures are designed to detect material misstatements at the assertion level.

Accepted Answer

A) True 
 B)False

Question 8

A simple way of testing which period a sale should be recorded in is to:

Accepted Answer

A)  trace the sale through to the accounting records. 
B)  observe the account receivable clerk record the sale. 
C)  vouch the sale to the delivery documentation for the sale of goods. 
D)  None of the above 
A)  trace the sale through to the accounting records. 
B)  observe the account receivable clerk record the sale. 
C)  vouch the sale to the delivery documentation for the sale of goods. 
D)  None of the above

Question 9

Analytical procedures involve:

Accepted Answer

A)  the investigation of identified fluctuations and relationships that are inconsistent with other information. 
B)  evaluations of financial information made by a study of plausible relationships among financial and non-financial data. 
C)  Both a and b 
D)  None of the above 
A)  the investigation of identified fluctuations and relationships that are inconsistent with other information. 
B)  evaluations of financial information made by a study of plausible relationships among financial and non-financial data. 
C)  Both a and b 
D)  None of the above

Question 10

Identify situations where the understatement of sales can be a risk for certain clients and how auditors should react to such risk.

Accepted Answer

The understatement of sales can be a ris

Question 11

Substantive procedures are also known as:

Accepted Answer

A)  tests of details. 
B)  compliance tests. 
C)  tests of subsequent events. 
D)  tests of controls. 
A)  tests of details. 
B)  compliance tests. 
C)  tests of subsequent events. 
D)  tests of controls.

Question 12

When substantive tests performed identify errors or exceptions, the auditor's first response is to:

Accepted Answer

A)  qualify the audit report. 
B)  report the client to ASIC. 
C)  understand why the exception or error has arisen. 
D)  None of the above 
A)  qualify the audit report. 
B)  report the client to ASIC. 
C)  understand why the exception or error has arisen. 
D)  None of the above

Question 13

Testing the postings of the sales ledger to the general ledger and the trade receivables sub-ledger relates to which assertion?

Accepted Answer

A)  Occurrence 
B)  Completeness 
C)  Accuracy 
D)  None of the above 
A)  Occurrence 
B)  Completeness 
C)  Accuracy 
D)  None of the above

Question 14

The risk that an auditor expresses an inappropriate audit opinion when a financial report is materially misstated is known as:

Accepted Answer

A)  engagement risk. 
B)  audit risk. 
C)  client business risk. 
D)  detection risk. 
A)  engagement risk. 
B)  audit risk. 
C)  client business risk. 
D)  detection risk.

Question 15

Testing the pricing and mathematical accuracy of sales invoices is an example of a substantive test of transactions in the sales process.

Accepted Answer

A) True 
 B)False

Question 16

Comparing supplier/creditor invoices to the initial record of entry relates to which assertion?

Accepted Answer

A)  Completeness 
B)  Accuracy 
C)  Cut-off 
D)  Existence 
A)  Completeness 
B)  Accuracy 
C)  Cut-off 
D)  Existence

Question 17

Purchases testing is performed most efficiently by the use of controls testing.

Accepted Answer

A) True 
 B)False

Question 18

The key audit assertions when auditing cost of sales and expenses include:

Accepted Answer

A)  cut-off. 
B)  completeness. 
C)  accuracy. 
D)  All of the above 
A)  cut-off. 
B)  completeness. 
C)  accuracy. 
D)  All of the above

Question 19

What are the three audit assertions that are important to ensuring that the auditor has gained sufficient and appropriate audit evidence for sales revenue?

Accepted Answer

The three audit assertions that are impo

Question 20

Explain the key objective of substantive testing and the responses from auditors when errors or exceptions are identified during testing.

Accepted Answer

When performing substantive testing, the

Control risk is the risk that an auditor expresses an inappropriate audit opinion when a financial report is materially misstated.

The accuracy of cost of sales and expenses is verified by:

Occurrence is not typically a significant assertion as the primary objective in testing for occurrence is to ensure that costs and expenses are not overstated.

Sales revenue is typically not significant due to its size.

An example of a substantive test always performed for costs and expenses is obtaining detailed analysis of selected accounts and tracing the details to the source data.

Explain the nature of and motivations for various approaches for companies to manipulate their profits through the use of expenses.

Substantive procedures are designed to detect material misstatements at the assertion level.

A simple way of testing which period a sale should be recorded in is to:

Analytical procedures involve:

Identify situations where the understatement of sales can be a risk for certain clients and how auditors should react to such risk.

Substantive procedures are also known as:

When substantive tests performed identify errors or exceptions, the auditor's first response is to:

Testing the postings of the sales ledger to the general ledger and the trade receivables sub-ledger relates to which assertion?

The risk that an auditor expresses an inappropriate audit opinion when a financial report is materially misstated is known as:

Testing the pricing and mathematical accuracy of sales invoices is an example of a substantive test of transactions in the sales process.

Comparing supplier/creditor invoices to the initial record of entry relates to which assertion?

Purchases testing is performed most efficiently by the use of controls testing.

The key audit assertions when auditing cost of sales and expenses include:

What are the three audit assertions that are important to ensuring that the auditor has gained sufficient and appropriate audit evidence for sales revenue?

Explain the key objective of substantive testing and the responses from auditors when errors or exceptions are identified during testing.

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Risk Assessment 1

Risk Assessment II

Audit Evidence

Gaining an Understanding of the Clients System of Internal Controls

Sampling and Overview of the Risk Response Phase of the Audit

Execution of the Audit Testing of Controls

Execution of the Audit Performing Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Completing and Reporting on the Audit

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Exam 11: Substantive Testing and Income Statement Accounts

Control risk is the risk that an auditor expresses an inappropriate audit opinion when a financial report is materially misstated.

The accuracy of cost of sales and expenses is verified by:

Occurrence is not typically a significant assertion as the primary objective in testing for occurrence is to ensure that costs and expenses are not overstated.

Sales revenue is typically not significant due to its size.

An example of a substantive test always performed for costs and expenses is obtaining detailed analysis of selected accounts and tracing the details to the source data.

Explain the nature of and motivations for various approaches for companies to manipulate their profits through the use of expenses.

Substantive procedures are designed to detect material misstatements at the assertion level.

A simple way of testing which period a sale should be recorded in is to:

Analytical procedures involve:

Identify situations where the understatement of sales can be a risk for certain clients and how auditors should react to such risk.

Substantive procedures are also known as:

When substantive tests performed identify errors or exceptions, the auditor's first response is to:

Testing the postings of the sales ledger to the general ledger and the trade receivables sub-ledger relates to which assertion?

The risk that an auditor expresses an inappropriate audit opinion when a financial report is materially misstated is known as:

Testing the pricing and mathematical accuracy of sales invoices is an example of a substantive test of transactions in the sales process.

Comparing supplier/creditor invoices to the initial record of entry relates to which assertion?

Purchases testing is performed most efficiently by the use of controls testing.

The key audit assertions when auditing cost of sales and expenses include:

What are the three audit assertions that are important to ensuring that the auditor has gained sufficient and appropriate audit evidence for sales revenue?

Explain the key objective of substantive testing and the responses from auditors when errors or exceptions are identified during testing.

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Risk Assessment 1

Risk Assessment II

Audit Evidence

Gaining an Understanding of the Clients System of Internal Controls

Sampling and Overview of the Risk Response Phase of the Audit

Execution of the Audit Testing of Controls

Execution of the Audit Performing Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Completing and Reporting on the Audit

Filters