Question 1

The auditor should make inquiries if the deposit in transit on the year-end bank reconciliation is not shown on the bank cutoff statement.

Accepted Answer

A) True 
 B)False

Question 2

Initial procedures for substantive tests of investments would not ordinarily include:

Accepted Answer

A)  understanding investment policies regarding the proportion of investments in government securities, corporate bonds, and equity securities. 
B)  understanding an entity's policy for investing excess cash, its financing activities, and its ability to generate free cash flow. 
C)  checking the mathematical accuracy of client-prepared schedules of investments. 
D)  determining that subsidiary investment ledgers agree with related general ledger control account balances. 
E)  understanding economic drivers that allow an entity to engage in investing activities. 
A)  understanding investment policies regarding the proportion of investments in government securities, corporate bonds, and equity securities. 
B)  understanding an entity's policy for investing excess cash, its financing activities, and its ability to generate free cash flow. 
C)  checking the mathematical accuracy of client-prepared schedules of investments. 
D)  determining that subsidiary investment ledgers agree with related general ledger control account balances. 
E)  understanding economic drivers that allow an entity to engage in investing activities.

Question 3

Consider the following financial statement assertions:
-Vouch entries in investment accounts.
_____

Accepted Answer

A) EO ? Existence or Occurrence 
B) VA ? Valuation or Allocation 
C) C ? Completeness 
D) RO ? Rights and Obligations 
E) PD ? Presentation and Disclosure
F)EO, C and VA
G)EO, VA, C, and PD
H)EO, VA and RO
I)EO, C and RO
J)EO, VA, C, RO, and PD
K)EO, VA, C and RO 
A) EO ? Existence or Occurrence 
B) VA ? Valuation or Allocation 
C) C ? Completeness 
D) RO ? Rights and Obligations 
E) PD ? Presentation and Disclosure
F)EO, C and VA
G)EO, VA, C, and PD
H)EO, VA and RO
I)EO, C and RO
J)EO, VA, C, RO, and PD
K)EO, VA, C and RO

Question 4

Calculation of the dividend payout ratio is an important analytical procedure for testing assertions related to both short-term and long-term investments.

Accepted Answer

A) True 
 B)False

Question 5

The specific audit objective for the audit of investments, investment revenues, and realized and unrealized gains and losses, are reported at proper amounts, relates to the:

Accepted Answer

A)  existence or occurrence assertion. 
B)  completeness assertion. 
C)  rights and obligations assertion. 
D)  valuation or allocation assertion. 
E)  presentation or disclosure assertion. 
A)  existence or occurrence assertion. 
B)  completeness assertion. 
C)  rights and obligations assertion. 
D)  valuation or allocation assertion. 
E)  presentation or disclosure assertion.

Question 6

The confirmation process for securities held in safekeeping by others is substantially different from the process of confirming accounts receivable.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not true concerning the confirmation of securities held by outsiders for safekeeping?

Accepted Answer

A)  Confirmations should be requested as of the date other securities are counted. 
B)  The auditor must control the mailings. 
C)  The auditor should receive responses directly from the custodian. 
D)  The data confirmed are the same as the data that should be noted when the auditor is able to inspect the securities. 
E)  Either positive or negative confirmations can be used. 
A)  Confirmations should be requested as of the date other securities are counted. 
B)  The auditor must control the mailings. 
C)  The auditor should receive responses directly from the custodian. 
D)  The data confirmed are the same as the data that should be noted when the auditor is able to inspect the securities. 
E)  Either positive or negative confirmations can be used.

Question 8

Substantive tests of cash balances result in evidential matter that has a high degree of reliability.

Accepted Answer

A) True 
 B)False

Question 9

What are some important value-added opportunities that CPAs may provide using the knowledge obtained during the audit of marketable securities and cash balances?

Accepted Answer

Following are some important value-added

Question 10

The bank transfer schedule should list all transfer checks issued at or near year-end.

Accepted Answer

A) True 
 B)False

Question 11

Substantive tests of investment balances provide evidential matter that has a high degree of reliability.

