Question 1

Auditors usually choose separate measures of materiality for each of the financial statements.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is a substantive test that an auditor most likely would perform to verify the existence and valuation of recorded accounts payable?

Accepted Answer

A)  Investigating the open purchase order file to ascertain that prenumbered purchase orders are used and accounted for. 
B)  Receiving the client's unopened mail for a reasonable period of time after year-end to search for unrecorded vendor's invoices. 
C)  Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports. 
D)  Confirming accounts payable balances with known vendors and suppliers who have zero balances at year-end. 
A)  Investigating the open purchase order file to ascertain that prenumbered purchase orders are used and accounted for. 
B)  Receiving the client's unopened mail for a reasonable period of time after year-end to search for unrecorded vendor's invoices. 
C)  Vouching selected entries in the accounts payable subsidiary ledger to purchase orders and receiving reports. 
D)  Confirming accounts payable balances with known vendors and suppliers who have zero balances at year-end.

Question 3

Which of the following engagement planning procedures would most likely assist the auditor in identifying related-party transactions before the balance-sheet date?

Accepted Answer

A)  Interviewing internal auditors about their reporting responsibilities. 
B)  Reviewing accounting records for recurring transactions occurring near year-end. 
C)  Inspecting communications with the client's legal counsel regarding recorded contingent liabilities. 
D)  Scanning the minutes for significant transactions with members of the board of directors. 
A)  Interviewing internal auditors about their reporting responsibilities. 
B)  Reviewing accounting records for recurring transactions occurring near year-end. 
C)  Inspecting communications with the client's legal counsel regarding recorded contingent liabilities. 
D)  Scanning the minutes for significant transactions with members of the board of directors.

Question 4

Auditors usually prepare an audit plan summarizing the preliminary analytical review and the materiality assessment.

Accepted Answer

A) True 
 B)False

Question 5

What are the advantages and limitations derived from using computer-assisted audit techniques (CAATs)packages?

Accepted Answer

The advantages of computer-assisted audi

Question 6

The Code of Professional Conduct permits predecessor auditors to give information to the auditors without client consent.

Accepted Answer

A) True 
 B)False

Question 7

____________________________________________________________ refers to procedures performed shortly before and after the balance sheet date.

Accepted Answer

The answer of ____________________________________________________________ refers to procedures performed shortly before...

Question 8

Which of the following audit procedures probably would provide the most reliable evidence concerning the entity's assertion of rights and obligations related to inventories?

Accepted Answer

A)  Trace test counts noted during the physical count of inventory to the summarization of quantities. 
B)  Inspect agreements for evidence of inventory held on consignment. 
C)  Select the last few shipping advices used before the physical count and determine whether the shipments were recorded as sales. 
D)  Inspect the open purchase order file for significant commitments to consider for disclosure. 
A)  Trace test counts noted during the physical count of inventory to the summarization of quantities. 
B)  Inspect agreements for evidence of inventory held on consignment. 
C)  Select the last few shipping advices used before the physical count and determine whether the shipments were recorded as sales. 
D)  Inspect the open purchase order file for significant commitments to consider for disclosure.

Question 9

A major reason for thinking about overall materiality at the planning stage is to try to fine-tune the audit for effectiveness and efficiency.

Accepted Answer

A) True 
 B)False

Question 10

The confirmation of an accounts receivable balance provides primary evidence regarding which management assertion?

Accepted Answer

A)  Completeness. 
B)  Valuation. 
C)  Allocation. 
D)  Existence. 
A)  Completeness. 
B)  Valuation. 
C)  Allocation. 
D)  Existence.

Question 11

In auditing accrued liabilities,an auditor's procedures most likely would focus primarily on management's assertion of

Accepted Answer

A)  Existence or occurrence. 
B)  Completeness. 
C)  Presentation and disclosure. 
D)  Valuation or allocation. 
A)  Existence or occurrence. 
B)  Completeness. 
C)  Presentation and disclosure. 
D)  Valuation or allocation.

Question 12

Which of the following is not a benefit claimed for the practice of determining materiality in the initial planning stage of an audit?

Accepted Answer

A)  Being able to fine-tune the audit work for effectiveness and efficiency. 
B)  Avoiding the problem of doing more work than necessary (overauditing). 
C)  Being able to decide early what type of audit opinion to issue. 
D)  Avoiding the problem of doing too little work (underauditing). 
A)  Being able to fine-tune the audit work for effectiveness and efficiency. 
B)  Avoiding the problem of doing more work than necessary (overauditing). 
C)  Being able to decide early what type of audit opinion to issue. 
D)  Avoiding the problem of doing too little work (underauditing).

Question 13

The auditor is not required to ask the predecessor auditor about

Accepted Answer

A)  Facts that might bear on the integrity of management. 
B)  Disagreements the predecessor may have had with management about accounting principles and audit procedures. 
C)  The fees charged for the previous audit. 
D)  The predecessor's understanding about the reasons for the change of auditors. 
A)  Facts that might bear on the integrity of management. 
B)  Disagreements the predecessor may have had with management about accounting principles and audit procedures. 
C)  The fees charged for the previous audit. 
D)  The predecessor's understanding about the reasons for the change of auditors.

Question 14

The use of computer systems has increased the potential for management supervision of the internal control system.

Accepted Answer

A) True 
 B)False

Question 15

The time reports are recorded by budget categories for all the following purposes except for

Accepted Answer

A)  Providing evidence that the audit plan was satisfied. 
B)  Evaluating the efficiency of the audit team members. 
C)  Compiling a record for billing the client. 
D)  Compiling a record for planning the next audit. 
A)  Providing evidence that the audit plan was satisfied. 
B)  Evaluating the efficiency of the audit team members. 
C)  Compiling a record for billing the client. 
D)  Compiling a record for planning the next audit.

