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Audit Final - 54-80
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Questions in this quiz (27)
1A proof of cash includes a reconciliation of cash receipts deposited in the bank with the cash disbursements records for a given period.
- ATrue
- BFalse
2Which of the following items would not normally appear on bank reconciliations?
- ABalance per bank
- BList of deposits in transit
- COutstanding deposits
- DOutstanding checks
3Which of the following procedures might be useful in discovering a contingent liability for a lawsuit that management is intentionally neglecting to disclose?
- AInquiries (orally and in writing) of management.
- BAnalyzing legal expense and review invoices and statements from outside legal counsel.
- CReviewing current and previous years’ internal revenue agent reports.
- DObtaining a letter of representation from management that it is aware of no undisclosed contingent liabilities.
4When using nonstatistical sampling, the larger the sample size, the greater the auditor’s confidence that the point estimate is close to the true population value.
- ATrue
- BFalse
5The standard letter of inquiry to the client’s legal counsel should be prepared on:
- Aplain paper (no letterhead) and be unsigned.
- Blawyer’s stationery and signed by the lawyer.
- Cauditor’s stationery and signed by an audit partner.
- Dclient’s stationery and signed by a company official
6Which of the following items would ordinarily not be included in the standard letter of inquiry to the client’s attorney?
- AA list, prepared by management, of pending threatened litigation of material amounts.
- BA request that the attorney furnish information or comment about the likelihood of an unfavorable outcome of litigation.
- CA request that the attorney furnish an estimate of the amount or range of the potential loss.
- DA request that the attorney confirm the amount of outstanding fees which client owes for legal services.
7The failure to capitalize a permanent asset, or the recording of an asset acquisition at the improper amount, affects the balance sheet:
- Aforever.
- Bfor the current period.
- Cfor the depreciable life of the asset.
- Duntil the firm disposes of the asset.
8The reason for testing the client’s bank reconciliation is to verify whether the client’s recorded bank balance is the same amount as the actual cash in bank, except for deposits in transit, checks outstanding, and other reconciling items. The information needed to complete the tests of the reconciliation are provided by the:
- Aclient’s records and ledgers for the year under audit.
- Bcutoff bank statement.
- Cclient’s records and ledgers for the subsequent year.
- Dcanceled checks for the year under audit.
9Imprest accounts usually carry a significant balance.
- ATrue
- BFalse
10Analytical procedures are substantive tests and, if the results of the analytical procedures are favorable, the auditor will:
- Areduce the extent of tests of details of balances.
- Breduce the extent of tests of controls.
- Creduce the tests of transactions.
- Dreduce all of the other tests.
11Auditors of public companies must obtain certain representations from management regarding internal control over financial reporting.
- ATrue
- BFalse
12Which of the following is likely to be determined first when performing tests of details for accounts receivable?
- ARecorded accounts receivable exist.
- BAccounts receivable in the aged trial balance agree with related master file amounts, and the total is correctly added and agrees with the general ledger.
- CAccounts receivable are owned.
- DExisting accounts receivable are included.
13Controls over the acquisition and recording of insurance are a part of the ________.
- Ainventory and warehousing cycle
- Bcapitalization cycle
- Ctreasury cycle
- Dacquisition and payment cycle
14When auditors evaluate sales returns and allowances, a primary emphasis is on the objective of occurrence.
- ATrue
- BFalse
15Blank confirmations are considered less reliable than standard positive confirmations.
- ATrue
- BFalse
16A bill of lading is a special type of sales invoice used when goods are shipped interstate.
- ATrue
- BFalse
17A bill of lading is a written contract between the seller and the buyer.
- ATrue
- BFalse
18Monetary unit sampling is also referred to as all of the following except:
- Aattribute sampling.
- Bdollar unit sampling.
- Ccumulative monetary amount sampling.
- Dsampling with probability proportional to size.
19At the completion of the audit, management is typically asked to make a written statement as a part of the engagement letter that it is aware of no undisclosed contingent liabilities.
- ATrue
- BFalse
20Which of the following is not required to be communicated to the audit committee or similarly designated body under auditing standards?
- AAll material frauds and illegal acts of a material nature.
- BDisagreements with management about the scope of the audit, applicability of accounting principles, or wording of the audit report.
- CDifficulties encountered in performing the audit, such as lack of availability of client personnel and failure to provide necessary information.
- DAuditor’s responsibilities under generally accepted auditing standards, including responsibility for evaluating internal control and the concept of reasonable rather than absolute assurance.
21Many of the auditor’s audit procedures in the audit of cash center around the client’s bank confirmations.
- ATrue
- BFalse
22An auditor needs to determine whether all customers of an electric utility company are being billed. The auditor should test from the:
- Asales register to the accounts receivable ledger.
- Bsales register to the meter department records.
- Caccounts receivable ledger to the sales register.
- Dmeter department records to the sales register.
23A proof of cash is effective at identifying which of the following misstatements?
- AChecks written for incorrect amounts.
- BChecks issued to invalid vendors.
- CFraudulent checks.
- DChecks recorded by the books for an amount different than the check.
24For good internal control, the credit-granting function should be separate from the sales function.
- ATrue
- BFalse
25There is very little opportunity for confirmation from third parties of balance sheet accounts related to the payroll and personnel cycle.
- ATrue
- BFalse
26Which of the following audit procedures would be least likely to lead the auditor to find an unrecorded fixed asset disposal?
- AExamination of insurance policies.
- BReview of repairs and maintenance expense.
- CReview of property tax files.
- DScanning of invoices for fixed asset additions.
27The most important test of details of balances to determine the existence of recorded accounts receivable is:
- Atracing details of sales invoices to shipping documents.
- Btracing the credits in accounts receivable to bank deposits.
- Ctracing sales returns entries to credit memos issued and receiving room reports.
- Dthe confirmation of customers’ balances.
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- Midterm Audit Quiz on Audit Final - 54-80, created by Andrew Knifer on 19/05/2016.
- Author
- Andrew Knifer
- Language
- English
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