Question 1

Preliminary judgments about materiality are set for planning purposes and may be changed as the audit progresses.

Accepted Answer

A) True 
 B)False

Question 2

The auditor will allocate more materiality to accounts with a(n):

Accepted Answer

A)  high chance of misstatements and that are difficult to audit. 
B)  high chance of misstatements but that are easy to audit. 
C)  low chance of misstatements but that are difficult to audit. 
D)  low chance of misstatements and that are easy to audit. 
E)  average chance of misstatements and that are easy to audit. 
A)  high chance of misstatements and that are difficult to audit. 
B)  high chance of misstatements but that are easy to audit. 
C)  low chance of misstatements but that are difficult to audit. 
D)  low chance of misstatements and that are easy to audit. 
E)  average chance of misstatements and that are easy to audit.

Question 3

Materiality underlies the application of generally accepted auditing standards, particularly the:

Accepted Answer

A)  general and field work standards. 
B)  general and reporting standards. 
C)  field work and reporting standards. 
D)  reporting standards. 
E)  general standards. 
A)  general and field work standards. 
B)  general and reporting standards. 
C)  field work and reporting standards. 
D)  reporting standards. 
E)  general standards.

Question 4

In developing analytical procedures, the reliability of budget data is independent of the assumptions used in their preparation or the care used in compiling the budgeted amounts.

Accepted Answer

A) True 
 B)False

Question 5

Inventory Turnover (in days) = Inventory / Cost of Goods Sold x 365

Accepted Answer

A) True 
 B)False

Question 6

In planning the audit, the auditor should assess materiality at two levels:

Accepted Answer

A)  the preliminary level and the final level. 
B)  the company level and the divisional level. 
C)  the account balance level and the detailed item level. 
D)  the financial statement level and the account balance level. 
E)  the account balance level and the transaction level. 
A)  the preliminary level and the final level. 
B)  the company level and the divisional level. 
C)  the account balance level and the detailed item level. 
D)  the financial statement level and the account balance level. 
E)  the account balance level and the transaction level.

Question 7

Materiality at the account balance level is stated in planning an audit because:

Accepted Answer

A)  some users make decisions based upon individual account balances. 
B)  the auditor verifies account balances in reaching an overall conclusion on the fairness of the financial statements. 
C)  the opinion on the fairness of the financial statements extends to the individual account balances. 
D)  official pronouncements have specified different levels of materiality for various financial statement items. 
E)  the opinion on the fairness of the financial statements extends to the individual transactions. 
A)  some users make decisions based upon individual account balances. 
B)  the auditor verifies account balances in reaching an overall conclusion on the fairness of the financial statements. 
C)  the opinion on the fairness of the financial statements extends to the individual account balances. 
D)  official pronouncements have specified different levels of materiality for various financial statement items. 
E)  the opinion on the fairness of the financial statements extends to the individual transactions.

Preliminary judgments about materiality are set for planning purposes and may be changed as the audit progresses.

The auditor will allocate more materiality to accounts with a(n):

Materiality underlies the application of generally accepted auditing standards, particularly the:

In developing analytical procedures, the reliability of budget data is independent of the assumptions used in their preparation or the care used in compiling the budgeted amounts.

Inventory Turnover (in days) = Inventory / Cost of Goods Sold x 365

In planning the audit, the auditor should assess materiality at two levels:

Materiality at the account balance level is stated in planning an audit because:

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

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

Auditing Investments and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters

Exam 8: Materiality Decisions and Performing Analytical Procedures

Preliminary judgments about materiality are set for planning purposes and may be changed as the audit progresses.

The auditor will allocate more materiality to accounts with a(n):

Materiality underlies the application of generally accepted auditing standards, particularly the:

In developing analytical procedures, the reliability of budget data is independent of the assumptions used in their preparation or the care used in compiling the budgeted amounts.

Inventory Turnover (in days) = Inventory / Cost of Goods Sold x 365

In planning the audit, the auditor should assess materiality at two levels:

Materiality at the account balance level is stated in planning an audit because:

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

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

Auditing Investments and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

Filters