Kayla Harbaugh
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Auditing Chapter 6 homework

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Kayla Harbaugh
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Auditing Chapter 6 homework

Question 1 of 30

1

Auditing Chapter 6 homework

Select one of the following:

  • Sufficiency of evidence

  • Quantity of evidence

  • Meaning of evidence

  • Quality of evidence

Explanation

Question 2 of 30

1

Two determinants of the persuasiveness of evidence include which of the following?

Select one of the following:

  • Appropriateness and sufficiency.

  • Competence and sufficiency.

  • Independence and effectiveness.

  • Relevance and reliability.

Explanation

Question 3 of 30

1

Directional testing involves testing transactions or balances for which type of error?

Select one of the following:

  • Neither overstatement nor understatement.

  • Overstatment

  • Understatement

  • Either overstatement or understatement

Explanation

Question 4 of 30

1

Which one of the following would be considered the most reliable type of audit evidence?

Select one of the following:

  • Customer accounts receivable files.

  • Confirmations from banks.

  • Purchase orders from vendors

  • Computerized general ledger.

Explanation

Question 5 of 30

1

Which one of the following would be the most reliable type of evidence?

Select one of the following:

  • Inquiry with the in-house attorney.

  • Indirectly obtained evidence.

  • Photocopies

  • Observation of assets

Explanation

Question 6 of 30

1

Which one of the following would be the least reliable type of evidence?

Select one of the following:

  • 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

Explanation

Question 7 of 30

1

An example of an external document would include which of the following?

Select one of the following:

  • Vendor invoices

  • Customer orders

  • Confirmation replies from customers

  • All of the above

Explanation

Question 8 of 30

1

The process of vouching helps establish which of the following regarding recorded transactions?

Select one of the following:

  • Transactions are presented properly.

  • Transactions have been recorded

  • Transactions are complete

  • Transactions are valid

Explanation

Question 9 of 30

1

Footing, cross-footing, and tests of extensions are examples of which approach to gathering evidence?

Select one of the following:

  • Vouching

  • Recalculation

  • Examination of documentation

  • Reprocessing

Explanation

Question 10 of 30

1

An audit program provides an effective means for which of the following?

Select one of the following:

  • 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

Explanation

Question 11 of 30

1

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.

Select one of the following:

  • I only

  • I and III only

  • II only

  • I, II, and III

Explanation

Question 12 of 30

1

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?

Select one of the following:

  • Direct testing for rights

  • Directional testing for completeness

  • Directional testing for existence

  • Direct testing for valuation

Explanation

Question 13 of 30

1

Which of the following assertions is the primary assertion that is satisfied by physically observing the client's count of inventory?

Select one of the following:

  • Valuation

  • Completeness

  • Rights

  • Existence

Explanation

Question 14 of 30

1

When using the audit procedure vouching, the auditor is primarily concerned with which of the following assertions?

Select one of the following:

  • Existence

  • Completeness

  • Classification

  • Authorization

Explanation

Question 15 of 30

1

The extent of procedures is affected mostly by which of the following factors?

Select one of the following:

  • 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

Explanation

Question 16 of 30

1

An audit program is created to specify which of the following?

Select one of the following:

  • 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

Explanation

Question 17 of 30

1

Which one of the following is the primary reason for documenting audit work?

Select one of the following:

  • 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

Explanation

Question 18 of 30

1

To be considered reliable evidence, confirmations must be controlled by which of the following parties?

Select one of the following:

  • A client employee responsible for accounts receivable

  • A client's controller or CFO

  • A client's internal audit department

  • An external auditor

Explanation

Question 19 of 30

1

Conclusions are typically documented by auditors in which type of work paper?

Select one of the following:

  • Audit program

  • Representation letter

  • Audit planning memo

  • Audit memoranda

Explanation

Question 20 of 30

1

The processes used by management in developing estimates include which of the following?

Select one of the following:

  • 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

Explanation

Question 21 of 30

1

Which of the following is the primary source for evidence to corroborate the existence of pending litigation?

Select one of the following:

  • Management representation letters

  • Vendor confirmations

  • Disclosures in financial statements

  • Attorney confirmations

Explanation

Question 22 of 30

1

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?

Select one of the following:

  • Decrease

  • Increase

  • Become more difficult to ascertain

  • Remain the same

Explanation

Question 23 of 30

1

What is determined to be appropriate and sufficient will be affected by which of the following?

Select one of the following:

  • The client's risk of material misstatement

  • The risk of material weakness in internal controls

  • Either a or b

  • None of the above

Explanation

Question 24 of 30

1

Audit documentation should contain which of the following?

Select one of the following:

  • 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

Explanation

Question 25 of 30

1

Which of the following is not an estimate that requires significant auditor judgment and skepticism?

Select one of the following:

  • Common stock and related additional paid-in capital

  • Valuation of goodwill

  • Allowance for bad debt

  • Obligations for pension plans

Explanation

Question 26 of 30

1

When using confirmations with outside parties, the auditor must assure which of the following about the outside party?

Select one of the following:

  • 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

Explanation

Question 27 of 30

1

Which of the following characteristics are not normally included in quality audit documentation?

Select one of the following:

  • 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

Explanation

Question 28 of 30

1

A date at which audit evidence is collected earlier than the balance sheet date is referred to as what?

Select one of the following:

  • Subsequent date

  • Cutoff period

  • Significant date

  • Interim date

Explanation

Question 29 of 30

1

The written record that forms the basis for the auditor’s conclusions is referred to as what?

Select one of the following:

  • Audit adjustment

  • Audit documentation

  • Accounting records

  • Footing

Explanation

Question 30 of 30

1

The auditor may use analytical procedures during which phase of the audit?

Select one of the following:

  • Planning the audit

  • Substantive testing

  • Completing the audit

  • All of the above

Explanation

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