Question 1

Define the following terms commonly used in audit procedures:
1.Examine
2.Scan
3.Compute
4.Foot
5.Compare
6.Count
7.Vouch

Accepted Answer

1.Examine - A reasonably detailed study

Question 2

Indicate whether confirmation of accounts receivable and accounts payable, provided they each are significant accounts, is required or optional:

Accepted Answer

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

Question 3

Discuss three of the following influences on the persuasiveness of evidence.
1.Relevance
2.Independence of provider
3.Effectiveness of client's internal controls
4.Auditor's direct knowledge
5.Degree of objectivity
6.Timeliness

Accepted Answer

1.Relevance - Evidence must pertain to t

Question 4

An audit program is the list of audit procedures for an audit area or an entire audit.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following forms of evidence would be least persuasive in forming the auditor's opinion about marketable securities and other investments held by the company?

Accepted Answer

A) Responses to auditor's questions by the president and controller regarding the investments account 
B) Correspondence with a stockbroker regarding the quantity of client's investments held in street name by the broker 
C) Minutes of the board of directors authorizing the purchase of stock as an investment 
D) The auditor's count of marketable securities 
A) Responses to auditor's questions by the president and controller regarding the investments account 
B) Correspondence with a stockbroker regarding the quantity of client's investments held in street name by the broker 
C) Minutes of the board of directors authorizing the purchase of stock as an investment 
D) The auditor's count of marketable securities

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Audit evidence is often available only in electronic form, and auditors must evaluate how this affects their ability to gather sufficient, appropriate evidence.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Evidence is generally considered appropriate when:

Accepted Answer

A) it has been obtained by random selection. 
B) there is enough of it to afford a reasonable basis for an opinion on financial statements. 
C) it is relevant to the audit objective being tested. 
D) it consists of written statements made by managers of the company under audit. 
A) it has been obtained by random selection. 
B) there is enough of it to afford a reasonable basis for an opinion on financial statements. 
C) it is relevant to the audit objective being tested. 
D) it consists of written statements made by managers of the company under audit.

Question 10

Accounts receivable confirmations must be controlled by the client from the time they are prepared until the time they are returned to the auditor.

Accepted Answer

A) True 
 B)False

Question 11

Audit documents:

Accepted Answer

A) are kept by the client for easy reference for their accounting staff. 
B) should be considered as a substitute for the clients accounting records. 
C) are designed to facilitate the review and supervision of the work performed by the audit team by a reviewing partner. 
D) prepared during the engagement are the property of the client once the audit bill is paid. 
A) are kept by the client for easy reference for their accounting staff. 
B) should be considered as a substitute for the clients accounting records. 
C) are designed to facilitate the review and supervision of the work performed by the audit team by a reviewing partner. 
D) prepared during the engagement are the property of the client once the audit bill is paid.

Question 12

All evidence must have the same level of persuasiveness.

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

Auditor judgment is the primary determinant in determining the amount of evidence gathered.

Accepted Answer

A) True 
 B)False

Question 15

You are auditing the company's purchasing process for goods and services.You are primarily concerned with the company not recording all purchase transactions.Which audit procedure below would be the most effective audit procedure in this case?

Accepted Answer

A) Vouching from the accounts payable account to the vendor invoices 
B) Tracing vendor invoices to recorded amounts in the accounts payable account 
C) Confirmation accounts payable recorded amounts 
D) Reconciling the accounts payable subsidiary ledger to the accounts payable account 
A) Vouching from the accounts payable account to the vendor invoices 
B) Tracing vendor invoices to recorded amounts in the accounts payable account 
C) Confirmation accounts payable recorded amounts 
D) Reconciling the accounts payable subsidiary ledger to the accounts payable account

Question 16

Calculating the gross margin for the current year under audit as a percent of sales and comparing it with previous years is what type of evidence?

Accepted Answer

A) Physical examination 
B) Analytical procedures 
C) Observation 
D) Inquiry 
A) Physical examination 
B) Analytical procedures 
C) Observation 
D) Inquiry

Question 17

Which of the following statements relating to the competence of evidential matter is always true?

Accepted Answer

A) Evidence from outside an enterprise is always reliable. 
B) Accounting data developed under satisfactory conditions of internal control is not reliable. 
C) Oral representations made by management are not reliable evidence. 
D) Evidence must be both reliable and relevant to be considered appropriate. 
A) Evidence from outside an enterprise is always reliable. 
B) Accounting data developed under satisfactory conditions of internal control is not reliable. 
C) Oral representations made by management are not reliable evidence. 
D) Evidence must be both reliable and relevant to be considered appropriate.

Question 18

Audit evidence has two primary qualities for the auditor; relevance and reliability.Given the choices below, which provides the auditor with the most reliable audit evidence?

Accepted Answer

A) General ledger account balances 
B) Confirmation of accounts receivable balance received from a customer 
C) Internal memo explaining the issuance of a credit memo 
D) Copy of month-end adjusting entries 
A) General ledger account balances 
B) Confirmation of accounts receivable balance received from a customer 
C) Internal memo explaining the issuance of a credit memo 
D) Copy of month-end adjusting entries

Question 19

Appropriateness of evidence is a measure of the:

Accepted Answer

A) quantity of evidence. 
B) quality of evidence. 
C) sufficiency of evidence. 
D) meaning of evidence. 
A) quantity of evidence. 
B) quality of evidence. 
C) sufficiency of evidence. 
D) meaning of evidence.

Question 20

When preparing and organizing audit files:

Accepted Answer

A) The rules established by the SEC and PCAOB must be followed. 
B) A lead schedule contains the detailed accounts from the general ledger making up the line item on the trial balance. 
C) A working trial balance is considered part of the permanent file. 
D) The audit program is not part of the audit files. 
A) The rules established by the SEC and PCAOB must be followed. 
B) A lead schedule contains the detailed accounts from the general ledger making up the line item on the trial balance. 
C) A working trial balance is considered part of the permanent file. 
D) The audit program is not part of the audit files.

Exam 7: Audit Evidence

Define the following terms commonly used in audit procedures: 1.Examine 2.Scan 3.Compute 4.Foot 5.Compare 6.Count 7.Vouch

Indicate whether confirmation of accounts receivable and accounts payable, provided they each are significant accounts, is required or optional:

Discuss three of the following influences on the persuasiveness of evidence. 1.Relevance 2.Independence of provider 3.Effectiveness of client's internal controls 4.Auditor's direct knowledge 5.Degree of objectivity 6.Timeliness

An audit program is the list of audit procedures for an audit area or an entire audit.

Which of the following forms of evidence would be least persuasive in forming the auditor's opinion about marketable securities and other investments held by the company?

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

Audit evidence is often available only in electronic form, and auditors must evaluate how this affects their ability to gather sufficient, appropriate evidence.

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

Evidence is generally considered appropriate when:

Accounts receivable confirmations must be controlled by the client from the time they are prepared until the time they are returned to the auditor.

Audit documents:

All evidence must have the same level of persuasiveness.

Physical examination:

Auditor judgment is the primary determinant in determining the amount of evidence gathered.

You are auditing the company's purchasing process for goods and services.You are primarily concerned with the company not recording all purchase transactions.Which audit procedure below would be the most effective audit procedure in this case?

Calculating the gross margin for the current year under audit as a percent of sales and comparing it with previous years is what type of evidence?

Which of the following statements relating to the competence of evidential matter is always true?

Audit evidence has two primary qualities for the auditor; relevance and reliability.Given the choices below, which provides the auditor with the most reliable audit evidence?

Appropriateness of evidence is a measure of the:

When preparing and organizing audit files:

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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