Accounting Chapter 5 Quiz

What type of information does specialized journal information include?

What is the required form of audit documentation?

Which account balance assertion is the auditor most concerned about verifying if a company's primary motivation is to avoid paying income taxes?

Which transaction assertion is the auditor most concerned with if the audit client is under pressure to meet an earnings target?

What audit procedure is likely to be used when auditing purchases to address unrecorded transactions?

Which statement is not valid concerning audit evidence?

Which statement concerning audit evidence is correct?

What does the permanent audit file usually include?

What does the current audit file usually include?

What should all audit documentation headings include?

To whom do the audit working papers belong?

Which procedures are designed to detect possible material monetary errors in financial statements?

An auditor's decision to apply analytical procedures usually depends on what?

Which nonfinancial information would an auditor consider during analytical procedures in the planning phase?

What would the auditor expect the year-end balance in the accrued commissions payable account to be if agents' sales were $10 million?

What should an auditor expect from revenue in a not-for-profit organization with increasing subscribers?

What do analytical procedures indicate if they show unexpected account relationships?

Which is not a typical analytical procedure?

What classification do analytical procedures fall under primarily?

How are abnormal fluctuations in gross profit identified in the audit planning phase?

An example of an analytical procedure is the comparison of what?

What should analytical procedures in audit planning focus on?

When are analytical procedures required?

If the gross profit percentage has declined significantly, the auditor should what?

Which statement does the auditor emphasize during the examination of the financial statements?

If significant fluctuations in financial statements occur and management can't explain them, the auditor should what?

Which ratios are most predictable for analytical procedures as substantive procedures?

Information to develop estimates through analytical procedures can be obtained from all except:

What would most likely satisfy the auditor regarding a doubled accounts receivable balance?

Which would be least likely comparable between similar corporations in the same industry?

Which ratio would an engagement partner most likely calculate during the overall review stage of an audit?

Audit evidence includes only written information used by the auditor in arriving at an opinion about the fairness of financial statements.

The auditor gathers audit evidence to test management's assertions.

Management assertions fall into four main categories.

The classification assertion refers to transactions and events being recorded in the correct accounting period.

The completeness assertion refers to ensuring that transactions and events that should have been recorded actually have been recorded.

The cutoff assertion relates to whether transactions and events have been recorded in the correct accounting period.

Audit procedures are designed to test management assertions.

The relevance of audit evidence or specific audit procedures depends on the assertion being tested.

The auditor must use his or her professional judgment to determine the amount of audit evidence to be gathered.

The sufficiency of evidence refers to the quality of audit evidence.

A confirmation is used to:

Which of the following elements ultimately determines the amount of audit work that is necessary in the circumstances to afford a reasonable basis for an opinion?

Which of the following is an essential factor in evaluating the sufficiency of evidence? The evidence must:

Which set of assertions is tested when, during completion of the audit, the audit partner conducts a final review of the format of the entity's balance sheet?

In testing plant and equipment balances, an auditor may physically inspect new additions listed on the summary of plant and equipment transactions for the year. This procedure is designed to obtain evidence concerning management's assertions about classes of transactions and events, and specifically, which assertion?

Which assertions may be tested for the 'account balances' category of management assertions?

Which assertions may be tested for the 'transactions and events' category of management assertions?

Which assertions may be tested for the 'presentation and disclosure' category of management assertions?

Tracing is used primarily to test which of the following assertions about classes of transactions?

Vouching is used primarily to test which of the following assertions about classes of transactions?

In designing written audit programs, an auditor should plan specific audit procedures to test:

Footing is an example of:

In determining whether transactions have been recorded, the direction of the audit testing should start from the:

To test for unsupported entries in the ledger, the direction of audit testing should start from the:

Which of the following presumptions does not relate to the appropriateness of audit evidence?

Of the following, which is the least persuasive type of audit evidence?

The third general auditing standard requires that due professional care be exercised in the performance of the examination and the preparation of the report. Due professional care deals with what is done by the independent auditor and how well it is done. For example, due care in the matter of audit documents requires that audit documents:

Which of the following shows the detailed general ledger accounts that make up a financial statement category on the auditor's working trial balance?

The permanent (continuing) file of an auditor's working papers most likely would include copies of the:

An example of audit evidence with a medium level of reliability is:

Audit documentation prepared on audits of public entities is the property of the:

All of the following are typically in the current file except:

You are auditing a store that sells merchandise. Some of the store merchandise is held on consignment. Which account balance assertion for inventory should you be most concerned about verifying?

You are auditing a manufacturing company that has a large production facility. Some of the production equipment is held through lease agreements. Which of the following is the account balance assertion you would be most concerned about?

Which of the following procedures would an auditor most likely perform to verify management's assertion of completeness?

Which of the following best describes the primary purpose of audit procedures?

Procedures specifically outlined in an audit program are designed primarily to:

Which statement concerning audit evidence is not valid?

Each of the following might, by itself, form a valid basis for an auditor to reduce substantive testing except for the:

Of the following, the most reliable type of evidence typically is:

Which of the following presumptions is correct about the reliability of audit evidence?

Which of the following types of documentary evidence should the auditor consider to be the most reliable?

Which of the following is the least persuasive documentation in support of an auditor's opinion?

Which of the following statements is generally correct about the appropriateness of audit evidence?

Which of the following types of audit evidence is the most persuasive?

Following are several statements regarding accounting records or audit documentation. Which of the statements is correct?

Audit documents record the results of the auditor's evidence-gathering procedures. When preparing audit documents, the auditor should remember that:

Audit documents that record the procedures used by the auditor to gather evidence should be:

In creating lead schedules for an audit engagement, what financial information is needed to begin?