Question 1

Existence of trade receivables is usually verified by:

Accepted Answer

A)  examining copies of sales invoice sent to the client's customers. 
B)  sending confirmations to the client's customers. 
C)  calculating changes in the receivables balance from one year to the next. 
D)  evaluating the adequacy of the provision for doubtful debts. 
A)  examining copies of sales invoice sent to the client's customers. 
B)  sending confirmations to the client's customers. 
C)  calculating changes in the receivables balance from one year to the next. 
D)  evaluating the adequacy of the provision for doubtful debts.

Question 2

Ensuring that all property, plant and equipment owned by the entity at year-end are included on the balance sheet relates to which assertion?

Accepted Answer

A)  Rights and obligations 
B)  Completeness 
C)  Classification 
D)  Existence 
A)  Rights and obligations 
B)  Completeness 
C)  Classification 
D)  Existence

Question 3

When the assessment of inherent and control risk is low:

Accepted Answer

A)  the level of substantive procedures is limited. 
B)  there are lots of controls that have been tested and found to be effective. 
C)  Both a and b 
D)  None of the above 
A)  the level of substantive procedures is limited. 
B)  there are lots of controls that have been tested and found to be effective. 
C)  Both a and b 
D)  None of the above

Question 4

Physically sighting fixed assets enables the auditor to test the rights and obligations assertion.

Accepted Answer

A) True 
 B)False

Question 5

When performing substantive procedures, the key objective is to determine whether:

Accepted Answer

A)  there are immaterial misstatements within the balance being investigated. 
B)  the client's internal controls are operating effectively. 
C)  there are material misstatements within the balance being investigated. 
D)  None of the above 
A)  there are immaterial misstatements within the balance being investigated. 
B)  the client's internal controls are operating effectively. 
C)  there are material misstatements within the balance being investigated. 
D)  None of the above

Question 6

Prepayments are audited by vouching the balance to the supporting invoices.

Accepted Answer

A) True 
 B)False

Question 7

The valuation and allocation assertion relates to which of the following audit objectives?

Accepted Answer

A)  All accounts payable on the balance sheet are real debts payable for goods received or services performed 
B)  All accounts payable owed by the entity at year-end are included on the balance sheet 
C)  Accounts payable are stated at the amounts owed at year-end 
D)  Accounts payable are properly classified, described and disclosed in the financial report 
A)  All accounts payable on the balance sheet are real debts payable for goods received or services performed 
B)  All accounts payable owed by the entity at year-end are included on the balance sheet 
C)  Accounts payable are stated at the amounts owed at year-end 
D)  Accounts payable are properly classified, described and disclosed in the financial report

Question 8

The two key assertions for inventory are completeness and rights and obligations.

Accepted Answer

A) True 
 B)False

Question 9

The typical procedures performed to search for unrecorded payables are referred to as subsequent payments testing and cut-off testing.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following substantive tests of cash account balances are always performed?

Accepted Answer

A)  Test cut-off of cash receipts, cash payments and transfers at year-end 
B)  Confirm cash held by others 
C)  Examine the client's bank reconciliations 
D)  All of the above 
A)  Test cut-off of cash receipts, cash payments and transfers at year-end 
B)  Confirm cash held by others 
C)  Examine the client's bank reconciliations 
D)  All of the above

Question 11

Explain examples of substantive tests of inventory that are always performed.

Accepted Answer

Examples of substantive tests of invento

Question 12

Observing the client's stocktake enables the auditor to establish that:

Accepted Answer

A)  count tags, sheets or cards are properly controlled. 
B)  the client's personnel are complying with the instructions for stocktakes. 
C)  items belonging to the client are accurately counted and recorded. 
D)  All of the above 
A)  count tags, sheets or cards are properly controlled. 
B)  the client's personnel are complying with the instructions for stocktakes. 
C)  items belonging to the client are accurately counted and recorded. 
D)  All of the above

Question 13

Which of the following is not an example of a substantive test of cash payments transactions?

Accepted Answer

A)  Test the account classifications of cash payments 
B)  Account for the numerical sequence of cheques issued during a specified period 
C)  Test the mathematical accuracy of the cash receipts ledger 
D)  Determine whether the signatures on paid cheques are authorised 
A)  Test the account classifications of cash payments 
B)  Account for the numerical sequence of cheques issued during a specified period 
C)  Test the mathematical accuracy of the cash receipts ledger 
D)  Determine whether the signatures on paid cheques are authorised

Question 14

The collapse of Worldcom in 2002 caused commentators to question the company's financial reporting practices. Explain the major problems with the company's financial reporting that contributed to the company's collapse.

