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Auditing Chapter 6 homework

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Auditing Chapter 6 homework
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
Auditing Chapter 6 homework
Answer
  • Sufficiency of evidence
  • Quantity of evidence
  • Meaning of evidence
  • Quality of evidence

Question 2

Question
Two determinants of the persuasiveness of evidence include which of the following?
Answer
  • Appropriateness and sufficiency.
  • Competence and sufficiency.
  • Independence and effectiveness.
  • Relevance and reliability.

Question 3

Question
Directional testing involves testing transactions or balances for which type of error?
Answer
  • Neither overstatement nor understatement.
  • Overstatment
  • Understatement
  • Either overstatement or understatement

Question 4

Question
Which one of the following would be considered the most reliable type of audit evidence?
Answer
  • Customer accounts receivable files.
  • Confirmations from banks.
  • Purchase orders from vendors
  • Computerized general ledger.

Question 5

Question
Which one of the following would be the most reliable type of evidence?
Answer
  • Inquiry with the in-house attorney.
  • Indirectly obtained evidence.
  • Photocopies
  • Observation of assets

Question 6

Question
Which one of the following would be the least reliable type of evidence?
Answer
  • Confirmations returned by bank directly to the auditor.
  • Evidence from an easily overridden information system.
  • Letters of communication from the Securities Exchange Commission.
  • Physical examination of perpetual inventory

Question 7

Question
An example of an external document would include which of the following?
Answer
  • Vendor invoices
  • Customer orders
  • Confirmation replies from customers
  • All of the above

Question 8

Question
The process of vouching helps establish which of the following regarding recorded transactions?
Answer
  • Transactions are presented properly.
  • Transactions have been recorded
  • Transactions are complete
  • Transactions are valid

Question 9

Question
Footing, cross-footing, and tests of extensions are examples of which approach to gathering evidence?
Answer
  • Vouching
  • Recalculation
  • Examination of documentation
  • Reprocessing

Question 10

Question
An audit program provides an effective means for which of the following?
Answer
  • Reviewing the completeness and persuasiveness of procedures performed
  • Recording the audit work performed and those responsible for performing the work
  • Organizing and distributing the work
  • All of the above

Question 11

Question
When may audit procedures be performed? I - on the balance sheet date. II - prior to the balance sheet date. III - subsequent to the balance sheet date.
Answer
  • I only
  • I and III only
  • II only
  • I, II, and III

Question 12

Question
An auditor selects a sample of items recorded and traces them back to the supporting documentation. This is an example of which of the following?
Answer
  • Direct testing for rights
  • Directional testing for completeness
  • Directional testing for existence
  • Direct testing for valuation

Question 13

Question
Which of the following assertions is the primary assertion that is satisfied by physically observing the client's count of inventory?
Answer
  • Valuation
  • Completeness
  • Rights
  • Existence

Question 14

Question
When using the audit procedure vouching, the auditor is primarily concerned with which of the following assertions?
Answer
  • Existence
  • Completeness
  • Classification
  • Authorization

Question 15

Question
The extent of procedures is affected mostly by which of the following factors?
Answer
  • The availability of the client's staff at or near the balance sheet date
  • The auditors judgement that misstatements are probable in certain balances
  • The sheer volume of procedures to be applied by the auditor
  • The time of year in which the client takes a physical inventory in the warehouse

Question 16

Question
An audit program is created to specify which of the following?
Answer
  • The type of audit opinion to be rendered based upon procedures performed
  • The audit procedures that will be performed every year for the client
  • How an auditor should think while performing audit procedures
  • Audit objectives and procedures to be followed during the audit process

Question 17

Question
Which one of the following is the primary reason for documenting audit work?
Answer
  • To provide a stand-alone medium that gives audit conclusions and supports the opinion
  • To prevent litigation by other parties that question the audit performance
  • To give the client a full reporting of all work performed on their behalf
  • To supply a point of reference for all auditors performing the work subsequently

Question 18

Question
To be considered reliable evidence, confirmations must be controlled by which of the following parties?
Answer
  • A client employee responsible for accounts receivable
  • A client's controller or CFO
  • A client's internal audit department
  • An external auditor

Question 19

Question
Conclusions are typically documented by auditors in which type of work paper?
Answer
  • Audit program
  • Representation letter
  • Audit planning memo
  • Audit memoranda

Question 20

Question
The processes used by management in developing estimates include which of the following?
Answer
  • Controls over the process
  • The reliability of underlying data in developing the estimate
  • Use of outside experts by management (for example, how they were used and their expertise)
  • All of the above

Question 21

Question
Which of the following is the primary source for evidence to corroborate the existence of pending litigation?
Answer
  • Management representation letters
  • Vendor confirmations
  • Disclosures in financial statements
  • Attorney confirmations

Question 22

Question
Performance of audit procedures at an interim date causes the risk of material misstatement occurring between the interim date and the end of the year to do which of the following?
Answer
  • Decrease
  • Increase
  • Become more difficult to ascertain
  • Remain the same

Question 23

Question
What is determined to be appropriate and sufficient will be affected by which of the following?
Answer
  • The client's risk of material misstatement
  • The risk of material weakness in internal controls
  • Either a or b
  • None of the above

Question 24

Question
Audit documentation should contain which of the following?
Answer
  • A heading that includes the name of the audit client, an explanatory title, and the balance sheet date
  • The initials or electronic signature of the auditor performing the audit test and the date the test was completed
  • The initials or electronic signature of the manager or partner who reviewed the documentation and the date the review was completed
  • All of the above

Question 25

Question
Which of the following is not an estimate that requires significant auditor judgment and skepticism?
Answer
  • Common stock and related additional paid-in capital
  • Valuation of goodwill
  • Allowance for bad debt
  • Obligations for pension plans

Question 26

Question
When using confirmations with outside parties, the auditor must assure which of the following about the outside party?
Answer
  • The outside party exists
  • The outside party is able to respond objectively and independently
  • The outside party is unbiased in responding
  • All of the above

Question 27

Question
Which of the following characteristics are not normally included in quality audit documentation?
Answer
  • A cross-reference
  • An assessment of whether the test indicates the possibility of material misstatement in an account
  • Initials of the person preparing and reviewing the document
  • All are included in quality audit documentation

Question 28

Question
A date at which audit evidence is collected earlier than the balance sheet date is referred to as what?
Answer
  • Subsequent date
  • Cutoff period
  • Significant date
  • Interim date

Question 29

Question
The written record that forms the basis for the auditor’s conclusions is referred to as what?
Answer
  • Audit adjustment
  • Audit documentation
  • Accounting records
  • Footing

Question 30

Question
The auditor may use analytical procedures during which phase of the audit?
Answer
  • Planning the audit
  • Substantive testing
  • Completing the audit
  • All of the above
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