Question 1

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

Question 2

Audit documentation does not normally include the

Accepted Answer

A) specific assertions under audit. 
B) industry accounting guides. 
C) record of the procedures performed. 
D) decisions made in the course of the audit. 
A) specific assertions under audit. 
B) industry accounting guides. 
C) record of the procedures performed. 
D) decisions made in the course of the audit.

Question 3

An auditor who uses 7 percent of income before taxes as a basis for overall materiality would be basing judgment on

Accepted Answer

A) absolute size. 
B) relative size. 
C) nature of the item. 
D) cumulative effects. 
A) absolute size. 
B) relative size. 
C) nature of the item. 
D) cumulative effects.

Question 4

The essential advantages of a computer-assisted audit techniques (CAATs)package would not include the fact that

Accepted Answer

A) the same software can be used on different types of clients' computer environments. 
B) a large number of CAATs packages are currently available. 
C) software packages are always inexpensive. 
D) the ability to control and modify the program to meet an auditors' need. 
A) the same software can be used on different types of clients' computer environments. 
B) a large number of CAATs packages are currently available. 
C) software packages are always inexpensive. 
D) the ability to control and modify the program to meet an auditors' need.

Question 5

Which of the following is not a way in which auditors use the concept of overall materiality?

Accepted Answer

A) As a guide to planning the audit plan 
B) As a guide to the evaluation of evidence 
C) As a guide for making decisions about the audit report 
D) As a guide for assessing control risk 
A) As a guide to planning the audit plan 
B) As a guide to the evaluation of evidence 
C) As a guide for making decisions about the audit report 
D) As a guide for assessing control risk

Question 6

During the initial planning phase of an audit,a CPA most likely would

Accepted Answer

A) test specific internal control activities that are likely to prevent fraud. 
B) evaluate the reasonableness of the client's accounting estimates of inventory obsolescence. 
C) discuss the timing of the audit procedures with the client's management. 
D) inquire of the client's attorney as to whether any unrecorded claims are probable of assertion. 
A) test specific internal control activities that are likely to prevent fraud. 
B) evaluate the reasonableness of the client's accounting estimates of inventory obsolescence. 
C) discuss the timing of the audit procedures with the client's management. 
D) inquire of the client's attorney as to whether any unrecorded claims are probable of assertion.

Question 7

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 8

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

Accepted Answer

The advantages of computer-assisted audi

Question 9

Cutoff tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent year provide assurance about management's assertion of

Accepted Answer

A) presentation and disclosure. 
B) completeness. 
C) rights and obligations. 
D) existence. 
A) presentation and disclosure. 
B) completeness. 
C) rights and obligations. 
D) existence.

Question 10

Which of the following is not considered an accounting estimate?

Accepted Answer

A) Allowance for loan losses 
B) Credit sales 
C) Net realizable value of inventory 
D) Percentage-of-completion revenue to be recorded 
A) Allowance for loan losses 
B) Credit sales 
C) Net realizable value of inventory 
D) Percentage-of-completion revenue to be recorded

Question 11

Which of the following is not a category of audit documentation?

Accepted Answer

A) Temporary files 
B) Permanent files 
C) Audit administrative files 
D) Current documentation files 
A) Temporary files 
B) Permanent files 
C) Audit administrative files 
D) Current documentation files

Question 12

Computer-assisted audit techniques (CAATs)could not be used for which of the following audit tasks?

Accepted Answer

A) Testing calculations and making computations 
B) Evaluating control risk assessment 
C) Summarizing,resequencing,and reformatting data 
D) Comparing audit evidence from manual audit procedures to company needs 
A) Testing calculations and making computations 
B) Evaluating control risk assessment 
C) Summarizing,resequencing,and reformatting data 
D) Comparing audit evidence from manual audit procedures to company needs

Question 13

Explain the bottom-up approach and the top-down approach to quantifying overall materiality.

Accepted Answer

In the bottom-up approach to judging mat

Question 14

D.Jackson,CPA,audited Washington Company's financial statements for the year ended December 31,2017.On November 1,2018,Washington notified Jackson that it was changing auditors and that Jackson's services were being terminated.On November 5,2018,Washington invited Lincoln,CPA,to make a proposal for an engagement to audit its financial statements for the year ended December 31,2018.
Required:
What procedures concerning Jackson should Lincoln perform before accepting the engagement?

Accepted Answer

a.Lincoln should explain to Washington t

Question 15

Looking at vendors' invoices for particular information is an example of

Accepted Answer

A) physical observation. 
B) confirmation. 
C) inspection of documents. 
D) scanning. 
A) physical observation. 
B) confirmation. 
C) inspection of documents. 
D) scanning.