Accepted Answer

A) True 
 B)False

Question 12

The transaction cycle that does not interface directly with cash is the:

Accepted Answer

A)  revenue cycle. 
B)  expenditure cycle. 
C)  production cycle. 
D)  financing cycle. 
E)  investing cycle. 
A)  revenue cycle. 
B)  expenditure cycle. 
C)  production cycle. 
D)  financing cycle. 
E)  investing cycle.

Question 13

Confirmation of cash on deposit will provide evidence for the existence or occurrence assertion since there is written acknowledgment that the balance exists.

Accepted Answer

A) True 
 B)False

Question 14

The specific audit objective for the audit of investments, recorded investment asset and equity balances represent investments that exist at the balance sheet date, relates to the:

Accepted Answer

A)  existence or occurrence assertion. 
B)  completeness assertion. 
C)  rights and obligations assertion. 
D)  valuation or allocation assertion. 
E)  presentation or disclosure assertion. 
A)  existence or occurrence assertion. 
B)  completeness assertion. 
C)  rights and obligations assertion. 
D)  valuation or allocation assertion. 
E)  presentation or disclosure assertion.

Question 15

The auditor should coordinate the inspection of all material negotiable instruments on hand.

Accepted Answer

A) True 
 B)False

Question 16

The specific audit objective for the audit of investments, all recorded investments are owned by the reporting entity, relates to the:

Accepted Answer

A)  existence or occurrence assertion. 
B)  completeness assertion. 
C)  rights and obligations assertion. 
D)  valuation or allocation assertion. 
E)  presentation or disclosure assertion. 
A)  existence or occurrence assertion. 
B)  completeness assertion. 
C)  rights and obligations assertion. 
D)  valuation or allocation assertion. 
E)  presentation or disclosure assertion.

Question 17

Which of the following bank transfers appears to be an example of kiting aimed at concealing a cash shortage? $\quad $$\text { Date of } $$\quad $$\quad $$\quad\quad $$ \text {Date of}$
$\quad $$\text { Disbursement } $$\quad $$\quad $$\quad $$ \text {Receipt }$
$\begin{array}{lll}
\text { Books } & \text { Books }& \text { Books }& \text { Books }
\end{array}$
A)$\begin{array}{llll}
12 / 28 &1 / 03 &\quad12 / 28 & 12 / 28
\end{array}$
B)$\begin{array}{llll}
1 / 03 & 1 / 05 & \quad\quad1 / 03 & 1 / 03
\end{array}$
C)$\begin{array}{llll}12 / 30 & 1 / 03 &\quad 12 / 30 & 12 / 30\end{array}$
D)$\begin{array}{llll}
1 / 02 & 1 / 04 &\quad 12 / 30 & 12 / 30
\end{array}$
E)$\begin{array}{llll}
1 / 03 & 1 / 05 &\quad 1 / 03 & 12 / 31
\end{array}$

Accepted Answer

The answer of Which of the following bank transfers appears...

Question 18

The specific audit objective, year-end transfers of cash between banks are recorded in the proper period, is derived from the:

Accepted Answer

A)  existence or occurrence assertion. 
B)  completeness assertion. 
C)  rights and obligations assertion. 
D)  valuation or allocation assertion. 
E)  presentation or disclosure assertion. 
A)  existence or occurrence assertion. 
B)  completeness assertion. 
C)  rights and obligations assertion. 
D)  valuation or allocation assertion. 
E)  presentation or disclosure assertion.

Question 19

Inspecting and counting securities on hand relates to:

Accepted Answer

A)  initial procedures. 
B)  analytical procedures. 
C)  tests of details of transactions. 
D)  tests of details of balances. 
E)  presentation and disclosure. 
A)  initial procedures. 
B)  analytical procedures. 
C)  tests of details of transactions. 
D)  tests of details of balances. 
E)  presentation and disclosure.

