Question 1

Which account is used in the current ratio but not the quick ratio?

Accepted Answer

A) marketable securities 
B) accounts payable 
C) accounts receivable 
D) inventory 
A) marketable securities 
B) accounts payable 
C) accounts receivable 
D) inventory

Question 2

Supporting schedules

Accepted Answer

A) must be prepared by the auditor. 
B) make up the largest portion of audit documentation. 
C) must consist of either reconciliation of amounts or substantive analytical procedures. 
D) all of the above 
A) must be prepared by the auditor. 
B) make up the largest portion of audit documentation. 
C) must consist of either reconciliation of amounts or substantive analytical procedures. 
D) all of the above

Question 3

Analytical procedures performed during the completion stage of the audit

Accepted Answer

A) help the auditor understand the client's business and industry. 
B) are typically performed by a senior partner with extensive knowledge of the client's business. 
C) help the auditor identify significant matters requiring special attention later in the engagement. 
D) all of the above 
A) help the auditor understand the client's business and industry. 
B) are typically performed by a senior partner with extensive knowledge of the client's business. 
C) help the auditor identify significant matters requiring special attention later in the engagement. 
D) all of the above

Question 4

Industry comparisons can be used as

Accepted Answer

A) an aid to understanding the client's business. 
B) an indicator of errors. 
C) an indicator of fraud. 
D) an aid to internal controls. 
A) an aid to understanding the client's business. 
B) an indicator of errors. 
C) an indicator of fraud. 
D) an aid to internal controls.

Question 5

The relevance of audit evidence depends on the audit objective being tested.

Accepted Answer

A) True 
 B)False

Question 6

Financial ratios

Accepted Answer

A) are used during the planning and final review phases of the audit. 
B) can be linked to the trial balance so that calculations are automatically updated as adjustments are made. 
C) should be compared to previous years and industry averages. 
D) all of the above 
A) are used during the planning and final review phases of the audit. 
B) can be linked to the trial balance so that calculations are automatically updated as adjustments are made. 
C) should be compared to previous years and industry averages. 
D) all of the above

Question 7

Auditors must make decisions regarding what evidence to gather and how much to accumulate.Which of the following is a decision that must be made by auditors related to evidence?

Accepted Answer

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

Question 8

To determine accounts receivable turnover,net sales is divided by

Accepted Answer

A) beginning net accounts receivable. 
B) average gross receivables. 
C) cost of goods sold. 
D) 365 days. 
A) beginning net accounts receivable. 
B) average gross receivables. 
C) cost of goods sold. 
D) 365 days.

Question 9

Factors that determine the auditor's willingness to accept a document as reliable evidence include

Accepted Answer

A) whether it is internal or external. 
B) whether it was created and processed under conditions of effective internal control. 
C) whether it is an original document or a photocopy. 
D) all of the above. 
A) whether it is internal or external. 
B) whether it was created and processed under conditions of effective internal control. 
C) whether it is an original document or a photocopy. 
D) all of the above.

Question 10

An example of a supporting schedule is a reconciliation of amounts,which consists of the details that make up a year-end balance.

Accepted Answer

A) True 
 B)False

Question 11

Why is the appropriateness of audit evidence obtained by the auditor important in forming an audit opinion?
 Describe the qualities information should have to be considered appropriate by the auditor.

Accepted Answer

Appropriateness is a measure of the qual

Question 12

There has been an increased emphasis on the use of analytical procedures during an audit.

Accepted Answer

A) True 
 B)False

Question 13

Which financial ratio is computed by dividing current assets by current liabilities?

Accepted Answer

A) quick ratio 
B) debt to equity 
C) accounts receivable turnover 
D) current ratio 
A) quick ratio 
B) debt to equity 
C) accounts receivable turnover 
D) current ratio

Question 14

Analytical procedures are so important that they are required during the

Accepted Answer

A) planning and test of control phases. 
B) planning and completion phases. 
C) test of control and completion phases. 
D) planning,test of control,and completion phases. 
A) planning and test of control phases. 
B) planning and completion phases. 
C) test of control and completion phases. 
D) planning,test of control,and completion phases.

Question 15

Analytical procedures

Accepted Answer

A) performed during the audit planning phase generally use aggregate data. 
B) are never performed during the testing phase of an audit. 
C) are declining in importance as a type of audit evidence. 
D) performed during the audit planning stage help the auditor take a final objective look at the audited financial statements. 
A) performed during the audit planning phase generally use aggregate data. 
B) are never performed during the testing phase of an audit. 
C) are declining in importance as a type of audit evidence. 
D) performed during the audit planning stage help the auditor take a final objective look at the audited financial statements.

Question 16

Audit documentation

Accepted Answer

A) should identify the items tested when the audit procedures involve sampling of transactions or balances. 
B) does not aid in the preparation of the tax return since accounting and tax rules differ. 
C) is another term for the audit program. 
D) should not be given to anyone outside the audit firm,even if a subpoena has been issued. 
A) should identify the items tested when the audit procedures involve sampling of transactions or balances. 
B) does not aid in the preparation of the tax return since accounting and tax rules differ. 
C) is another term for the audit program. 
D) should not be given to anyone outside the audit firm,even if a subpoena has been issued.

Question 17

Analytical procedures must be used in the planning and completion phases of the audit.

Accepted Answer

A) True 
 B)False

Question 18

The type of audit evidence known as inquiry requires the auditor to obtain oral or written information from the client in response to questions.

Accepted Answer

A) True 
 B)False

Question 19

The basis for preparing financial statements for companies is the general ledger.As soon as possible the auditor obtains the general ledger accounts of the client and prepares a working trial balance.Discuss the audit documentation in the current file that relates to the working trial balance.Include a description of lead and support schedules in your answer.

Accepted Answer

Lead Schedules-each line item on the wor

Question 20

When making audit evidence decisions,

Accepted Answer

A) the auditor decides which items in the population to test before determining the sample size. 
B) the sample size for any given procedure must remain constant from audit to audit. 
C) audit engagement software can assist the auditor in making evidence decisions. 
D) the auditor is required to use the sample sizes that are determined by the PCAOB. 
A) the auditor decides which items in the population to test before determining the sample size. 
B) the sample size for any given procedure must remain constant from audit to audit. 
C) audit engagement software can assist the auditor in making evidence decisions. 
D) the auditor is required to use the sample sizes that are determined by the PCAOB.

Exam 7: Audit Evidence

Which account is used in the current ratio but not the quick ratio?

Supporting schedules

Analytical procedures performed during the completion stage of the audit

Industry comparisons can be used as

The relevance of audit evidence depends on the audit objective being tested.

Financial ratios

Auditors must make decisions regarding what evidence to gather and how much to accumulate.Which of the following is a decision that must be made by auditors related to evidence?

To determine accounts receivable turnover,net sales is divided by

Factors that determine the auditor's willingness to accept a document as reliable evidence include

An example of a supporting schedule is a reconciliation of amounts,which consists of the details that make up a year-end balance.

Why is the appropriateness of audit evidence obtained by the auditor important in forming an audit opinion? Describe the qualities information should have to be considered appropriate by the auditor.

There has been an increased emphasis on the use of analytical procedures during an audit.

Which financial ratio is computed by dividing current assets by current liabilities?

Analytical procedures are so important that they are required during the

Analytical procedures

Audit documentation

Analytical procedures must be used in the planning and completion phases of the audit.

The type of audit evidence known as inquiry requires the auditor to obtain oral or written information from the client in response to questions.

When making audit evidence decisions,

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

Filters