Question 1

Which one of the following is a contract stating the terms of the bonds issued by a corporation?

Accepted Answer

A)  bond contract 
B)  broker's advice 
C)  stock certificate 
D)  bond certificate 
E)  bond indenture 
A)  bond contract 
B)  broker's advice 
C)  stock certificate 
D)  bond certificate 
E)  bond indenture

Question 2

The specific audit objective, recorded cash balances are realizable at the amounts stated on the balance sheet and agree with supporting schedules, 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 3

The auditor may obtain the year-end bank statement directly from the bank and prepare the reconciliation personally. This step is most likely when:

Accepted Answer

A)  the auditor suspects possible material misstatements. 
B)  it is impracticable to obtain confirmations. 
C)  detection risk is set at high. 
D)  detection risk is set at moderate. 
E)  detection risk is set at low. 
A)  the auditor suspects possible material misstatements. 
B)  it is impracticable to obtain confirmations. 
C)  detection risk is set at high. 
D)  detection risk is set at moderate. 
E)  detection risk is set at low.

Question 4

Consider the following financial statement assertions:
-Recalculate investment revenue earned.
_____

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 5

The auditor should trace bank transfers using a bank transfer schedule primarily to determine if:

Accepted Answer

A)  cash has been understated due to kiting. 
B)  cash has been overstated due to kiting. 
C)  cash has been understated due to lapping. 
D)  cash has been overstated due to lapping. 
E)  any unusual cash receipts or payments occurred. 
A)  cash has been understated due to kiting. 
B)  cash has been overstated due to kiting. 
C)  cash has been understated due to lapping. 
D)  cash has been overstated due to lapping. 
E)  any unusual cash receipts or payments occurred.

Question 6

Audit tests to detect lapping involve which of the following?

Accepted Answer

A)  confirm accounts payable 
B)  compare details of cash disbursements journal entries with the details of corresponding daily deposit slips 
C)  prepare a bank transfer schedule 
D)  make a surprise cash count 
E)  use a bank cutoff statement 
A)  confirm accounts payable 
B)  compare details of cash disbursements journal entries with the details of corresponding daily deposit slips 
C)  prepare a bank transfer schedule 
D)  make a surprise cash count 
E)  use a bank cutoff statement

Question 7

It is not unusual for auditors to obtain significant assurance from analytical procedures applied to cash balances.

Accepted Answer

A) True 
 B)False

Question 8

The primary audit procedure for cash on hand and undeposited receipts is to perform a cash count.

Accepted Answer

A) True 
 B)False

Question 9

The tracing of bank transfers provides reliable evidence concerning the existence or occurrence and valuation or allocation assertions.

Accepted Answer

A) True 
 B)False

Question 10

Identify and discuss the steps the auditor should take in connection with the count of cash on hand.

Accepted Answer

Undeposited cash receipts and change fun

Question 11

When auditing investments, the auditor must apply significant audit judgment with respect to evaluating (1) the proper classification of investments and (2) the fair market value of investments.
REQUIRED: The appropriateness of the client's application of FASB No. 115 must be addressed for which three types of securities?

Accepted Answer

The appropriateness of the client's appl

Question 12

Consider the following financial statement assertions:
-Scan, review, or prepare bank reconciliations as appropriate.

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 13

In auditing investments, auditors may compare current-year and prior-year balances or compare actual results for the amount of investments and investment income with budgets or the documentation of management's plans. Unexpected differences would would be least likely to pertain to assertions about:

Accepted Answer

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

Question 14

The company officer who is assigned the authority and responsibility for investing transactions should have all of the following characteristics except:

Accepted Answer

A)  is of unquestioned integrity. 
B)  possesses the knowledge and skills required of a person charged with executing such transactions. 
C)  has the ability to understand the auditor's procedures relating to investing transactions. 
D)  realizes the importance of observing all prescribed control procedures. 
E)  can assist other participating members of management in making initial and ongoing assessments of risks associated with individual investments. 
A)  is of unquestioned integrity. 
B)  possesses the knowledge and skills required of a person charged with executing such transactions. 
C)  has the ability to understand the auditor's procedures relating to investing transactions. 
D)  realizes the importance of observing all prescribed control procedures. 
E)  can assist other participating members of management in making initial and ongoing assessments of risks associated with individual investments.

Question 15

The specific audit objective for the audit of investments, investment balances are properly identified and classified in the financial statements, 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 16

During the count of a cash fund, the auditor should insist that the custodian of the fund be present throughout the count.

