Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Below are 12 audit procedures.Classify each procedure according to the following types of audit evidence: (1)physical examination, (2)confirmation, (3)documentation, (4)observation, (5)inquiry of the client, (6)reperformance, and (7)analytical procedure.

Accepted Answer

1.Observation
2.Physical examination
3.R

Question 3

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 4

Confirmations are among the most expensive type of evidence to obtain.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a correct combination of terms and related type of audit evidence?

Accepted Answer

A) Inquire - inquiries of client 
B) Count - physical examination 
C) Recompute - documentation 
D) Read - documentation 
A) Inquire - inquiries of client 
B) Count - physical examination 
C) Recompute - documentation 
D) Read - documentation

Question 8

Whenever practical and reasonable, the confirmation of accounts receivable is required of CPAs.

Accepted Answer

A) True 
 B)False

Question 9

Cost is never an adequate justification for omitting a necessary procedure or not gathering an adequate sample size.

Accepted Answer

A) True 
 B)False

Question 10

Two determinants of the persuasiveness of evidence are:

Accepted Answer

A) competence and sufficiency. 
B) relevance and reliability. 
C) appropriateness and sufficiency. 
D) independence and effectiveness. 
A) competence and sufficiency. 
B) relevance and reliability. 
C) appropriateness and sufficiency. 
D) independence and effectiveness.

Question 11

The two most important factors when determining the appropriate sample size in an audit are the auditor's expectation of misstatements and the objectivity of the evidence.

Accepted Answer

A) True 
 B)False

Question 12

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 13

A(n)________ is the detailed instruction that explains the audit evidence to be obtained during the audit.

Accepted Answer

A) audit objectives 
B) audit procedure 
C) audit assertion 
D) audit program 
A) audit objectives 
B) audit procedure 
C) audit assertion 
D) audit program

Question 14

Which of the following statements is correct regarding the costs involved in obtaining evidence?

Accepted Answer

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

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

The auditor must gather sufficient and appropriate evidence during the course of the audit.Sufficient evidence must:

Accepted Answer

A) be well documented and cross-referenced in the audit documents. 
B) be based on sources that are external to company. 
C) provide evidence that prove or disprove an audit objective/assertion. 
D) be persuasive enough to enable the auditor to issue an audit report. 
A) be well documented and cross-referenced in the audit documents. 
B) be based on sources that are external to company. 
C) provide evidence that prove or disprove an audit objective/assertion. 
D) be persuasive enough to enable the auditor to issue an audit report.

Question 17

Auditing standards require that records for audits of private companies be retained for a minimum of seven years.

Accepted Answer

A) True 
 B)False

Question 18

"Physical examination" is the inspection or count by the auditor of items such as:

Accepted Answer

A) cash, inventory, and payroll timecards. 
B) cash, inventory, canceled checks, and sales documents. 
C) cash, inventory, canceled checks, and tangible fixed assets. 
D) cash, inventory, securities, notes receivable, and tangible fixed assets. 
A) cash, inventory, and payroll timecards. 
B) cash, inventory, canceled checks, and sales documents. 
C) cash, inventory, canceled checks, and tangible fixed assets. 
D) cash, inventory, securities, notes receivable, and tangible fixed assets.

Question 19

Audit procedures are concerned with the nature, extent, and timing in gathering audit evidence.Which, of the following, is true as to the timing of audit procedures?

Accepted Answer

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

Question 20

Auditors may decide to replace tests of details with analytical procedures when possible because the:

Accepted Answer

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

Exam 7: Audit Evidence

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

Below are 12 audit procedures.Classify each procedure according to the following types of audit evidence: (1)physical examination, (2)confirmation, (3)documentation, (4)observation, (5)inquiry of the client, (6)reperformance, and (7)analytical procedure.

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.

Confirmations are among the most expensive type of evidence to obtain.

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.

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

Which of the following is not a correct combination of terms and related type of audit evidence?

Whenever practical and reasonable, the confirmation of accounts receivable is required of CPAs.

Cost is never an adequate justification for omitting a necessary procedure or not gathering an adequate sample size.

Two determinants of the persuasiveness of evidence are:

The two most important factors when determining the appropriate sample size in an audit are the auditor's expectation of misstatements and the objectivity of the evidence.

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

A(n)________ is the detailed instruction that explains the audit evidence to be obtained during the audit.

Which of the following statements is correct regarding the costs involved in obtaining evidence?

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

The auditor must gather sufficient and appropriate evidence during the course of the audit.Sufficient evidence must:

Auditing standards require that records for audits of private companies be retained for a minimum of seven years.

"Physical examination" is the inspection or count by the auditor of items such as:

Audit procedures are concerned with the nature, extent, and timing in gathering audit evidence.Which, of the following, is true as to the timing of audit procedures?

Auditors may decide to replace tests of details with analytical procedures when possible because the:

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

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