Question 16

Prior to beginning the fieldwork on a new audit engagement in which the audit team does not possess expertise in the industry in which the client operates,the audit team should

Accepted Answer

A) reduce audit risk by lowering the preliminary levels of materiality. 
B) design special substantive tests to compensate for the lack of industry expertise. 
C) engage financial experts familiar with the nature of the industry. 
D) obtain knowledge of matters that relate to the nature of the entity's business. 
A) reduce audit risk by lowering the preliminary levels of materiality. 
B) design special substantive tests to compensate for the lack of industry expertise. 
C) engage financial experts familiar with the nature of the industry. 
D) obtain knowledge of matters that relate to the nature of the entity's business.

Question 17

The confirmation of a cash balance provides primary evidence regarding which management assertion?

Accepted Answer

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

Question 18

C.Hill,CPA,has been retained to audit the financial statements of Monday Co.Monday's predecessor auditor was K.Post,CPA,whom Monday has notified by that its services have been terminated.Under these circumstances,which party should initiate the communications between Hill and Post?

Accepted Answer

A) Hill,the auditor 
B) Post,the predecessor auditor 
C) Monday's controller or CFO 
D) The chair of Monday's board of directors 
A) Hill,the auditor 
B) Post,the predecessor auditor 
C) Monday's controller or CFO 
D) The chair of Monday's board of directors

Question 19

An auditor would least likely use computer software to

Accepted Answer

A) access client data files. 
B) prepare spreadsheets. 
C) assess information systems control risk. 
D) construct parallel simulations to test the client's computing system. 
A) access client data files. 
B) prepare spreadsheets. 
C) assess information systems control risk. 
D) construct parallel simulations to test the client's computing system.

Question 20

An auditor's purpose in auditing the information contained in the pension footnote most likely is to obtain evidence concerning management's assertion about

Accepted Answer

A) rights and obligations. 
B) existence. 
C) presentation and disclosure. 
D) valuation. 
A) rights and obligations. 
B) existence. 
C) presentation and disclosure. 
D) valuation.

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

Audit documentation does not normally include the

An auditor who uses 7 percent of income before taxes as a basis for overall materiality would be basing judgment on

The essential advantages of a computer-assisted audit techniques (CAATs)package would not include the fact that

Which of the following is not a way in which auditors use the concept of overall materiality?

During the initial planning phase of an audit,a CPA most likely would

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

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

Cutoff tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent year provide assurance about management's assertion of

Which of the following is not considered an accounting estimate?

Which of the following is not a category of audit documentation?

Computer-assisted audit techniques (CAATs)could not be used for which of the following audit tasks?

Explain the bottom-up approach and the top-down approach to quantifying overall materiality.

Looking at vendors' invoices for particular information is an example of

Prior to beginning the fieldwork on a new audit engagement in which the audit team does not possess expertise in the industry in which the client operates,the audit team should

The confirmation of a cash balance provides primary evidence regarding which management assertion?

C.Hill,CPA,has been retained to audit the financial statements of Monday Co.Monday's predecessor auditor was K.Post,CPA,whom Monday has notified by that its services have been terminated.Under these circumstances,which party should initiate the communications between Hill and Post?

An auditor would least likely use computer software to

An auditor's purpose in auditing the information contained in the pension footnote most likely is to obtain evidence concerning management's assertion about

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 Audits, Governmental Audits, and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Exam 3: Engagement Planning

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

Audit documentation does not normally include the

An auditor who uses 7 percent of income before taxes as a basis for overall materiality would be basing judgment on

The essential advantages of a computer-assisted audit techniques (CAATs)package would not include the fact that

Which of the following is not a way in which auditors use the concept of overall materiality?

During the initial planning phase of an audit,a CPA most likely would

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

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

Cutoff tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent year provide assurance about management's assertion of

Which of the following is not considered an accounting estimate?

Which of the following is not a category of audit documentation?

Computer-assisted audit techniques (CAATs)could not be used for which of the following audit tasks?

Explain the bottom-up approach and the top-down approach to quantifying overall materiality.

Looking at vendors' invoices for particular information is an example of

Prior to beginning the fieldwork on a new audit engagement in which the audit team does not possess expertise in the industry in which the client operates,the audit team should

The confirmation of a cash balance provides primary evidence regarding which management assertion?

C.Hill,CPA,has been retained to audit the financial statements of Monday Co.Monday's predecessor auditor was K.Post,CPA,whom Monday has notified by that its services have been terminated.Under these circumstances,which party should initiate the communications between Hill and Post?

An auditor would least likely use computer software to

An auditor's purpose in auditing the information contained in the pension footnote most likely is to obtain evidence concerning management's assertion about

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 Audits, Governmental Audits, and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters