Question 1

An example of a supporting schedule is a reconciliation of amounts, which consists of the details that make up a year-end balance.

Accepted Answer

A) True 
 B)False

Question 2

An example of a document the auditor receives from the client, but which was prepared by someone outside the client's organization is a

Accepted Answer

A)  confirmation. 
B)  sales invoice. 
C)  vendor invoice. 
D)  bank reconciliation. 
A)  confirmation. 
B)  sales invoice. 
C)  vendor invoice. 
D)  bank reconciliation.

Question 3

A(n) ________ is a supporting schedule that supports a specific amount and is normally expected to tie the amount recorded in the client's records to another source of information.

Accepted Answer

A)  reconciliation of amounts 
B)  analysis 
C)  summary of procedures 
D)  informational document 
A)  reconciliation of amounts 
B)  analysis 
C)  summary of procedures 
D)  informational document

Question 4

Name three characteristics of evidence from the perspective of a scientist doing an experiment, a lawyer prosecuting an accused thief, and an auditor of financial statements. For the three characteristics that you name, describe briefly the similarities and the differences among these three professions.

Accepted Answer

Use of the evidence. Scientist: Determin

Question 5

It is not common nor required for an auditor to summarize all adjusting entries which have not been recorded before the audit is concluded.

Accepted Answer

A) True 
 B)False

Question 6

The ________ always includes a list of the ________, and it usually includes sample sizes, items to select, and the timing of the tests.

Accepted Answer

A)  audit program; audit objectives 
B)  audit program; audit procedures 
C)  audit assertion; audit programs 
D)  audit assertion; audit objectives 
A)  audit program; audit objectives 
B)  audit program; audit procedures 
C)  audit assertion; audit programs 
D)  audit assertion; audit objectives

Question 7

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.

Question 8

An example of highly persuasive evidence to an auditor is the responses to questions on a questionnaire by audit client employees.

Accepted Answer

A) True 
 B)False

Question 9

When analytical procedures reveal unusual fluctuations in an account balance, the auditor will probably perform fewer tests of details for that account and increase the tests of controls related to the account.

Accepted Answer

A) True 
 B)False

Question 10

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 11

A canceled check written by the client, made payable to a local supplier and drawn on the client's bank account is one type of internal document.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Audit documents are the joint property of the auditor and the audit client.

Accepted Answer

A) True 
 B)False

Question 14

Calculating the gross margin for the current audit year 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 15

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 16

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.

Question 17

________, generally, provide the most reliable evidence.

Accepted Answer

A)  Confirmations 
B)  Recalculations 
C)  Reperformances 
D)  Observations 
A)  Confirmations 
B)  Recalculations 
C)  Reperformances 
D)  Observations

Question 18

The sample size generally does not depend on client circumstances such as the extent of automated controls in place in the client's accounting information system.

Accepted Answer

A) True 
 B)False

Question 19

When auditors use documentation to support recorded transactions and amounts, the process is usually called

Accepted Answer

A)  tracing. 
B)  confirmations. 
C)  vouching. 
D)  reperformance. 
A)  tracing. 
B)  confirmations. 
C)  vouching. 
D)  reperformance.

Question 20

Which financial ratio is computed by dividing current assets by current liabilities?

Accepted Answer

A)  quick ratio 
B)  debt to equity 
C)  accounts receivable turnover 
D)  current ratio 
A)  quick ratio 
B)  debt to equity 
C)  accounts receivable turnover 
D)  current ratio

Exam 7: Audit Evidence

An example of a supporting schedule is a reconciliation of amounts, which consists of the details that make up a year-end balance.

An example of a document the auditor receives from the client, but which was prepared by someone outside the client's organization is a

A(n) ________ is a supporting schedule that supports a specific amount and is normally expected to tie the amount recorded in the client's records to another source of information.

It is not common nor required for an auditor to summarize all adjusting entries which have not been recorded before the audit is concluded.

The ________ always includes a list of the ________, and it usually includes sample sizes, items to select, and the timing of the tests.

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

An example of highly persuasive evidence to an auditor is the responses to questions on a questionnaire by audit client employees.

When analytical procedures reveal unusual fluctuations in an account balance, the auditor will probably perform fewer tests of details for that account and increase the tests of controls related to the account.

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.

A canceled check written by the client, made payable to a local supplier and drawn on the client's bank account is one type of internal document.

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

Audit documents are the joint property of the auditor and the audit client.

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

Audit documents

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

________, generally, provide the most reliable evidence.

The sample size generally does not depend on client circumstances such as the extent of automated controls in place in the client's accounting information system.

When auditors use documentation to support recorded transactions and amounts, the process is usually called

Which financial ratio is computed by dividing current assets by current liabilities?

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

Filters

The always includes a list of the , and it usually includes sample sizes, items to select, and the timing of the tests.