Question 1

Internal documents are more reliable when the client's internal controls are good than when the client's internal controls are poor.

Accepted Answer

A) True 
 B)False

Question 2

The auditor is concerned that a client is failing to bill customers for shipments.An audit procedure that would gather relevant evidence would be to:

Accepted Answer

A)  compare the total of the schedule of accounts receivable with the balance of the accounts receivable account in the general ledger. 
B)  trace a sample of sales journal entries to the accounts receivable subsidiary ledger. 
C)  trace a sample of shipping documents to related duplicate sales invoices. 
D)  select a sample of duplicate sales invoices and trace each to related shipping documents. 
A)  compare the total of the schedule of accounts receivable with the balance of the accounts receivable account in the general ledger. 
B)  trace a sample of sales journal entries to the accounts receivable subsidiary ledger. 
C)  trace a sample of shipping documents to related duplicate sales invoices. 
D)  select a sample of duplicate sales invoices and trace each to related shipping documents.

Question 3

When analytical procedures reveal no unusual fluctuations in an account balance, the auditor will probably perform fewer tests of details of balance for that account.

Accepted Answer

A) True 
 B)False

Question 4

The distinction between physical examination of assets and examination of documents is dependent on the item being examined.If the object being examined has no inherent value, the evidence is called:

Accepted Answer

A)  documentation. 
B)  confirmation. 
C)  physical examination. 
D)  observation. 
A)  documentation. 
B)  confirmation. 
C)  physical examination. 
D)  observation.

Question 5

Match between columns
                        Premises: duplicate sales invoices
bank statements
notes receivable
remittance advices
cancelled cheques for payments of accounts payable
minutes of the meetings of the board of directors
vendors' invoices
payroll time cards
subsidiary accounts receivable records
signed lease agreements

Accepted Answer

The Answer of external and internal is...

Question 6

The primary purpose of performing analytical procedures in the testing phase of an audit is to:

Accepted Answer

A)  assess the going concern assumption. 
B)  reduce detailed tests. 
C)  help the auditor obtain an understanding of the client's industry and business. 
D)  indicate possible misstatements (attention directing). 
A)  assess the going concern assumption. 
B)  reduce detailed tests. 
C)  help the auditor obtain an understanding of the client's industry and business. 
D)  indicate possible misstatements (attention directing).

Question 7

'Evaluations of financial information made through analysis of plausible relationships among both financial and nonfinancial data' is a definition of:

Accepted Answer

A)  tests of transactions. 
B)  tests of balances. 
C)  auditing. 
D)  analytical procedures. 
A)  tests of transactions. 
B)  tests of balances. 
C)  auditing. 
D)  analytical procedures.

Question 8

A debt-to-equity ratio that is too high normally indicates the company has used up its borrowing capacity.

Accepted Answer

A) True 
 B)False

Question 9

ASA 500 requires the auditor to obtain sufficient or appropriate evidence to support the opinion issued.

Accepted Answer

A) True 
 B)False

Question 10

The auditor's decisions regarding evidence accumulation can be broken into four subdecisions.One decision relates to determining the nature of the audit procedure to be used to collect the evidence, i.e., 'which audit procedures to use'.Identify and discuss the remaining three audit evidence decisions that the auditor makes.

Accepted Answer

The remaining three audit evidence decis

Question 11

When an auditor calculates return on assets and compares it with previous periods, this type of evidence is an example of:

Accepted Answer

A)  observation. 
B)  physical examination. 
C)  inquiry. 
D)  analytical procedures. 
A)  observation. 
B)  physical examination. 
C)  inquiry. 
D)  analytical procedures.

Question 12

One feature common to all computer-based audit software is:

Accepted Answer

A)  the ability to input auditor's software into a client's computer system. 
B)  the inclusion of an industry database to facilitate analytical review procedures. 
C)  DOS-based command systems. 
D)  the ability to input a client's general ledger into the auditor's computer system. 
A)  the ability to input auditor's software into a client's computer system. 
B)  the inclusion of an industry database to facilitate analytical review procedures. 
C)  DOS-based command systems. 
D)  the ability to input a client's general ledger into the auditor's computer system.

Question 13

Bank balances and receivables are commonly associated with which type of audit evidence?

Accepted Answer

A)  confirmation 
B)  physical examination 
C)  Confirmation 
D)  inquiries of the client 
A)  confirmation 
B)  physical examination 
C)  Confirmation 
D)  inquiries of the client

Question 14

Factors affecting the persuasiveness of an audit sample size and items to select relate to:

Accepted Answer

A)  proper selection of the items in the sample. 
B)  adequate sample size. 
C)  sufficiency of the evidence. 
D)  all of the above 
A)  proper selection of the items in the sample. 
B)  adequate sample size. 
C)  sufficiency of the evidence. 
D)  all of the above

Question 15

For analytical review procedures, the most commonly used statistical technique is:

Accepted Answer

A)  mean and standard deviation calculations. 
B)  regression analysis. 
C)  summarisation. 
D)  batching. 
A)  mean and standard deviation calculations. 
B)  regression analysis. 
C)  summarisation. 
D)  batching.

