Question 1

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 2

Which assertions may be tested for the "account balances" category of management assertions?

Accepted Answer

A)  Existence, accuracy, rights and obligations, completeness. 
B)  Existence, rights and obligations, completeness, valuation and allocation. 
C)  Occurrence, rights and obligations, completeness, valuation and allocation. 
D)  Occurrence, accuracy, rights and obligations, completeness. 
A)  Existence, accuracy, rights and obligations, completeness. 
B)  Existence, rights and obligations, completeness, valuation and allocation. 
C)  Occurrence, rights and obligations, completeness, valuation and allocation. 
D)  Occurrence, accuracy, rights and obligations, completeness.

Question 3

All audit documentation should have a heading,which includes

Accepted Answer

A)  Name of the company under audit. 
B)  Title of the working paper. 
C)  Company's year-end date. 
D)  All of these. 
A)  Name of the company under audit. 
B)  Title of the working paper. 
C)  Company's year-end date. 
D)  All of these.

Question 4

Footing is an example of

Accepted Answer

A)  Recalculation. 
B)  Confirmation. 
C)  Inquiries. 
D)  Analytical procedures. 
A)  Recalculation. 
B)  Confirmation. 
C)  Inquiries. 
D)  Analytical procedures.

Question 5

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 6

Which of the following statements is generally correct about the appropriateness of audit evidence?

Accepted Answer

A)  The more effective the internal control, the more assurance it provides about the reliability of the accounting data and financial statements. 
B)  Appropriateness of audit evidence refers to the amount of corroborative evidence obtained. 
C)  Information obtained indirectly from independent outside sources is more persuasive than the auditor's direct personal knowledge obtained through observation and inspection. 
D)  Appropriateness of audit evidence refers only to audit evidence obtained from outside the entity. 
A)  The more effective the internal control, the more assurance it provides about the reliability of the accounting data and financial statements. 
B)  Appropriateness of audit evidence refers to the amount of corroborative evidence obtained. 
C)  Information obtained indirectly from independent outside sources is more persuasive than the auditor's direct personal knowledge obtained through observation and inspection. 
D)  Appropriateness of audit evidence refers only to audit evidence obtained from outside the entity.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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 9

The permanent (continuing)file of an auditor's working papers most likely would include copies of the

Accepted Answer

A)  Bank statements. 
B)  Debt agreements. 
C)  Lead schedules. 
D)  Attorney's letters. 
A)  Bank statements. 
B)  Debt agreements. 
C)  Lead schedules. 
D)  Attorney's letters.

Question 10

Management assertions fall into four main categories.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements concerning audit evidence is correct?

Accepted Answer

A)  Appropriate evidence supporting management's assertions should be convincing rather than persuasive. 
B)  Effective internal controls contribute little to the reliability of the evidence created within the entity. 
C)  The cost of obtaining evidence is not an important consideration to an auditor in deciding what evidence should be obtained. 
D)  A company's accounting data cannot be considered sufficient audit evidence to support the financial statements. 
A)  Appropriate evidence supporting management's assertions should be convincing rather than persuasive. 
B)  Effective internal controls contribute little to the reliability of the evidence created within the entity. 
C)  The cost of obtaining evidence is not an important consideration to an auditor in deciding what evidence should be obtained. 
D)  A company's accounting data cannot be considered sufficient audit evidence to support the financial statements.

Question 12

Which assertions may be tested for the "presentation and disclosure" category of management assertions?

Accepted Answer

A)  Existence, rights and obligations, cutoff and classification, completeness, accuracy and valuation. 
B)  Occurrence, rights and obligations, existence, accuracy and valuation, cutoff and classification. 
C)  Occurrence, completeness, classification and understandability, cutoff and classification. 
D)  Occurrence, rights and obligations, completeness, classification and understandability, accuracy and valuation. 
A)  Existence, rights and obligations, cutoff and classification, completeness, accuracy and valuation. 
B)  Occurrence, rights and obligations, existence, accuracy and valuation, cutoff and classification. 
C)  Occurrence, completeness, classification and understandability, cutoff and classification. 
D)  Occurrence, rights and obligations, completeness, classification and understandability, accuracy and valuation.

Question 13

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 14

Which of the following presumptions does not relate to the appropriateness of audit evidence?

Accepted Answer

A)  The more effective the internal control system, the more assurance it provides about the accounting data and financial statements. 
B)  An auditor's opinion, to be economically useful, is formed within a reasonable time and based on evidence obtained at a reasonable cost. 
C)  Evidence obtained from independent sources outside the entity is more reliable than evidence secured solely within the entity. 
D)  The independent auditor's direct personal knowledge, obtained through observation and inspection, is more persuasive than information obtained indirectly. 
A)  The more effective the internal control system, the more assurance it provides about the accounting data and financial statements. 
B)  An auditor's opinion, to be economically useful, is formed within a reasonable time and based on evidence obtained at a reasonable cost. 
C)  Evidence obtained from independent sources outside the entity is more reliable than evidence secured solely within the entity. 
D)  The independent auditor's direct personal knowledge, obtained through observation and inspection, is more persuasive than information obtained indirectly.

