Question 1

In determining whether transactions have been recorded, the direction of the audit testing should start from the

Accepted Answer

A)  General ledger balances. 
B)  Adjusted trial balance. 
C)  Original source documents. 
D)  General journal entries. 
A)  General ledger balances. 
B)  Adjusted trial balance. 
C)  Original source documents. 
D)  General journal entries.

Question 2

The auditor must use his or her professional judgment to determine the amount of audit evidence to be gathered.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following types of audit evidence is the most persuasive?

Accepted Answer

A)  Prenumbered internal purchase order forms. 
B)  Auditee worksheets supporting cost allocations. 
C)  Bank statements obtained from the auditee. 
D)  Auditee personnel responses to auditor inquiries. 
A)  Prenumbered internal purchase order forms. 
B)  Auditee worksheets supporting cost allocations. 
C)  Bank statements obtained from the auditee. 
D)  Auditee personnel responses to auditor inquiries.

Question 4

Which of the following show the detailed general ledger accounts that make up a financial statement category on the auditor's working trial balance?

Accepted Answer

A)  Account analyses. 
B)  Supporting schedules. 
C)  Control accounts. 
D)  Lead schedules. 
A)  Account analyses. 
B)  Supporting schedules. 
C)  Control accounts. 
D)  Lead schedules.

Question 5

Name two management assertions pertaining to the inventory account balance and explain why they are considered in an audit.

Accepted Answer

Answers should include two of the follow

Question 6

Which of the following presumptions is correct about the reliability of audit evidence?

Accepted Answer

A)  Information obtained indirectly from outside sources is the most reliable audit evidence. 
B)  To be reliable, audit evidence should be convincing rather than persuasive. 
C)  Reliability of audit evidence refers to the amount of corroborative evidence obtained. 
D)  An effective internal control system provides more reliable audit evidence. 
A)  Information obtained indirectly from outside sources is the most reliable audit evidence. 
B)  To be reliable, audit evidence should be convincing rather than persuasive. 
C)  Reliability of audit evidence refers to the amount of corroborative evidence obtained. 
D)  An effective internal control system provides more reliable audit evidence.

Question 7

Audit documents record the results of the auditor's evidence-gathering procedures. When preparing audit documents, the auditor should remember that

Accepted Answer

A)  Audit documents should be kept on the client's premises so that the client can have access to them for reference purposes. 
B)  Audit documents should be the primary support for the financial statements being examined. 
C)  Audit documents should be considered as a substitute for the company's accounting records. 
D)  Audit documents should be designed to facilitate the review and supervision of work done by auditors assigned to the engagement. 
A)  Audit documents should be kept on the client's premises so that the client can have access to them for reference purposes. 
B)  Audit documents should be the primary support for the financial statements being examined. 
C)  Audit documents should be considered as a substitute for the company's accounting records. 
D)  Audit documents should be designed to facilitate the review and supervision of work done by auditors assigned to the engagement.

Question 8

In testing plant and equipment balances, an auditor may physically inspect new additions listed on the summary of plant and equipment transactions for the year. This procedure is designed to obtain evidence concerning management's assertions about classes of transactions and events, and specifically, which assertion?

Accepted Answer

A)  Occurrence. 
B)  Cutoff. 
C)  Authorization. 
D)  Classification. 
A)  Occurrence. 
B)  Cutoff. 
C)  Authorization. 
D)  Classification.

Question 9

Which of the following are ordinarily designed to detect possible material monetary errors in the financial statements?

Accepted Answer

A)  Tests of controls. 
B)  Analytical procedures. 
C)  Computer controls. 
D)  Post-audit review of audit documents. 
A)  Tests of controls. 
B)  Analytical procedures. 
C)  Computer controls. 
D)  Post-audit review of audit documents.

Question 10

According to the text, what are the two functions of working papers?

Accepted Answer

Working papers provide support for the a

Question 11

Analytical procedures are

Accepted Answer

A)  Never required. 
B)  Required for planning, substantive testing, and overall review of the financial statements. 
C)  Required for planning and overall review of the financial statements. 
D)  Required during planning only. 
A)  Never required. 
B)  Required for planning, substantive testing, and overall review of the financial statements. 
C)  Required for planning and overall review of the financial statements. 
D)  Required during planning only.

Question 12

Of the following, which is the least persuasive type of audit evidence?