Question 16

A document that the auditor receives from the client, but which was prepared by someone outside the client's organisation, is:

Accepted Answer

A)  an inquiry. 
B)  an external document. 
C)  an internal document. 
D)  a confirmation. 
A)  an inquiry. 
B)  an external document. 
C)  an internal document. 
D)  a confirmation.

Question 17

The evidence used by auditors has which feature?

Accepted Answer

A)  Various types of audit evidence are used. 
B)  A high level of assurance is required from the evidence. 
C)  The evidence is used to determine whether statements are fairly presented. 
D)  All of the above 
A)  Various types of audit evidence are used. 
B)  A high level of assurance is required from the evidence. 
C)  The evidence is used to determine whether statements are fairly presented. 
D)  All of the above

Question 18

Analytical procedures use comparisons and relationships to assess whether data appear plausible.

Accepted Answer

A) True 
 B)False

Question 19

Evidence obtained directly by the auditor is more competent than information obtained indirectly.Which of the following is NOT an example of the auditor's direct knowledge?

Accepted Answer

A)  physical examination 
B)  inquiry 
C)  computation 
D)  observation 
A)  physical examination 
B)  inquiry 
C)  computation 
D)  observation

Question 20

Which one of the following is NOT one of the characteristics of reliable evidence?

Accepted Answer

A)  effectiveness of the client's internal controls 
B)  degree of objectivity 
C)  independence of the provider 
D)  size of the sample 
A)  effectiveness of the client's internal controls 
B)  degree of objectivity 
C)  independence of the provider 
D)  size of the sample

Internal documents are more reliable when the client's internal controls are good than when the client's internal controls are poor.

The auditor is concerned that a client is failing to bill customers for shipments.An audit procedure that would gather relevant evidence would be to:

When analytical procedures reveal no unusual fluctuations in an account balance, the auditor will probably perform fewer tests of details of balance for that account.

The distinction between physical examination of assets and examination of documents is dependent on the item being examined.If the object being examined has no inherent value, the evidence is called:

The primary purpose of performing analytical procedures in the testing phase of an audit is to:

'Evaluations of financial information made through analysis of plausible relationships among both financial and nonfinancial data' is a definition of:

A debt-to-equity ratio that is too high normally indicates the company has used up its borrowing capacity.

ASA 500 requires the auditor to obtain sufficient or appropriate evidence to support the opinion issued.

When an auditor calculates return on assets and compares it with previous periods, this type of evidence is an example of:

One feature common to all computer-based audit software is:

Bank balances and receivables are commonly associated with which type of audit evidence?

Factors affecting the persuasiveness of an audit sample size and items to select relate to:

For analytical review procedures, the most commonly used statistical technique is:

A document that the auditor receives from the client, but which was prepared by someone outside the client's organisation, is:

The evidence used by auditors has which feature?

Analytical procedures use comparisons and relationships to assess whether data appear plausible.

Evidence obtained directly by the auditor is more competent than information obtained indirectly.Which of the following is NOT an example of the auditor's direct knowledge?

Which one of the following is NOT one of the characteristics of reliable evidence?

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters

Exam 5: Audit evidence

Internal documents are more reliable when the client's internal controls are good than when the client's internal controls are poor.

The auditor is concerned that a client is failing to bill customers for shipments.An audit procedure that would gather relevant evidence would be to:

When analytical procedures reveal no unusual fluctuations in an account balance, the auditor will probably perform fewer tests of details of balance for that account.

The distinction between physical examination of assets and examination of documents is dependent on the item being examined.If the object being examined has no inherent value, the evidence is called:

The primary purpose of performing analytical procedures in the testing phase of an audit is to:

'Evaluations of financial information made through analysis of plausible relationships among both financial and nonfinancial data' is a definition of:

A debt-to-equity ratio that is too high normally indicates the company has used up its borrowing capacity.

ASA 500 requires the auditor to obtain sufficient or appropriate evidence to support the opinion issued.

When an auditor calculates return on assets and compares it with previous periods, this type of evidence is an example of:

One feature common to all computer-based audit software is:

Bank balances and receivables are commonly associated with which type of audit evidence?

Factors affecting the persuasiveness of an audit sample size and items to select relate to:

For analytical review procedures, the most commonly used statistical technique is:

A document that the auditor receives from the client, but which was prepared by someone outside the client's organisation, is:

The evidence used by auditors has which feature?

Analytical procedures use comparisons and relationships to assess whether data appear plausible.

Evidence obtained directly by the auditor is more competent than information obtained indirectly.Which of the following is NOT an example of the auditor's direct knowledge?

Which one of the following is NOT one of the characteristics of reliable evidence?

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit planning and documentation

Materiality and risk

Internal control and control risk

Fraud auditing

The impact of information technology on the audit process

Overall audit plan and audit program

Audit of the sales and collection cycle: Tests of controls and substantive tests of transactions

Completing tests in the sales and collection cycle: Accounts receivable

Audit sampling

Audit of transaction cycles and financial statement balances I

Audit of transaction cycles and financial statement balances II

Completing the audit

Audit reporting

Other auditing and assurance engagements

Filters