Question 20

The inspecting and counting of securities on hand is ordinarily performed simultaneously with the auditor's:

Accepted Answer

A)  observing of the inventory counting. 
B)  inspecting of major additions to plant assets. 
C)  confirming of securities held by others. 
D)  counting of cash. 
E)  recalculating of investment revenue earned. 
A)  observing of the inventory counting. 
B)  inspecting of major additions to plant assets. 
C)  confirming of securities held by others. 
D)  counting of cash. 
E)  recalculating of investment revenue earned.

The auditor should make inquiries if the deposit in transit on the year-end bank reconciliation is not shown on the bank cutoff statement.

Initial procedures for substantive tests of investments would not ordinarily include:

Consider the following financial statement assertions: -Vouch entries in investment accounts. _____

Calculation of the dividend payout ratio is an important analytical procedure for testing assertions related to both short-term and long-term investments.

The specific audit objective for the audit of investments, investment revenues, and realized and unrealized gains and losses, are reported at proper amounts, relates to the:

The confirmation process for securities held in safekeeping by others is substantially different from the process of confirming accounts receivable.

Which of the following is not true concerning the confirmation of securities held by outsiders for safekeeping?

Substantive tests of cash balances result in evidential matter that has a high degree of reliability.

What are some important value-added opportunities that CPAs may provide using the knowledge obtained during the audit of marketable securities and cash balances?

The bank transfer schedule should list all transfer checks issued at or near year-end.

Substantive tests of investment balances provide evidential matter that has a high degree of reliability.

The transaction cycle that does not interface directly with cash is the:

Confirmation of cash on deposit will provide evidence for the existence or occurrence assertion since there is written acknowledgment that the balance exists.

The specific audit objective for the audit of investments, recorded investment asset and equity balances represent investments that exist at the balance sheet date, relates to the:

The auditor should coordinate the inspection of all material negotiable instruments on hand.

The specific audit objective for the audit of investments, all recorded investments are owned by the reporting entity, relates to the:

The specific audit objective, year-end transfers of cash between banks are recorded in the proper period, is derived from the:

Inspecting and counting securities on hand relates to:

The inspecting and counting of securities on hand is ordinarily performed simultaneously with the auditor's:

Auditing and the Public Accounting

Financial Statement Audits and

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Audit Sampling in Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters

Exam 18: Auditing Investments and

The auditor should make inquiries if the deposit in transit on the year-end bank reconciliation is not shown on the bank cutoff statement.

Initial procedures for substantive tests of investments would not ordinarily include:

Consider the following financial statement assertions: -Vouch entries in investment accounts. _____

Calculation of the dividend payout ratio is an important analytical procedure for testing assertions related to both short-term and long-term investments.

The specific audit objective for the audit of investments, investment revenues, and realized and unrealized gains and losses, are reported at proper amounts, relates to the:

The confirmation process for securities held in safekeeping by others is substantially different from the process of confirming accounts receivable.

Which of the following is not true concerning the confirmation of securities held by outsiders for safekeeping?

Substantive tests of cash balances result in evidential matter that has a high degree of reliability.

What are some important value-added opportunities that CPAs may provide using the knowledge obtained during the audit of marketable securities and cash balances?

The bank transfer schedule should list all transfer checks issued at or near year-end.

Substantive tests of investment balances provide evidential matter that has a high degree of reliability.

The transaction cycle that does not interface directly with cash is the:

Confirmation of cash on deposit will provide evidence for the existence or occurrence assertion since there is written acknowledgment that the balance exists.

The specific audit objective for the audit of investments, recorded investment asset and equity balances represent investments that exist at the balance sheet date, relates to the:

The auditor should coordinate the inspection of all material negotiable instruments on hand.

The specific audit objective for the audit of investments, all recorded investments are owned by the reporting entity, relates to the:

The specific audit objective, year-end transfers of cash between banks are recorded in the proper period, is derived from the:

Inspecting and counting securities on hand relates to:

The inspecting and counting of securities on hand is ordinarily performed simultaneously with the auditor's:

Auditing and the Public Accounting

Financial Statement Audits and

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Audit Sampling in Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters