Question 1

Which type of supporting schedule is designed to show the activity in a general ledger account during the entire period under audit?

Accepted Answer

A) trial balance 
B) reconciliation of amounts 
C) summary of procedures 
D) analysis 
A) trial balance 
B) reconciliation of amounts 
C) summary of procedures 
D) analysis

Question 2

When determining sufficient and appropriate audit evidence in order to form an opinion on the client's financial statements the auditor compiles audit documentation to support the opinion.The largest portion of audit documentation will include detailed supporting schedules prepared by the client or the auditor in support of specific accounts on the financial statements.Two types of supporting schedules are analysis and reconciliation of amounts.Discuss those two schedules and give an example for each schedule.

Accepted Answer

Analysis: designed to show the activity

Question 3

The permanent audit file would usually include the

Accepted Answer

A) client's working trial balance. 
B) summary of the risk assessment procedures performed. 
C) organizational chart of the company's employees. 
D) summary of the auditors test of controls for the current years audit. 
A) client's working trial balance. 
B) summary of the risk assessment procedures performed. 
C) organizational chart of the company's employees. 
D) summary of the auditors test of controls for the current years audit.

Question 4

Substantive analytical procedures performed in all phases of the audit generally use aggregate data to help understand where misstatements are more likely to occur.

Accepted Answer

A) True 
 B)False

Question 5

When the auditor scans the sales journal looking for large and unusual transactions,he is gathering what type of evidence?

Accepted Answer

A) inspection 
B) recalculation 
C) physical examination 
D) analytical procedures 
A) inspection 
B) recalculation 
C) physical examination 
D) analytical procedures

Question 6

One purpose of performing analytical procedures in the planning phase of an audit is to assess the client's financial condition.Explain how the assessment of a client's financial condition can affect the auditor's decisions concerning evidence accumulation in later phases of the audit.

Accepted Answer

Auditors must obtain knowledge about a c

Question 7

Below are 10 documents typically examined during an audit.Classify each document as either internal or external.

Accepted Answer

1. external 6. internal
2. int

Question 8

Audit procedures can result in significant,unexpected differences.The auditor should investigate further if

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 9

Objective evidence is more reliable,and hence more persuasive,than subjective evidence.

Accepted Answer

A) True 
 B)False

Question 10

Distinguish between internal documentation and external documentation as types of audit evidence.Give two examples of each.Which type is considered more reliable?

Accepted Answer

Internal documentation involves the audi

Question 11

________ is the auditor's examination of the client's documents and records to substantiate that the information is included in the financial statements.

Accepted Answer

A) Inspection 
B) Recalculation 
C) Observation 
D) Verification 
A) Inspection 
B) Recalculation 
C) Observation 
D) Verification

Question 12

Auditors use tick marks,which are symbols adjacent to the detail on the body of the schedule.

Accepted Answer

A) True 
 B)False

Question 13

Physical examination

Accepted Answer

A) is a direct means of verifying that an asset really exists. 
B) is sufficient evidence to verify that the existing assets are owned by the client. 
C) can be used for both tangible assets and documents. 
D) is not generally a reliable type of audit evidence. 
A) is a direct means of verifying that an asset really exists. 
B) is sufficient evidence to verify that the existing assets are owned by the client. 
C) can be used for both tangible assets and documents. 
D) is not generally a reliable type of audit evidence.

Question 14

When the auditor uses tracing as an audit procedure for tests of transactions,she is primarily concerned with which audit objective?

Accepted Answer

A) occurrence 
B) completeness 
C) cutoff 
D) classification 
A) occurrence 
B) completeness 
C) cutoff 
D) classification

Question 15

When the auditor uses supporting evidence for amounts posted to account balances with documentary evidence,that process is called

Accepted Answer

A) inquiry. 
B) confirmation. 
C) vouching. 
D) physical examination. 
A) inquiry. 
B) confirmation. 
C) vouching. 
D) physical examination.

Question 16

The permanent files included as part of audit documentation do not normally include

Accepted Answer

A) a copy of the current and prior years' audit programs. 
B) copies of articles of incorporation,bylaws and contracts. 
C) information related to the understanding of internal control. 
D) results of analytical procedures from prior years. 
A) a copy of the current and prior years' audit programs. 
B) copies of articles of incorporation,bylaws and contracts. 
C) information related to the understanding of internal control. 
D) results of analytical procedures from prior years.

Question 17

When the auditor foots the journals and the subsidiary ledgers,it is considered reperformance.

Accepted Answer

A) True 
 B)False

Question 18

Confirmations are ordinarily used to verify account balances,but may be used to verify transactions.

Accepted Answer

A) True 
 B)False

Question 19

Inquiries of the client are usually sufficient to provide appropriate evidence to satisfy an audit objective.

Accepted Answer

A) True 
 B)False

Question 20

For audit evidence to be compelling to the auditor it must be sufficient and appropriate.Which statement below is not correct regarding the appropriateness of audit evidence?

Accepted Answer

A) The more effective the internal control system,the more assurance it provides the auditor about the reliability of financial reporting by the client. 
B) An auditor's opinion,to be economically useful and profitable to the auditing firm needs to be formed within a reasonable time and based on evidence obtained that assures profits for the auditing firm. 
C) Evidence obtained from independent sources outside the entity is generally more reliable than evidence secured solely within the entity. 
D) The independent auditor's direct personal knowledge,obtained through inquiry,observation and inspection,is generally more persuasive than information obtained indirectly. 
A) The more effective the internal control system,the more assurance it provides the auditor about the reliability of financial reporting by the client. 
B) An auditor's opinion,to be economically useful and profitable to the auditing firm needs to be formed within a reasonable time and based on evidence obtained that assures profits for the auditing firm. 
C) Evidence obtained from independent sources outside the entity is generally more reliable than evidence secured solely within the entity. 
D) The independent auditor's direct personal knowledge,obtained through inquiry,observation and inspection,is generally more persuasive than information obtained indirectly.

Exam 7: Audit Evidence

Which type of supporting schedule is designed to show the activity in a general ledger account during the entire period under audit?

The permanent audit file would usually include the

Substantive analytical procedures performed in all phases of the audit generally use aggregate data to help understand where misstatements are more likely to occur.

When the auditor scans the sales journal looking for large and unusual transactions,he is gathering what type of evidence?

One purpose of performing analytical procedures in the planning phase of an audit is to assess the client's financial condition.Explain how the assessment of a client's financial condition can affect the auditor's decisions concerning evidence accumulation in later phases of the audit.

Below are 10 documents typically examined during an audit.Classify each document as either internal or external.

Audit procedures can result in significant,unexpected differences.The auditor should investigate further if

Objective evidence is more reliable,and hence more persuasive,than subjective evidence.

Distinguish between internal documentation and external documentation as types of audit evidence.Give two examples of each.Which type is considered more reliable?

________ is the auditor's examination of the client's documents and records to substantiate that the information is included in the financial statements.

Auditors use tick marks,which are symbols adjacent to the detail on the body of the schedule.

Physical examination

When the auditor uses tracing as an audit procedure for tests of transactions,she is primarily concerned with which audit objective?

When the auditor uses supporting evidence for amounts posted to account balances with documentary evidence,that process is called

The permanent files included as part of audit documentation do not normally include

When the auditor foots the journals and the subsidiary ledgers,it is considered reperformance.

Confirmations are ordinarily used to verify account balances,but may be used to verify transactions.

Inquiries of the client are usually sufficient to provide appropriate evidence to satisfy an audit objective.

For audit evidence to be compelling to the auditor it must be sufficient and appropriate.Which statement below is not correct regarding the appropriateness of audit evidence?

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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