Question 1 2 out of 2 points

Testing the information on the aged trial balance for detail tie-in is a necessary audit procedure, which would normally include:Answer

Selected Answer:Test-footing the total column and the columns depicting theaging Comparing the total of the aged trial balance with the general ledger accounts receivable account

YesYes

Correct Answer:Test-footing the total column and the columns depicting theaging Comparing the total of the aged trial balance with the general ledger accounts receivable account

YesYes

Question 2 2 out of 2 points

Which of the following is the principle "weakness" of using negative confirmations for your tests of details of balances for accounts receivable?Answer

Selected Answer:conclusions drawn from receiving no reply may not be correct

Correct Answer:conclusions drawn from receiving no reply may not be correct

Question 3 2 out of 2 points

Most tests of accounts receivable are based on what schedule, file, or listing?Answer

Selected Answer:Aged accounts receivable trial balance.

Correct Answer:Aged accounts receivable trial balance.

Question 4 2 out of 2 points

When do most companies record sales returns and allowances?Answer

Selected Answer:During the accounting period in which the return occurs.

Correct Answer:During the accounting period in which the return occurs.

Question 5 2 out of 2 points

Audit procedures designed to uncover credit sales made after the client's fiscal year end that relate to the current year being audited provide evidence for which of the following audit objective?Answer

Selected Answer:cutoff

Correct Answer:cutoff

Question 6 2 out of 2 points

Tests of which balance-related audit objective are normally performed first in an audit of the sales and collection?Answer

Selected Answer:Detail tie-in

Correct Answer:Detail tie-in

Question 7 0 out of 2 points

The correct accounting for accounts receivable accounts with credit balances, provided they are significant, would be:Answer

Selected Answer:written off.

Correct Answer:reclassified as accounts payable.

Question 8 0 out of 2 points

An auditor is performing a credit analysis of customers with balances over 60 days due. She is most likely obtaining evidence for which audit related objective?Answer

Selected Answer:existence

Correct Answer:realizable value

Question 9 0 out of 2 points

In performing your audit you noticed that often times goods are shipped that are not matched with the corresponding sales invoice. This control deficiency could cause:Answer

Selected Answer:understatement of revenues and inventory.

Correct Answer:understatement of revenues and overstatement of inventory.

Question 10 2 out of 2 points

For cash receipts, the occurrence transaction-related audit objective affects which of the following balance-related audit objective?Answer

Selected Answer:Completeness

Correct Answer:Completeness

Question 11 0 out of 2 points

An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared. This test is performed to satisfy the audit objective of:Answer

Selected Answer:existence.

Correct Answer:completeness.

Question 12 0 out of 2 points

The audit procedure of tracing sales invoices to shipping documents will provide the auditor evidence that:Answer

Selected Answer:goods shipped were billed to customers.

Correct Answer:billed sales were shipped.

Question 13 2 out of 2 points

The most important test of details of balances to determine the existence of recorded accounts receivable is:Answer

Selected Answer:the confirmation of customers' balances.

Correct Answer:the confirmation of customers' balances.

Question 14 2 out of 2 points

For most audits, inherent risk for accounts receivable is moderate or low except for which balance-related audit objectives?Answer

Selected Answer:Realizable value and cutoff.

Correct Answer:Realizable value and cutoff.

Question 15 2 out of 2 points

Cutoff misstatements occur when:Answer

Selected Answer:The auditor fails to obtain the end-of-year bank statement directly from the bank, obtaining instead the statement which includes the two succeeding weeks Subsequent period transactions are recorded in the current period Current period transactions are recorded in the subsequent period

NoYesYes

Correct Answer:The auditor fails to obtain the end-of-year bank statement directly from the bank, obtaining instead the statement which includes the two succeeding weeks Subsequent period transactions are recorded in the current period Current period transactions are recorded in the subsequent period

NoYesYes

Question 16 2 out of 2 points

Tests for rates of occurrence are appropriately used in all but which of the following situations?Answer

Selected Answer:Testing of internal controlsSubstantive testing of transactionsSubstantive testing of details of balances

YesYesNo

Correct Answer:Testing of internal controlsSubstantive testing of transactionsSubstantive testing of details of balances

YesYesNo

Question 17 0 out of 2 points

If acceptable audit risk is increased, acceptable risk of incorrect acceptance should be:Answer

Selected Answer:reduced.

Correct Answer:increased.

Question 18 2 out of 2 points

Which of the following is not a type of statistical method that provides results in dollar terms?Answer

Selected Answer:Attributes sampling

Correct Answer:Attributes sampling

Question 19 2 out of 2 points

The method used to measure the estimated total error amount in a population when there is both a recorded value and an audited value for each item in the sample is:Answer

Selected Answer:difference estimation.

Correct Answer:difference estimation.

Question 20 2 out of 2 points

What is the purpose of applying stratified sampling to a population?Answer

Selected Answer:To avoid items that may contain misstatementsTo emphasize certain items and deemphasize others

NoYes

Correct Answer:To avoid items that may contain misstatementsTo emphasize certain items and deemphasize others

NoYes

Question 21 2 out of 2 points

The final step in the evaluation of the audit results is the decision to:Answer

Selected Answer:accept the population as fairly stated or to require further action.

Correct Answer:accept the population as fairly stated or to require further action.

Question 22 2 out of 2 points

In estimating the population misstatement, the first step in projecting from the sample to the population is to:Answer

Selected Answer:make a point estimate.

Correct Answer:make a point estimate.

Question 23 2 out of 2 points

You are auditing Nelson and Company and determined that the sample results support a conclusion that the account is materially misstated, when in fact it was not misstated. This illustrates the risk of:Answer

Selected Answer:incorrect rejection.

Correct Answer:incorrect rejection.

Question 24 2 out of 2 points

As the amount of misstatements expected in the population approaches tolerable misstatement, the planned sample size will:Answer

Selected Answer:increase.

Correct Answer:increase.

Question 25 2 out of 2 points

The auditor is concerned with the audited value rather than the error amount of each item in the sample when using:Answer

Selected Answer:mean-per-unit estimation.

Correct Answer:mean-per-unit estimation.

Question 26 2 out of 2 points

When selecting a sample size for substantive tests of balances which factor, other factors being equal, would result in a larger sample?Answer

Selected Answer:smaller tolerable misstatement

Correct Answer:smaller tolerable misstatement

Question 27 2 out of 2 points

The risk the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance under audit is greater than the tolerable misstatement is:Answer

Selected Answer:the acceptable risk of incorrect acceptance.

Correct Answer:the acceptable risk of incorrect acceptance.

Question 28 2 out of 2 points

When errors are found in a sample, auditors in practice generally make the assumption:Answer

Selected Answer:that the actual sample errors are representative of the population errors.

Correct Answer:that the actual sample errors are representative of the population errors.

Question 29 2 out of 2 points

Which of the following does not have to be considered in determining the initial sample size of a test of details?Answer

Selected Answer:acceptable risk of incorrect rejection

Correct Answer:acceptable risk of incorrect rejection

Question 30 2 out of 2 points

The auditors principal objective when using a sample of tests of details of balances is whether the:Answer

Selected Answer:account balance being audited is fairly stated.

Correct Answer:account balance being audited is fairly stated.

Sunday, December 16, 2012 1:47:49 PM ESTOK