Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is an accurate statement regarding audit evidence?

Accepted Answer

A)  Responses to the auditor's questions by client employees are considered highly persuasive evidence. 
B)  Audit evidence should provide an absolute level of assurance. 
C)  The auditor uses evidence to determine whether the statements are fairly presented. 
D)  All evidence must be highly persuasive. 
A)  Responses to the auditor's questions by client employees are considered highly persuasive evidence. 
B)  Audit evidence should provide an absolute level of assurance. 
C)  The auditor uses evidence to determine whether the statements are fairly presented. 
D)  All evidence must be highly persuasive.

Question 3

Substantive analytical procedures performed during the testing phase of the audit

Accepted Answer

A)  are required under generally accepted auditing standards. 
B)  are always done independently from other audit procedures. 
C)  are used as a substantive test in support of account balances. 
D)  do not need to be documented in the working papers. 
A)  are required under generally accepted auditing standards. 
B)  are always done independently from other audit procedures. 
C)  are used as a substantive test in support of account balances. 
D)  do not need to be documented in the working papers.

Question 4

________ often incorporate sample size, items to select, and timing into the procedure.

Accepted Answer

A)  Audit objectives 
B)  Audit procedures 
C)  Audit assertions 
D)  Audit programs 
A)  Audit objectives 
B)  Audit procedures 
C)  Audit assertions 
D)  Audit programs

Question 5

Given the economic and time constraints in which auditors can collect evidence regarding 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 6

Match between columns
                        Premises: following details of transactions from original documents to journals
a use of the senses to assess certain activities
a comparison of information in two different locations
a calculation done by the auditor independent of the client
a determination of assets on hand at a given time
obtaining information from the client in response to specific questions
an examination of written information to determine facts pertinent to the audit
a less detailed examination of a document or record to determine if there is something unusual warranting further investigation
addition of a column of numbers to determine if the total is the same as the client's

Accepted Answer

The Answer of compute and scan and observe and inquire is...

Question 7

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 8

An example of an external document that provides reliable information for the auditor is a(n)

Accepted Answer

A)  employees' time report. 
B)  bank statement. 
C)  purchase order for company purchases. 
D)  carbon copy of a check. 
A)  employees' time report. 
B)  bank statement. 
C)  purchase order for company purchases. 
D)  carbon copy of a check.

Question 9

Which of the following is not a characteristic of the reliability of evidence?

Accepted Answer

A)  effectiveness of client internal controls 
B)  education of auditor 
C)  independence of information provider 
D)  timeliness 
A)  effectiveness of client internal controls 
B)  education of auditor 
C)  independence of information provider 
D)  timeliness

Question 10

Auditors use trends in the accounts receivable turnover ratio to assess the reasonableness of the company's credit policies.

Accepted Answer

A) True 
 B)False

Question 11

As long as analytical procedures are performed during the planning and testing phase of the audit, it is not necessary for the auditor to perform analytical procedures during the completion phase of the audit.

Accepted Answer

A) True 
 B)False

Question 12

It is important for the auditor to standardize the sample size from client to client and from audit to audit.

Accepted Answer

A) True 
 B)False

Question 13

"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 14

The most important difference between the quick and the current ratios is the inclusion of inventory in current assets for the quick ratio.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Which of the following is not one of the four decisions about what evidence to gather and how much of it to accumulate in the development of an audit program?

Accepted Answer

A)  which audit procedures to use 
B)  which accounts must agree to the general ledger 
C)  when to perform the procedures 
D)  what sample size to select for a given procedure 
A)  which audit procedures to use 
B)  which accounts must agree to the general ledger 
C)  when to perform the procedures 
D)  what sample size to select for a given procedure

Question 17

Auditors compare client data with

Accepted Answer

A)  industry data. 
B)  client-determined expected results. 
C)  similar prior-period data. 
D)  all of the above. 
A)  industry data. 
B)  client-determined expected results. 
C)  similar prior-period data. 
D)  all of the above.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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 total 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 total 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.

Question 20

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

Accepted Answer

A)  To be relevant, evidence must pertain to the audit objective of the evidence. 
B)  To be relevant, evidence must be persuasive. 
C)  To be relevant, evidence must relate to multiple audit objectives. 
D)  To be relevant, evidence must be derived from a system including effective internal controls. 
A)  To be relevant, evidence must pertain to the audit objective of the evidence. 
B)  To be relevant, evidence must be persuasive. 
C)  To be relevant, evidence must relate to multiple audit objectives. 
D)  To be relevant, evidence must be derived from a system including effective internal controls.

Exam 7: Audit Evidence

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

Which of the following is an accurate statement regarding audit evidence?

Substantive analytical procedures performed during the testing phase of the audit

________ often incorporate sample size, items to select, and timing into the procedure.

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

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

An example of an external document that provides reliable information for the auditor is a(n)

Which of the following is not a characteristic of the reliability of evidence?

Auditors use trends in the accounts receivable turnover ratio to assess the reasonableness of the company's credit policies.

As long as analytical procedures are performed during the planning and testing phase of the audit, it is not necessary for the auditor to perform analytical procedures during the completion phase of the audit.

It is important for the auditor to standardize the sample size from client to client and from audit to audit.

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

The most important difference between the quick and the current ratios is the inclusion of inventory in current assets for the quick ratio.

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.

Which of the following is not one of the four decisions about what evidence to gather and how much of it to accumulate in the development of an audit program?

Auditors compare client data with

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

When preparing and organizing audit files,

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

The Demand for Audit and Other Assurance Services

The CPA Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Planning and Materiality

Assessing the Risk of Material Misstatement

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, 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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