Question 1

The most common analytical procedure to assess liquidity is the:

Accepted Answer

A)  debt to equity ratio. 
B)  net profit margin. 
C)  inventory turnover ratio. 
D)  quick ratio. 
A)  debt to equity ratio. 
B)  net profit margin. 
C)  inventory turnover ratio. 
D)  quick ratio.

Question 2

The evidence used by auditors is different from that used by scientists in that:

Accepted Answer

A)  scientists use results of repeated experiments. 
B)  the certainty of conclusions drawn from the evidence can vary. 
C)  the party evaluating the evidence is a scientist. 
D)  all of the above 
A)  scientists use results of repeated experiments. 
B)  the certainty of conclusions drawn from the evidence can vary. 
C)  the party evaluating the evidence is a scientist. 
D)  all of the above

Question 3

Rank the reliability of the following items of audit evidence:
1)a sales invoice issued by the company
2)confirmation of an account receivable balance mailed by and returned directly to the auditor
3)minutes of a board meeting
4)a copy of a signed lease agreement

Accepted Answer

A)  2, 3, 4, 1 
B)  3, 4, 2, 1 
C)  2, 4, 1, 3 
D)  4, 3, 2, 1 
A)  2, 3, 4, 1 
B)  3, 4, 2, 1 
C)  2, 4, 1, 3 
D)  4, 3, 2, 1

Question 4

Analytical procedures are usually the most costly type of evidence.

Accepted Answer

A) True 
 B)False

Question 5

There are four important purposes of analytical procedures.Identify each of these four purposes and, for each purpose, give a specific example of an analytical procedure that an auditor might perform.

Accepted Answer

The four important purposes of analytica

Question 6

Which type of audit evidence can the auditor use in support of the 'ownership of noncurrent assets' audit objective?

Accepted Answer

A)  examine invoice from vendor 
B)  examine title for ownership of asset 
C)  physical examination 
D)  direct confirmation with vendor 
A)  examine invoice from vendor 
B)  examine title for ownership of asset 
C)  physical examination 
D)  direct confirmation with vendor

Question 7

An audit program:

Accepted Answer

A)  normally exists for each component of the audit. 
B)  always includes a list of the audit procedures. 
C)  usually includes sample sizes, items to select, and the timing of the tests. 
D)  all of the above 
A)  normally exists for each component of the audit. 
B)  always includes a list of the audit procedures. 
C)  usually includes sample sizes, items to select, and the timing of the tests. 
D)  all of the above

Question 8

The evidence used by auditors is different from that used in cases of law in that:

Accepted Answer

A)  the nature of the conclusion is to decide guilt or innocence. 
B)  the judge and jury evaluate the evidence. 
C)  the only evidence relied on is direct evidence and testimony by witnesses. 
D)  all of the above 
A)  the nature of the conclusion is to decide guilt or innocence. 
B)  the judge and jury evaluate the evidence. 
C)  the only evidence relied on is direct evidence and testimony by witnesses. 
D)  all of the above

Question 9

Which of the following statements is NOT correct?

Accepted Answer

A)  The decision of how many items to test will not be influenced by the increased costs of performing the additional tests. 
B)  The decision of how many items to test must be made by the auditor for each audit procedure. 
C)  The sample size for any given procedure is likely to vary from audit to audit. 
D)  It is possible to vary the sample size from one unit to 100% of the items in the population. 
A)  The decision of how many items to test will not be influenced by the increased costs of performing the additional tests. 
B)  The decision of how many items to test must be made by the auditor for each audit procedure. 
C)  The sample size for any given procedure is likely to vary from audit to audit. 
D)  It is possible to vary the sample size from one unit to 100% of the items in the population.

Question 10

Identify and define the seven categories of audit evidence.Which two types of evidence are the most expensive? Which three types of evidence are the least expensive? Which type of evidence would be most persuasive when testing the existence objective for long-term assets?

Accepted Answer

The seven categories of audit evidence a

Question 11

Most auditors prefer to replace tests of details with analytical procedures whenever possible because the:

Accepted Answer

A)  analytical procedures are more reliable. 
B)  tests of details are more difficult to interpret. 
C)  tests of details are more expensive. 
D)  analytical procedures are more persuasive. 
A)  analytical procedures are more reliable. 
B)  tests of details are more difficult to interpret. 
C)  tests of details are more expensive. 
D)  analytical procedures are more persuasive.

Question 12

Cost should never be a consideration when making decisions about evidence for a given audit.

Accepted Answer

A) True 
 B)False

Question 13

Match between columns
                        Premises: Compare customer names and amounts on sales invoices with entries in the sales journal.
Count inventory items and record the amount in the audit working papers.
Examine a piece of equipment to make sure a recent purchase of equipment was actually received and is in operation
Watch client employees count inventory to determine whether company procedures are being followed.
Stand by the payroll time clock to determine whether any employee 'punches in' more than one time.
Review the total of repairs and maintenance for each month to determine whether any month's total was unusually large.
Calculate the ratio of cost of goods sold to sales as a test of overall reasonableness of gross margin relative to the preceding year.
Re-foot entries in the sales journal to determine whether they were correctly totalled by the client.
Obtain a written statement from the client's bank stating the client's year-end balance on deposit.
Obtain information about the client's internal controls by asking questions of client personnel.
Make a surprise count of petty cash to verify that the amount of the petty cash fund is intact.
Trace column totals from the cash disbursements journal to the general ledger.

