Question 1

Auditors use trends in the inventory turnover ratio to identify potential errors in inventory pricing.

Accepted Answer

A) True 
 B)False

Question 2

An auditor can use engagement management software to facilitate tracking audit progress.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Adjusting entries discovered in the audit after often prepared by the auditor; these adjusting entries do not have to be approved by the client.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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 7

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

Accepted Answer

The Answer of budgets and audit objectives and analytical procedures is...

Question 8

Since confirmation replies and copies of client agreements are not considered schedules in the usual sense, they are not indexed and filed.

Accepted Answer

A) True 
 B)False

Question 9

For audit evidence to be compelling to the auditor it must be sufficient and appropriate. Which statement below is not correct regarding the appropriateness of audit evidence?

Accepted Answer

A)  The more effective the internal control system, the more assurance it provides the auditor about the reliability of financial reporting by the client. 
B)  An auditor's opinion, to be economically useful and profitable to the auditing firm needs to be formed within a reasonable time and based on evidence obtained that assures profits for the auditing firm. 
C)  Evidence obtained from independent sources outside the entity is generally more reliable than evidence secured solely within the entity. 
D)  The independent auditor's direct personal knowledge, obtained through inquiry, observation and inspection, is generally more persuasive than information obtained indirectly. 
A)  The more effective the internal control system, the more assurance it provides the auditor about the reliability of financial reporting by the client. 
B)  An auditor's opinion, to be economically useful and profitable to the auditing firm needs to be formed within a reasonable time and based on evidence obtained that assures profits for the auditing firm. 
C)  Evidence obtained from independent sources outside the entity is generally more reliable than evidence secured solely within the entity. 
D)  The independent auditor's direct personal knowledge, obtained through inquiry, observation and inspection, is generally more persuasive than information obtained indirectly.

Question 10

Analytical procedures are used extensively in practice, but they will not help the auditor in assessing an audit client's ability to continue as a going concern.

Accepted Answer

A) True 
 B)False

Question 11

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 - recalculation 
D)  read - documentation 
A)  inquire - inquiries of client 
B)  count - physical examination 
C)  recompute - recalculation 
D)  read - documentation

Question 12

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 13

The usefulness of analytical procedures as audit evidence depends significantly on appropriate comparison data.

Accepted Answer

A) True 
 B)False

Question 14

The most widely used profitability ratio is the gross profit percent.

Accepted Answer

A) True 
 B)False

Question 15

It is essential that the detail on an audit schedule is designed to list the detail and show the verification of support for a balance sheet account, and that this schedule also reconciles with the trial balance.

Accepted Answer

A) True 
 B)False

Question 16

The primary purpose of audit procedures is to

Accepted Answer

A)  detect all errors or fraudulent activities as well as illegal activities. 
B)  comply with auditing standards promulgated by the PCAOB for publicly held clients. 
C)  gather corroborative audit evidence about management's assertions regarding the client's financial statements. 
D)  determine the amount of errors in the balance sheet accounts in order to adjust the accounts to actual. 
A)  detect all errors or fraudulent activities as well as illegal activities. 
B)  comply with auditing standards promulgated by the PCAOB for publicly held clients. 
C)  gather corroborative audit evidence about management's assertions regarding the client's financial statements. 
D)  determine the amount of errors in the balance sheet accounts in order to adjust the accounts to actual.

Question 17

Auditors use trends in the inventory turnover ratio to identify potential inventory obsolescence.

Accepted Answer

A) True 
 B)False

Question 18

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 19

An example of less persuasive evidence to an auditor is the observation of the physical inventory taken by an audit client.

Accepted Answer

A) True 
 B)False

Question 20

Audit evidence obtained directly by the auditor will not be reliable if

Accepted Answer

A)  the auditor lacks the competence to evaluate the evidence. 
B)  it is provided by the client's attorney. 
C)  the client denies its veracity. 
D)  it is impossible for the auditor to obtain additional corroboratory evidence. 
A)  the auditor lacks the competence to evaluate the evidence. 
B)  it is provided by the client's attorney. 
C)  the client denies its veracity. 
D)  it is impossible for the auditor to obtain additional corroboratory evidence.

Exam 7: Audit Evidence

Auditors use trends in the inventory turnover ratio to identify potential errors in inventory pricing.

An auditor can use engagement management software to facilitate tracking audit progress.

Evidence is generally considered appropriate when

Adjusting entries discovered in the audit after often prepared by the auditor; these adjusting entries do not have to be approved by the client.

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

Analytical procedures are so important that they are required during the

Since confirmation replies and copies of client agreements are not considered schedules in the usual sense, they are not indexed and filed.

For audit evidence to be compelling to the auditor it must be sufficient and appropriate. Which statement below is not correct regarding the appropriateness of audit evidence?

Analytical procedures are used extensively in practice, but they will not help the auditor in assessing an audit client's ability to continue as a going concern.

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

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

The usefulness of analytical procedures as audit evidence depends significantly on appropriate comparison data.

The most widely used profitability ratio is the gross profit percent.

It is essential that the detail on an audit schedule is designed to list the detail and show the verification of support for a balance sheet account, and that this schedule also reconciles with the trial balance.

The primary purpose of audit procedures is to

Auditors use trends in the inventory turnover ratio to identify potential inventory obsolescence.

Industry comparisons can be used as

An example of less persuasive evidence to an auditor is the observation of the physical inventory taken by an audit client.

Audit evidence obtained directly by the auditor will not be reliable if

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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