Question 1

Which of the following is a correct statement regarding audit evidence?

Accepted Answer

A) A large sample of evidence provided by an independent party is always considered persuasive evidence. 
B) A small sample of only one or two pieces of highly appropriate evidence is always considered persuasive evidence. 
C) The auditor must obtain a sufficient amount of relevant and reliable evidence to form an opinion on the fairness of the financial statements. 
D) Evidence is usually more reliable for balance sheet accounts when it is obtained within six months of the balance sheet date. 
A) A large sample of evidence provided by an independent party is always considered persuasive evidence. 
B) A small sample of only one or two pieces of highly appropriate evidence is always considered persuasive evidence. 
C) The auditor must obtain a sufficient amount of relevant and reliable evidence to form an opinion on the fairness of the financial statements. 
D) Evidence is usually more reliable for balance sheet accounts when it is obtained within six months of the balance sheet date. C

Question 2

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  True

Question 3

Which of the following is the most objective type of evidence?

Accepted Answer

A) A letter written by the client's attorney discussing the likely outcome of outstanding lawsuits 
B) The physical count of securities and cash 
C) Inquiries of the credit manager about the collectability of noncurrent accounts receivable 
D) Observation of cobwebs on some inventory bins 
A) A letter written by the client's attorney discussing the likely outcome of outstanding lawsuits 
B) The physical count of securities and cash 
C) Inquiries of the credit manager about the collectability of noncurrent accounts receivable 
D) Observation of cobwebs on some inventory bins B

Question 4

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 5

Audit documentation should possess certain characteristics.Which of the following is true regarding those characteristics?

Accepted Answer

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

Question 6

Analytical procedures must be used during which phase(s)of the audit?

Accepted Answer

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

Question 7

The two characteristics of the appropriateness of evidence are:

Accepted Answer

A) relevance and timeliness. 
B) relevance and accuracy. 
C) relevance and reliability. 
D) reliability and accuracy. 
A) relevance and timeliness. 
B) relevance and accuracy. 
C) relevance and reliability. 
D) reliability and accuracy.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements regarding the appropriateness of evidence is correct?

Accepted Answer

A) The effectiveness of a client's internal control has no influence on the reliability of most types of evidence. 
B) Analytical procedures will be reliable evidence even if the client's internal controls are weak. 
C) One type of evidence is generally sufficient by itself to provide appropriate evidence. 
D) The objectivity of evidence obtained through inspection is high. 
A) The effectiveness of a client's internal control has no influence on the reliability of most types of evidence. 
B) Analytical procedures will be reliable evidence even if the client's internal controls are weak. 
C) One type of evidence is generally sufficient by itself to provide appropriate evidence. 
D) The objectivity of evidence obtained through inspection is high.

Question 10

The evaluations of financial information through analysis of plausible relationships among financial and nonfinancial data is the definition of:

Accepted Answer

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

Question 11

Match between columns
                        Premises: Use of comparisons and relationships to assess the reasonableness of account balances.
This is determined by the amount of evidence obtained.
Detailed instructions for the collection of a type of audit evidence.
The degree to which evidence can be considered believable or trustworthy.
Contains all the information that the auditor considers necessary to conduct an adequate audit and to provide support for the audit report.

Accepted Answer

The Answer of Audit objectives and Budgets and Sufficiency of is...

Question 12

Which of the following is a correct statement regarding confirmations?

Accepted Answer

A) Confirmations can be in oral or written form. 
B) Electronic confirmations are not acceptable under generally accepted auditing standards. 
C) Confirmations are generally used in the audit of fixed asset additions. 
D) Auditors consider alternative evidence available when determining if confirmations should be used. 
A) Confirmations can be in oral or written form. 
B) Electronic confirmations are not acceptable under generally accepted auditing standards. 
C) Confirmations are generally used in the audit of fixed asset additions. 
D) Auditors consider alternative evidence available when determining if confirmations should be used.