Accepted Answer

The collapse of Worldcom in 2002 was pri

Question 15

Identify and explain the key audit assertions relating to cash.

Accepted Answer

The three audit assertions that are part

Question 16

What are the principal objectives in auditing trade receivables?

Accepted Answer

The principal objectives in auditing tra

Question 17

The rights and obligations assertion relates to which of the following audit objectives?

Accepted Answer

A)  Inventory is properly classified, described and disclosed in the financial report 
B)  The entity owns, or has the legal right to, all of the inventory on the balance sheet 
C)  All inventory on the inventory listing is included in the financial report 
D)  All inventory owned by the entity at year-end is included on the balance sheet 
A)  Inventory is properly classified, described and disclosed in the financial report 
B)  The entity owns, or has the legal right to, all of the inventory on the balance sheet 
C)  All inventory on the inventory listing is included in the financial report 
D)  All inventory owned by the entity at year-end is included on the balance sheet

Question 18

Explain how substantive testing is used for prepayments, investments and intercompany balances.

Accepted Answer

Each of these accounts is typically audi

Question 19

Ensuring that accounts payable are stated at the amounts owed at year-end relates to the rights and obligations assertion.

Accepted Answer

A) True 
 B)False

Question 20

Accounting for the numerical sequence of cheques issued during a specific period is a substantive test relating to the purchases process.

Accepted Answer

A) True 
 B)False

Existence of trade receivables is usually verified by:

Ensuring that all property, plant and equipment owned by the entity at year-end are included on the balance sheet relates to which assertion?

When the assessment of inherent and control risk is low:

Physically sighting fixed assets enables the auditor to test the rights and obligations assertion.

When performing substantive procedures, the key objective is to determine whether:

Prepayments are audited by vouching the balance to the supporting invoices.

The valuation and allocation assertion relates to which of the following audit objectives?

The two key assertions for inventory are completeness and rights and obligations.

The typical procedures performed to search for unrecorded payables are referred to as subsequent payments testing and cut-off testing.

Which of the following substantive tests of cash account balances are always performed?

Explain examples of substantive tests of inventory that are always performed.

Observing the client's stocktake enables the auditor to establish that:

Which of the following is not an example of a substantive test of cash payments transactions?

The collapse of Worldcom in 2002 caused commentators to question the company's financial reporting practices. Explain the major problems with the company's financial reporting that contributed to the company's collapse.

Identify and explain the key audit assertions relating to cash.

What are the principal objectives in auditing trade receivables?

The rights and obligations assertion relates to which of the following audit objectives?

Explain how substantive testing is used for prepayments, investments and intercompany balances.

Ensuring that accounts payable are stated at the amounts owed at year-end relates to the rights and obligations assertion.

Accounting for the numerical sequence of cheques issued during a specific period is a substantive test relating to the purchases process.

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 Income Statement Accounts

Completing and Reporting on the Audit

Filters

Exam 10: Substantive Testing and Balance Sheet Accounts

Existence of trade receivables is usually verified by:

Ensuring that all property, plant and equipment owned by the entity at year-end are included on the balance sheet relates to which assertion?

When the assessment of inherent and control risk is low:

Physically sighting fixed assets enables the auditor to test the rights and obligations assertion.

When performing substantive procedures, the key objective is to determine whether:

Prepayments are audited by vouching the balance to the supporting invoices.

The valuation and allocation assertion relates to which of the following audit objectives?

The two key assertions for inventory are completeness and rights and obligations.

The typical procedures performed to search for unrecorded payables are referred to as subsequent payments testing and cut-off testing.

Which of the following substantive tests of cash account balances are always performed?

Explain examples of substantive tests of inventory that are always performed.

Observing the client's stocktake enables the auditor to establish that:

Which of the following is not an example of a substantive test of cash payments transactions?

The collapse of Worldcom in 2002 caused commentators to question the company's financial reporting practices. Explain the major problems with the company's financial reporting that contributed to the company's collapse.

Identify and explain the key audit assertions relating to cash.

What are the principal objectives in auditing trade receivables?

The rights and obligations assertion relates to which of the following audit objectives?

Explain how substantive testing is used for prepayments, investments and intercompany balances.

Ensuring that accounts payable are stated at the amounts owed at year-end relates to the rights and obligations assertion.

Accounting for the numerical sequence of cheques issued during a specific period is a substantive test relating to the purchases process.

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 Income Statement Accounts

Completing and Reporting on the Audit

Filters