Accepted Answer

A)  Documents mailed by outsiders to the auditor. 
B)  Correspondence between the auditor and third party vendors. 
C)  Copies of company sales invoices inspected by the auditor. 
D)  Computations made by the auditor. 
A)  Documents mailed by outsiders to the auditor. 
B)  Correspondence between the auditor and third party vendors. 
C)  Copies of company sales invoices inspected by the auditor. 
D)  Computations made by the auditor.

Question 13

The auditor notices significant fluctuations in key elements of the company's financial statements. If management is unable to provide an acceptable explanation, the auditor should

Accepted Answer

A)  Consider the matter a scope limitation. 
B)  Perform additional audit procedures to investigate the matter further. 
C)  Intensify the examination with the expectation of detecting management fraud. 
D)  Withdraw from the engagement. 
A)  Consider the matter a scope limitation. 
B)  Perform additional audit procedures to investigate the matter further. 
C)  Intensify the examination with the expectation of detecting management fraud. 
D)  Withdraw from the engagement.

Question 14

Which of the following tends to be most predictable for purposes of analytical procedures applied as substantive procedures?

Accepted Answer

A)  Relationships involving balance sheet accounts. 
B)  Transactions subject to management discretion. 
C)  Relationships involving income statement accounts. 
D)  Data subject to audit testing in the prior year. 
A)  Relationships involving balance sheet accounts. 
B)  Transactions subject to management discretion. 
C)  Relationships involving income statement accounts. 
D)  Data subject to audit testing in the prior year.

Question 15

Which set of assertions is tested when, during completion of the audit, the audit partner conducts a final review of the format of the entity's balance sheet?

Accepted Answer

A)  Assertions about classes of transactions and events. 
B)  Assertions about account balances at the period end. 
C)  Assertions about presentation and disclosure. 
D)  None of these. 
A)  Assertions about classes of transactions and events. 
B)  Assertions about account balances at the period end. 
C)  Assertions about presentation and disclosure. 
D)  None of these.

Question 16

For each of the following categories of analytical procedures, indicate (a) whether an auditor is required to use the procedure and (b) the purpose(s) of the procedure.
Preliminary analytical procedures (risk assessment procedures)
Substantive analytical procedures
Final analytical procedures

Accepted Answer

The auditor is required to use prelimina

Question 17

Analytical procedures enable the auditor to predict the balance or quantity of an item under audit. Information to develop this estimate can be obtained from all of the following except:

Accepted Answer

A)  Tracing transactions through the system to determine whether procedures are being applied as prescribed. 
B)  Comparison of financial data with data for comparable prior periods, anticipated results (e.g., budgets and forecasts) and similar data for the industry in which the entity operates. 
C)  Study of the relationships of elements of financial data that would be expected to conform to a predictable pattern based upon the entity's experience. 
D)  Study of the relationships of financial data with relevant nonfinancial data. 
A)  Tracing transactions through the system to determine whether procedures are being applied as prescribed. 
B)  Comparison of financial data with data for comparable prior periods, anticipated results (e.g., budgets and forecasts) and similar data for the industry in which the entity operates. 
C)  Study of the relationships of elements of financial data that would be expected to conform to a predictable pattern based upon the entity's experience. 
D)  Study of the relationships of financial data with relevant nonfinancial data.

Question 18

You are auditing a store that sells merchandise. Some of the store merchandise is held on consignment. Which account balance assertion for inventory should you be most concerned about verifying?

Accepted Answer

A)  Existence or occurrence. 
B)  Completeness. 
C)  Rights and obligations. 
D)  Valuation or allocation. 
A)  Existence or occurrence. 
B)  Completeness. 
C)  Rights and obligations. 
D)  Valuation or allocation.

Question 19

The sufficiency of evidence refers to the quality of audit evidence.

Accepted Answer

A) True 
 B)False

Question 20

An abnormal fluctuation in gross profit that might suggest the need for extended audit procedures for sales and inventories would most likely be identified in the planning phase of the audit by the use of

Accepted Answer

A)  Tests of transactions and balances. 
B)  A preliminary review of internal controls. 
C)  Specialized audit programs. 
D)  Analytical procedures. 
A)  Tests of transactions and balances. 
B)  A preliminary review of internal controls. 
C)  Specialized audit programs. 
D)  Analytical procedures.