Accepted Answer

A) True 
 B)False

Question 17

In the cash area, the auditor is usually more concerned about controls than about year-end balances.

Accepted Answer

A) True 
 B)False

Question 18

The specific audit objective, cash balances are properly identified and classified in the balance sheet, 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

In working with the bank reconciliation and the bank cutoff statement, the auditor finds that a prior-period check was not on the reconciliation as an outstanding check. This may be an indication of:

Accepted Answer

A)  window dressing. 
B)  lapping. 
C)  kiting. 
D)  an attempt to conceal a cash shortage. 
E)  an attempt to overstate cash. 
A)  window dressing. 
B)  lapping. 
C)  kiting. 
D)  an attempt to conceal a cash shortage. 
E)  an attempt to overstate cash.

Question 20

The specific audit objective for the audit of investments, all investments are included in the balance sheet investment accounts, 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.

Which one of the following is a contract stating the terms of the bonds issued by a corporation?

The specific audit objective, recorded cash balances are realizable at the amounts stated on the balance sheet and agree with supporting schedules, is derived from the:

The auditor may obtain the year-end bank statement directly from the bank and prepare the reconciliation personally. This step is most likely when:

Consider the following financial statement assertions: -Recalculate investment revenue earned. _____

The auditor should trace bank transfers using a bank transfer schedule primarily to determine if:

Audit tests to detect lapping involve which of the following?

It is not unusual for auditors to obtain significant assurance from analytical procedures applied to cash balances.

The primary audit procedure for cash on hand and undeposited receipts is to perform a cash count.

The tracing of bank transfers provides reliable evidence concerning the existence or occurrence and valuation or allocation assertions.

Identify and discuss the steps the auditor should take in connection with the count of cash on hand.

Consider the following financial statement assertions: -Scan, review, or prepare bank reconciliations as appropriate.

In auditing investments, auditors may compare current-year and prior-year balances or compare actual results for the amount of investments and investment income with budgets or the documentation of management's plans. Unexpected differences would would be least likely to pertain to assertions about:

The company officer who is assigned the authority and responsibility for investing transactions should have all of the following characteristics except:

The specific audit objective for the audit of investments, investment balances are properly identified and classified in the financial statements, relates to the:

During the count of a cash fund, the auditor should insist that the custodian of the fund be present throughout the count.

In the cash area, the auditor is usually more concerned about controls than about year-end balances.

The specific audit objective, cash balances are properly identified and classified in the balance sheet, is derived from the:

In working with the bank reconciliation and the bank cutoff statement, the auditor finds that a prior-period check was not on the reconciliation as an outstanding check. This may be an indication of:

The specific audit objective for the audit of investments, all investments are included in the balance sheet investment accounts, relates to the:

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

Which one of the following is a contract stating the terms of the bonds issued by a corporation?

The specific audit objective, recorded cash balances are realizable at the amounts stated on the balance sheet and agree with supporting schedules, is derived from the:

The auditor may obtain the year-end bank statement directly from the bank and prepare the reconciliation personally. This step is most likely when:

Consider the following financial statement assertions: -Recalculate investment revenue earned. _____

The auditor should trace bank transfers using a bank transfer schedule primarily to determine if:

Audit tests to detect lapping involve which of the following?

It is not unusual for auditors to obtain significant assurance from analytical procedures applied to cash balances.

The primary audit procedure for cash on hand and undeposited receipts is to perform a cash count.

The tracing of bank transfers provides reliable evidence concerning the existence or occurrence and valuation or allocation assertions.

Identify and discuss the steps the auditor should take in connection with the count of cash on hand.

Consider the following financial statement assertions: -Scan, review, or prepare bank reconciliations as appropriate.

The company officer who is assigned the authority and responsibility for investing transactions should have all of the following characteristics except:

The specific audit objective for the audit of investments, investment balances are properly identified and classified in the financial statements, relates to the:

During the count of a cash fund, the auditor should insist that the custodian of the fund be present throughout the count.

In the cash area, the auditor is usually more concerned about controls than about year-end balances.

The specific audit objective, cash balances are properly identified and classified in the balance sheet, is derived from the:

In working with the bank reconciliation and the bank cutoff statement, the auditor finds that a prior-period check was not on the reconciliation as an outstanding check. This may be an indication of:

The specific audit objective for the audit of investments, all investments are included in the balance sheet investment accounts, relates to the:

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