Question 13

When using analytical procedures:

Accepted Answer

A) unusual fluctuations occur when significant unexpected differences between the current year's data and other data used in comparisons are found. 
B) and no unusual fluctuations are noted, the possibility of material misstatement is increased. 
C) "attention directing" indicates an area where fraud has occurred. 
D) and no unusual fluctuations are noted, tests of details of balances can be eliminated, 
A) unusual fluctuations occur when significant unexpected differences between the current year's data and other data used in comparisons are found. 
B) and no unusual fluctuations are noted, the possibility of material misstatement is increased. 
C) "attention directing" indicates an area where fraud has occurred. 
D) and no unusual fluctuations are noted, tests of details of balances can be eliminated,

Question 14

Given the economic and time constraints in which auditors can collect evidence about management assertions about the financial statements, the auditor normally gathers evidence that is:

Accepted Answer

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

Question 15

When the auditor develops 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

Evidence is usually more persuasive for balance sheet accounts when it is obtained:

Accepted Answer

A) as close to the balance sheet date as possible. 
B) only from transactions occurring on the balance sheet date. 
C) from various times throughout the client's year. 
D) from the time period when transactions in that account were most numerous during the fiscal period. 
A) as close to the balance sheet date as possible. 
B) only from transactions occurring on the balance sheet date. 
C) from various times throughout the client's year. 
D) from the time period when transactions in that account were most numerous during the fiscal period.

Question 17

Inspection consists of looking at a process or procedure being performed by others.

Accepted Answer

A) True 
 B)False

Question 18

Due professional care, the third general standard, is concerned with what is done by the independent auditor and how well it is done.For example, due care in the matter of audit documentation requires that audit documentation of the evidence gathered by the auditor meets which of the following criteria?

Accepted Answer

A) Workpapers are prepared in sufficient detail so that they can be given to the client for future reference. 
B) The content is sufficient to provide support for the auditor's opinion, including the auditor's representation as to compliance with auditing standards. 
C) Audit evidence is principally gathered to determine if the client's financial statements, as prepared by management, can be relied upon to make managerial decisions about the firm. 
D) Audit evidence as displayed in the workpapers is primarily performed to protect the auditing firm in the case of a lawsuit by investors. 
A) Workpapers are prepared in sufficient detail so that they can be given to the client for future reference. 
B) The content is sufficient to provide support for the auditor's opinion, including the auditor's representation as to compliance with auditing standards. 
C) Audit evidence is principally gathered to determine if the client's financial statements, as prepared by management, can be relied upon to make managerial decisions about the firm. 
D) Audit evidence as displayed in the workpapers is primarily performed to protect the auditing firm in the case of a lawsuit by investors.

Question 19

Which of the following best describes one of the primary objectives of audit documentation?

Accepted Answer

A) Defend against claims of a deficient audit. 
B) Provide a basis for reviewing the work of subordinates. 
C) Provide reasonable assurance that the audit was conducted in accordance with auditing standards. 
D) Provide additional support of recorded amounts to the client. 
A) Defend against claims of a deficient audit. 
B) Provide a basis for reviewing the work of subordinates. 
C) Provide reasonable assurance that the audit was conducted in accordance with auditing standards. 
D) Provide additional support of recorded amounts to the client.

Question 20

When practical and reasonable, U.S.auditing standards require the confirmation of:

Accepted Answer

A) individual transactions between organizations, such as sales transactions. 
B) accounts receivable. 
C) fixed asset additions. 
D) payroll expenses. 
A) individual transactions between organizations, such as sales transactions. 
B) accounts receivable. 
C) fixed asset additions. 
D) payroll expenses.

Exam 7: Audit Evidence

Which of the following is a correct statement regarding audit evidence?

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

Which of the following is the most objective type of evidence?

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?

Audit documentation should possess certain characteristics.Which of the following is true regarding those characteristics?

Analytical procedures must be used during which phase(s)of the audit?

The two characteristics of the appropriateness of evidence are:

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

Which of the following statements regarding the appropriateness of evidence is correct?

The evaluations of financial information through analysis of plausible relationships among financial and nonfinancial data is the definition of:

Which of the following is a correct statement regarding confirmations?

When using analytical procedures:

Given the economic and time constraints in which auditors can collect evidence about management assertions about the financial statements, the auditor normally gathers evidence that is:

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

Evidence is usually more persuasive for balance sheet accounts when it is obtained:

Inspection consists of looking at a process or procedure being performed by others.

Which of the following best describes one of the primary objectives of audit documentation?

When practical and reasonable, U.S.auditing standards require the confirmation of:

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

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

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, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

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