Accepted Answer

The Answer of physical examination. and inquiry of the client. is...

Question 14

Analytical procedures are required during the planning and completion phases of all financial statement audits.

Accepted Answer

A) True 
 B)False

Question 15

What are the benefits to auditors of using computer software?

Accepted Answer

Computer software can be used to make st

Question 16

Which of the following is NOT relevant in determining what types of evidence to accumulate?

Accepted Answer

A)  timing 
B)  objectivity 
C)  sample size 
D)  audit procedures 
A)  timing 
B)  objectivity 
C)  sample size 
D)  audit procedures

Question 17

An example of vouching would be to trace from:

Accepted Answer

A)  duplicate bank deposit slips to the cash receipts journal. 
B)  the acquisitions journal to supporting vendors' invoices. 
C)  receiving reports to the acquisitions journal. 
D)  cancelled cheques to the cash disbursement journal. 
A)  duplicate bank deposit slips to the cash receipts journal. 
B)  the acquisitions journal to supporting vendors' invoices. 
C)  receiving reports to the acquisitions journal. 
D)  cancelled cheques to the cash disbursement journal.

Question 18

The reliability of evidence refers to the degree to which evidence is considered believable or trustworthy.There are six factors affecting the competence of evidence.Identify and discuss each.

Accepted Answer

The factors affecting the reliability of

Question 19

Identify each of the five major types of analytical procedures and give an example of each.

Accepted Answer

The five major types of analytical proce

Question 20

In determining the quantity and quality of evidence to gather, the auditor will be satisfied when the evidence is:

Accepted Answer

A)  conclusive. 
B)  completely convincing. 
C)  highly persuasive. 
D)  irrefutable. 
A)  conclusive. 
B)  completely convincing. 
C)  highly persuasive. 
D)  irrefutable.

The most common analytical procedure to assess liquidity is the:

The evidence used by auditors is different from that used by scientists in that:

Rank the reliability of the following items of audit evidence: 1)a sales invoice issued by the company 2)confirmation of an account receivable balance mailed by and returned directly to the auditor 3)minutes of a board meeting 4)a copy of a signed lease agreement

Analytical procedures are usually the most costly type of evidence.

There are four important purposes of analytical procedures.Identify each of these four purposes and, for each purpose, give a specific example of an analytical procedure that an auditor might perform.

Which type of audit evidence can the auditor use in support of the 'ownership of noncurrent assets' audit objective?

An audit program:

The evidence used by auditors is different from that used in cases of law in that:

Which of the following statements is NOT correct?

Identify and define the seven categories of audit evidence.Which two types of evidence are the most expensive? Which three types of evidence are the least expensive? Which type of evidence would be most persuasive when testing the existence objective for long-term assets?

Most auditors prefer to replace tests of details with analytical procedures whenever possible because the:

Cost should never be a consideration when making decisions about evidence for a given audit.

Analytical procedures are required during the planning and completion phases of all financial statement audits.

What are the benefits to auditors of using computer software?

Which of the following is NOT relevant in determining what types of evidence to accumulate?

An example of vouching would be to trace from:

The reliability of evidence refers to the degree to which evidence is considered believable or trustworthy.There are six factors affecting the competence of evidence.Identify and discuss each.

Identify each of the five major types of analytical procedures and give an example of each.

In determining the quantity and quality of evidence to gather, the auditor will be satisfied when the evidence is:

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

The most common analytical procedure to assess liquidity is the:

The evidence used by auditors is different from that used by scientists in that:

Rank the reliability of the following items of audit evidence: 1)a sales invoice issued by the company 2)confirmation of an account receivable balance mailed by and returned directly to the auditor 3)minutes of a board meeting 4)a copy of a signed lease agreement

Analytical procedures are usually the most costly type of evidence.

There are four important purposes of analytical procedures.Identify each of these four purposes and, for each purpose, give a specific example of an analytical procedure that an auditor might perform.

Which type of audit evidence can the auditor use in support of the 'ownership of noncurrent assets' audit objective?

An audit program:

The evidence used by auditors is different from that used in cases of law in that:

Which of the following statements is NOT correct?

Identify and define the seven categories of audit evidence.Which two types of evidence are the most expensive? Which three types of evidence are the least expensive? Which type of evidence would be most persuasive when testing the existence objective for long-term assets?

Most auditors prefer to replace tests of details with analytical procedures whenever possible because the:

Cost should never be a consideration when making decisions about evidence for a given audit.

Analytical procedures are required during the planning and completion phases of all financial statement audits.

What are the benefits to auditors of using computer software?

Which of the following is NOT relevant in determining what types of evidence to accumulate?

An example of vouching would be to trace from:

The reliability of evidence refers to the degree to which evidence is considered believable or trustworthy.There are six factors affecting the competence of evidence.Identify and discuss each.

Identify each of the five major types of analytical procedures and give an example of each.

In determining the quantity and quality of evidence to gather, the auditor will be satisfied when the evidence is:

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