In determining whether transactions have been recorded, the direction of the audit testing should start from the

The auditor must use his or her professional judgment to determine the amount of audit evidence to be gathered.

Which of the following types of audit evidence is the most persuasive?

Which of the following show the detailed general ledger accounts that make up a financial statement category on the auditor's working trial balance?

Name two management assertions pertaining to the inventory account balance and explain why they are considered in an audit.

Which of the following presumptions is correct about the reliability of audit evidence?

Audit documents record the results of the auditor's evidence-gathering procedures. When preparing audit documents, the auditor should remember that

Which of the following are ordinarily designed to detect possible material monetary errors in the financial statements?

According to the text, what are the two functions of working papers?

Analytical procedures are

Of the following, which is the least persuasive type of audit evidence?

The auditor notices significant fluctuations in key elements of the company's financial statements. If management is unable to provide an acceptable explanation, the auditor should

Which of the following tends to be most predictable for purposes of analytical procedures applied as substantive procedures?

Which set of assertions is tested when, during completion of the audit, the audit partner conducts a final review of the format of the entity's balance sheet?

For each of the following categories of analytical procedures, indicate (a) whether an auditor is required to use the procedure and (b) the purpose(s) of the procedure. Preliminary analytical procedures (risk assessment procedures) Substantive analytical procedures Final analytical procedures

Analytical procedures enable the auditor to predict the balance or quantity of an item under audit. Information to develop this estimate can be obtained from all of the following except:

You are auditing a store that sells merchandise. Some of the store merchandise is held on consignment. Which account balance assertion for inventory should you be most concerned about verifying?

The sufficiency of evidence refers to the quality of audit evidence.

An abnormal fluctuation in gross profit that might suggest the need for extended audit procedures for sales and inventories would most likely be identified in the planning phase of the audit by the use of

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financing Investing Process: Prepaid Expenses Intangible Assets and Property Plant and Equipment

Auditing the Financing Investing Process: Long-Term Liabilities Stockholders Equity and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

Assurance, Attestation, and Internal Auditing Services

Filters

Exam 5: Evidence and Documentation

In determining whether transactions have been recorded, the direction of the audit testing should start from the

The auditor must use his or her professional judgment to determine the amount of audit evidence to be gathered.

Which of the following types of audit evidence is the most persuasive?

Which of the following show the detailed general ledger accounts that make up a financial statement category on the auditor's working trial balance?

Name two management assertions pertaining to the inventory account balance and explain why they are considered in an audit.

Which of the following presumptions is correct about the reliability of audit evidence?

Audit documents record the results of the auditor's evidence-gathering procedures. When preparing audit documents, the auditor should remember that

Which of the following are ordinarily designed to detect possible material monetary errors in the financial statements?

According to the text, what are the two functions of working papers?

Analytical procedures are

Of the following, which is the least persuasive type of audit evidence?

The auditor notices significant fluctuations in key elements of the company's financial statements. If management is unable to provide an acceptable explanation, the auditor should

Which of the following tends to be most predictable for purposes of analytical procedures applied as substantive procedures?

Which set of assertions is tested when, during completion of the audit, the audit partner conducts a final review of the format of the entity's balance sheet?

For each of the following categories of analytical procedures, indicate (a) whether an auditor is required to use the procedure and (b) the purpose(s) of the procedure. Preliminary analytical procedures (risk assessment procedures) Substantive analytical procedures Final analytical procedures

Analytical procedures enable the auditor to predict the balance or quantity of an item under audit. Information to develop this estimate can be obtained from all of the following except:

You are auditing a store that sells merchandise. Some of the store merchandise is held on consignment. Which account balance assertion for inventory should you be most concerned about verifying?

The sufficiency of evidence refers to the quality of audit evidence.

An abnormal fluctuation in gross profit that might suggest the need for extended audit procedures for sales and inventories would most likely be identified in the planning phase of the audit by the use of

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning, Types of Audit Tests, and Materiality

Risk Assessment

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Auditing the Inventory Management Process

Auditing the Financing Investing Process: Prepaid Expenses Intangible Assets and Property Plant and Equipment

Auditing the Financing Investing Process: Long-Term Liabilities Stockholders Equity and Income Statement Accounts

Auditing the Financinginvesting Process: Cash and Investments

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct, Independence, and Quality Control

Legal Liability

Assurance, Attestation, and Internal Auditing Services

Filters