Question 16

Procedures used to detect material misstatements in dollar amounts and disclosures in financial statements are known as _______________________________________________.

Accepted Answer

substantiv

Question 17

Which of the following factors most likely would cause an auditor not to accept a new audit engagement?

Accepted Answer

A)  An inadequate understanding of the entity's internal controls. 
B)  The close proximity to the end of the entity's fiscal year. 
C)  Concluding that the entity's management probably lacks integrity. 
D)  The inability to perform preliminary analytical procedures before assessing control risk. 
A)  An inadequate understanding of the entity's internal controls. 
B)  The close proximity to the end of the entity's fiscal year. 
C)  Concluding that the entity's management probably lacks integrity. 
D)  The inability to perform preliminary analytical procedures before assessing control risk.

Question 18

Confirmations of accounts receivable provide evidence primarily about which two assertions?

Accepted Answer

A)  Completeness and valuation. 
B)  Valuation and rights and obligations. 
C)  Existence and rights and obligations. 
D)  Existence and completeness. 
A)  Completeness and valuation. 
B)  Valuation and rights and obligations. 
C)  Existence and rights and obligations. 
D)  Existence and completeness.

Question 19

Identify the two types of audit plans and indicate the purpose of each.

Accepted Answer

The two types of audit plans are (1)the

Question 20

Which of the following most likely would give the most assurance concerning the valuation assertion of accounts receivable?

Accepted Answer

A)  Tracing amounts in the subsidiary ledger to details on shipping documents. 
B)  Comparing receivable turnover rates to industry statistics for reasonableness. 
C)  Inquiring about receivables pledged under loan agreements. 
D)  Assessing the allowance for uncollectible accounts for reasonableness. 
A)  Tracing amounts in the subsidiary ledger to details on shipping documents. 
B)  Comparing receivable turnover rates to industry statistics for reasonableness. 
C)  Inquiring about receivables pledged under loan agreements. 
D)  Assessing the allowance for uncollectible accounts for reasonableness.

Auditors usually choose separate measures of materiality for each of the financial statements.

Which of the following is a substantive test that an auditor most likely would perform to verify the existence and valuation of recorded accounts payable?

Which of the following engagement planning procedures would most likely assist the auditor in identifying related-party transactions before the balance-sheet date?

Auditors usually prepare an audit plan summarizing the preliminary analytical review and the materiality assessment.

What are the advantages and limitations derived from using computer-assisted audit techniques (CAATs)packages?

The Code of Professional Conduct permits predecessor auditors to give information to the auditors without client consent.

____________________________________________________________ refers to procedures performed shortly before and after the balance sheet date.

Which of the following audit procedures probably would provide the most reliable evidence concerning the entity's assertion of rights and obligations related to inventories?

A major reason for thinking about overall materiality at the planning stage is to try to fine-tune the audit for effectiveness and efficiency.

The confirmation of an accounts receivable balance provides primary evidence regarding which management assertion?

In auditing accrued liabilities,an auditor's procedures most likely would focus primarily on management's assertion of

Which of the following is not a benefit claimed for the practice of determining materiality in the initial planning stage of an audit?

The auditor is not required to ask the predecessor auditor about

The use of computer systems has increased the potential for management supervision of the internal control system.

The time reports are recorded by budget categories for all the following purposes except for

Procedures used to detect material misstatements in dollar amounts and disclosures in financial statements are known as _______________________________________________.

Which of the following factors most likely would cause an auditor not to accept a new audit engagement?

Confirmations of accounts receivable provide evidence primarily about which two assertions?

Identify the two types of audit plans and indicate the purpose of each.

Which of the following most likely would give the most assurance concerning the valuation assertion of accounts receivable?

Auditing and Assurance Services

Professional Standards

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Exam 3: Engagement Planning

Auditors usually choose separate measures of materiality for each of the financial statements.

Which of the following is a substantive test that an auditor most likely would perform to verify the existence and valuation of recorded accounts payable?

Which of the following engagement planning procedures would most likely assist the auditor in identifying related-party transactions before the balance-sheet date?

Auditors usually prepare an audit plan summarizing the preliminary analytical review and the materiality assessment.

What are the advantages and limitations derived from using computer-assisted audit techniques (CAATs)packages?

The Code of Professional Conduct permits predecessor auditors to give information to the auditors without client consent.

____________________________________________________________ refers to procedures performed shortly before and after the balance sheet date.

Which of the following audit procedures probably would provide the most reliable evidence concerning the entity's assertion of rights and obligations related to inventories?

A major reason for thinking about overall materiality at the planning stage is to try to fine-tune the audit for effectiveness and efficiency.

The confirmation of an accounts receivable balance provides primary evidence regarding which management assertion?

In auditing accrued liabilities,an auditor's procedures most likely would focus primarily on management's assertion of

Which of the following is not a benefit claimed for the practice of determining materiality in the initial planning stage of an audit?

The auditor is not required to ask the predecessor auditor about

The use of computer systems has increased the potential for management supervision of the internal control system.

The time reports are recorded by budget categories for all the following purposes except for

Procedures used to detect material misstatements in dollar amounts and disclosures in financial statements are known as _______________________________________________.

Which of the following factors most likely would cause an auditor not to accept a new audit engagement?

Confirmations of accounts receivable provide evidence primarily about which two assertions?

Identify the two types of audit plans and indicate the purpose of each.

Which of the following most likely would give the most assurance concerning the valuation assertion of accounts receivable?

Auditing and Assurance Services

Professional Standards

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters