Question 1

Reclassification entries are made in the statements to present accounting information properly,even when the general ledger balances are correct.

Accepted Answer

A) True 
 B)False  True

Question 2

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

Accepted Answer

A) True 
 B)False  False

Question 3

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

Accepted Answer

A) True 
 B)False  True

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is the most objective type of evidence?

Accepted Answer

A)  A letter written by the client's attorney discussing the likely outcome of outstanding lawsuits 
B)  The physical count of securities and cash 
C)  Inquiries of the credit manager about the collectability of noncurrent accounts receivable 
D)  Observation of cobwebs on some inventory bins 
A)  A letter written by the client's attorney discussing the likely outcome of outstanding lawsuits 
B)  The physical count of securities and cash 
C)  Inquiries of the credit manager about the collectability of noncurrent accounts receivable 
D)  Observation of cobwebs on some inventory bins

Question 6

Analytical procedures must be used during which phase(s)of the audit?

Accepted Answer

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

Question 7

Auditors use evidence to help them draw conclusions.

Accepted Answer

A) True 
 B)False

Question 8

Audit documentation is the joint property of the auditor and the audit client.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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 11

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 12

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 13

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 14

The type of audit evidence known as inquiry requires the auditor to obtain oral or written information from the client in response to questions.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Below are 10 documents typically examined during an audit.Classify each document as either internal or external.

Accepted Answer

1.External 6.Internal
2.Intern

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 19

All evidence must have the same level of persuasiveness.

Accepted Answer

A) True 
 B)False

Question 20

When the auditor develops supporting evidence for amounts posted to account balances with documentary evidence,that process is called:

Accepted Answer

A)  inquiry. 
B)  confirmation. 
C)  vouching. 
D)  physical examination. 
A)  inquiry. 
B)  confirmation. 
C)  vouching. 
D)  physical examination.

Exam 7: Nature and Type of Audit Evidence

Reclassification entries are made in the statements to present accounting information properly,even when the general ledger balances are correct.

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

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

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

Which of the following is the most objective type of evidence?

Analytical procedures must be used during which phase(s)of the audit?

Auditors use evidence to help them draw conclusions.

Audit documentation is the joint property of the auditor and the audit client.

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

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?

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?

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

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

The type of audit evidence known as inquiry requires the auditor to obtain oral or written information from the client in response to questions.

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

Below are 10 documents typically examined during an audit.Classify each document as either internal or external.

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

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

All evidence must have the same level of persuasiveness.

When the auditor develops supporting evidence for amounts posted to account balances with documentary evidence,that process is called:

The Assurance Services Market

The Audit Standards Setting Process

Audit Reports

Legal Liability Considerations for Auditors

Ethics and the Audit Profession

Audit Responsibilities and Objectives

Audit Planning

Considering Materiality and Audit Risk

Considering Internal Control

Considering the Risk of Fraud

Implications of Information Technology for the Audit Process

Developing the Overall Audit Plan 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 Inventory and Warehousing Cycle

Audit of the Payroll and Personnel Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Audit Completion

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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