Question 15

In creating lead schedules for an audit engagement,what financial information is needed to begin?

Accepted Answer

A)  Interim financial information, such as third quarter sales, net income, and inventory and receivables balances. 
B)  Specialized journal information, such as the invoice and purchase order numbers of the last few sales and purchases of the year. 
C)  General ledger information, such as account numbers, prior-year account balances, and current year unadjusted information. 
D)  Adjusting entry information, such as deferrals and accruals and reclassification journal entries. 
A)  Interim financial information, such as third quarter sales, net income, and inventory and receivables balances. 
B)  Specialized journal information, such as the invoice and purchase order numbers of the last few sales and purchases of the year. 
C)  General ledger information, such as account numbers, prior-year account balances, and current year unadjusted information. 
D)  Adjusting entry information, such as deferrals and accruals and reclassification journal entries.

Question 16

Auditors obtain evidence about the inventory account through,among other procedures,observing the counting of inventory.What are some limitations "observation" has as an audit procedure?

Accepted Answer

Observation is limited to the

Question 17

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 18

The third general auditing standard requires that due professional care be exercised in the performance of the examination and the preparation of the report.Due professional care deals with what is done by the independent auditor and how well it is done.For example,due care in the matter of audit documents requires that audit documents'

Accepted Answer

A)  Format be neat and orderly and include both a permanent file and a general file. 
B)  Content be sufficient to provide support for the auditor's report, including the auditor's representation as to compliance with auditing standards. 
C)  Ownership is determined by the legal statutes of the state where the auditor practices. 
D)  Preparation is the responsibility of assistants whose work is reviewed by seniors, managers, and partners. 
A)  Format be neat and orderly and include both a permanent file and a general file. 
B)  Content be sufficient to provide support for the auditor's report, including the auditor's representation as to compliance with auditing standards. 
C)  Ownership is determined by the legal statutes of the state where the auditor practices. 
D)  Preparation is the responsibility of assistants whose work is reviewed by seniors, managers, and partners.

Question 19

Why is appropriateness important for audit evidence? What qualities must evidence have to be considered appropriate?

Accepted Answer

Appropriateness is a measure of the qual

Question 20

Sarah is auditing the sales of a new client.In one procedure Sarah performs,she begins with the original sales documents and then searches the accounting records to find the corresponding entry.What test is Sarah performing and what management assertion is she testing?

Accepted Answer

Sarah is tracing,which refers to first s

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

Which assertions may be tested for the "account balances" category of management assertions?

All audit documentation should have a heading,which includes

Footing is an example of

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?

Which of the following statements is generally correct about the appropriateness of audit evidence?

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

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

The permanent (continuing)file of an auditor's working papers most likely would include copies of the

Management assertions fall into four main categories.

Which of the following statements concerning audit evidence is correct?

Which assertions may be tested for the "presentation and disclosure" category of management assertions?

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

Which of the following presumptions does not relate to the appropriateness of audit evidence?

In creating lead schedules for an audit engagement,what financial information is needed to begin?

Auditors obtain evidence about the inventory account through,among other procedures,observing the counting of inventory.What are some limitations "observation" has as an audit procedure?

Analytical procedures are

Why is appropriateness important for audit evidence? What qualities must evidence have to be considered appropriate?

Sarah is auditing the sales of a new client.In one procedure Sarah performs,she begins with the original sales documents and then searches the accounting records to find the corresponding entry.What test is Sarah performing and what management assertion is she testing?

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 Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting 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

Professsional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,amd Internal Auditing Services-professional Judgement Module

Filters

Exam 5: Evidence and Documentation

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

Which assertions may be tested for the "account balances" category of management assertions?

All audit documentation should have a heading,which includes

Footing is an example of

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?

Which of the following statements is generally correct about the appropriateness of audit evidence?

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

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

The permanent (continuing)file of an auditor's working papers most likely would include copies of the

Management assertions fall into four main categories.

Which of the following statements concerning audit evidence is correct?

Which assertions may be tested for the "presentation and disclosure" category of management assertions?

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

Which of the following presumptions does not relate to the appropriateness of audit evidence?

In creating lead schedules for an audit engagement,what financial information is needed to begin?

Auditors obtain evidence about the inventory account through,among other procedures,observing the counting of inventory.What are some limitations "observation" has as an audit procedure?

Analytical procedures are

Why is appropriateness important for audit evidence? What qualities must evidence have to be considered appropriate?

Sarah is auditing the sales of a new client.In one procedure Sarah performs,she begins with the original sales documents and then searches the accounting records to find the corresponding entry.What test is Sarah performing and what management assertion is she testing?

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 Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting 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

Professsional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,amd Internal Auditing Services-professional Judgement Module

Filters