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Chapter 5 Pre Quiz

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Chapter 5 Pre Quiz
Kayla Harbaugh
Quiz by Kayla Harbaugh, updated more than 1 year ago
Kayla Harbaugh
Created by Kayla Harbaugh over 3 years ago
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Question 1

Question
Which of these statements is true about the audit opinion formulation process presented in this chapter?
Answer
  • The audit opinion formulation process is different for the financial statement only audit and the integrated audit.
  • The audit opinion formulation process is based on the premise that management has responsibility to prepare the financial statements and maintain internal control over financial reporting.
  • The audit opinion formulation process is comprised of seven phases.
  • All of these are true statements regarding the audit opinion formulation process.

Question 2

Question
Which of the following accounts would not be included in the Acquisition and Payment for Long-Lived Assets Cycle?
Answer
  • Equipment
  • Revenue
  • Depreciation expense
  • Gain on disposal

Question 3

Question
Which of the following information should be included in audit documentation?
Answer
  • Procedures performed.
  • Audit evidence examined.
  • Conclusions reached with respect to relevant financial statement assertions.
  • All of this information should be included.

Question 4

Question
Which of the following statements regarding client acceptance/continuance decisions is false?
Answer
  • Auditors are not required to perform audits for any organization that asks for an audit.
  • An audit firm's client portfolio is impacted by both audit firm decisions and client decisions.
  • Auditors should assess the background and experience of accounting personnel of a potential client.
  • It would not be appropriate for audit firms to perform background checks on management of a potential client.

Question 5

Question
Which of the following procedures is least likely to be performed during Phase V of the audit opinion formulation process?
Answer
  • Performance of an engagement quality review.
  • Performance of preliminary analytical review procedures.
  • Assessment of misstatements detected during the performance of substantive procedures and tests of controls.
  • Determination of the appropriate audit opinion(s) to issue.

Question 6

Question
There is not much overlap; i.e., things in common among the auditing standards set by the PCAOB, AICPA, and IAASB.
Answer
  • True
  • False

Question 7

Question
A classic inventory fraud involves management understating ending inventory, thereby yielding a reduction in cost of goods sold and an overstatement of profitability.
Answer
  • True
  • False

Question 8

Question
Risk assessment procedures provide sufficient appropriate audit evidence on which to base an audit opinion.
Answer
  • True
  • False

Question 9

Question
In conducting a substantive audit, the auditor uses only substantive procedures, and does not rely on tests of internal controls.
Answer
  • True
  • False

Question 10

Question
Substantive procedures include substantive analytical procedures and tests of details.
Answer
  • True
  • False
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