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Audit Final Exam May 2010

53 Questions  I  By Beowolfagate1
Audit Final Exam May 2010
Dr. Hwangs final audit 416 multiple choice form book

  
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1.  The return of a positive confirmation of account receivable without an exception attests to the
A.
B.
C.
D.
2.  Which of the following sample planning factors will influence the sample size for a test of details of balances for a specific account?  Expected Amount of Misstatement                        Measure of tolerable misstatement                                                                                                                                                               
A.
B.
C.
D.
3.  Which of the following audit procedures will best uncover an understatement of sales and accounts receivable?
A.
B.
C.
D.
4.  An inventory turnover analysis is useful to the auditor because it may detect?
A.
B.
C.
D.
5.  A principal purpose of a letter of representation from management is to?
A.
B.
C.
D.
6.  Which of the following audit procedures is least likely to detect an unrecorded liability?                                                            
A.
B.
C.
D.
7.  Which of the following audit procedures is best for identifying unrecorded trade accounts payable?
A.
B.
C.
D.
8.  In an audit of financial statements, a CPA will generally find stratified sampling techniques to be most applicable to
A.
B.
C.
D.
9.  Ansman, CPA, has been requested by a client, Rainco Corp., to prepare info in addition to the basic F/S for this years audit. which of the following is the best reason for Rainco's requesting the additional info?
A.
B.
C.
D.
10.  The controller of Excello Manufacturing Inc. wants to use analytical procedures to identify the possible existence of idle equipment or the possibility that equipment has been disposed of without having been written off. Which of the following ratios will best accomplish this objective?
A.
B.
C.
D.
11.  Karr has audited the F/S of Lurch corporation for the year ended Dec. 31, 2009. Karr's field work was completed on Feb. 27 2010, Karrs auditor's report was dated Feb. 28 2010 and was received by the management of Lurch on March 5, 2010. On April 4, 2010, the management of Lurch asked that Karr approve inclusion of this report in their annual report to stockholders, which will include unaudited financial statements for the first quarter ended March31, 2010. Karr approved the inclusion of the auditor's report in the annual report to stockholders. Under the circumstances, Karr is responsible for inquiring as to the subsequent events occurring through?
A.
B.
C.
D.
12.  In testing for unrecorded retirements of equipment, an auditor will most likely...?
A.
B.
C.
D.
13.  As a result o analytical procedures, the auditor determines that the gross profit percentage has declined from 30% in the preceding year to 20% in the current year.  The auditor should
A.
B.
C.
D.
14.  The accuracy of perpetual inventory master files may be established, in part, by comparing perpetual inventory records with?
A.
B.
C.
D.
15.  When a contingency is resolved subsequent to the issuance of audited financial statements, which correctly contained disclosure of the contingency in the footnotes based on information available at the date of issuance, the auditor should?
A.
B.
C.
D.
16.  A client erroneously recorded a large purchase twice.  Which of the following internal control measures would be most likely to detect this error in a timely and efficient manner?                                                              
A.
B.
C.
D.
17.  For control purposed, the quantities of materials ordered may be omitted from the copy of the purchase order that is?
A.
B.
C.
D.
18.  The audit step most likely to reveal the existence of contingent liabilities is?
A.
B.
C.
D.
19.  In connection with his review of key ratios, the CPA notes that Pyzi had accounts receivable equal to 30 days’ sales at December 31, 2008, and to 45 days’ sales at conditions, clientele, or sales mix, this change most likely will indicate
A.
B.
C.
D.
20.  Which of the following best describes the independent auditor’s approach to obtaining satisfaction concerning depreciation expense in the income statement?
A.
B.
C.
D.
21.  A CPA auditing inventory may appropriately apply attributes sampling to estimate the?
A.
B.
C.
D.
22.  The negative form of accounts receivable confirmation request is useful except when
A.
B.
C.
D.
23.  When obtaining evidence regarding litigation against a client, the CPA will be least interested in determining?
A.
B.
C.
D.
24.  When an auditor tests a client's cost accounting records, the auditors tests are primarily designed to determine that?
A.
B.
C.
D.
25.  Which of the following is an internal control that will prevent paid cash disbursement documents from being presented for payment a second time?                               
A.
B.
C.
D.
26.  With respect to an internal control measure that will ensure accountability for fixed asset retirements, management should implement controls that include?
A.
B.
C.
D.
27.  Budd, the purchasing agent of Lake Hardware Wholesalers, has a relative who owns a retail hardware store.  Budd arranged for hardware to be delivered by manufacturers to the retail store on a COD basis, thereby enabling his relative to buy a Lake’s wholesale prices.  Budd was probably able to accomplish this because of Lake’s poor internal control over                                                               
A.
B.
C.
D.
28.  Ansman, CPA, has been requested by a client, Rainco corp, to prepare additional info accompanying the basic F/S for this years audit. In issuing the additional info, Ansman must be certain to?
A.
B.
C.
D.
29.  Management's refusal to furnish a written representation on a matter that the auditor considers essential constitutes?
A.
B.
C.
D.
30.  A number of tractors influence the sample size for a substantive test of details of an account balance.  All other things being equal, which of the following would lead to a larger sample size?                                            
A.
B.
C.
D.
31.  Which of the following is not an internal control deficiency related to factory equipment?
A.
B.
C.
D.
32.  The date of the management representation letter should coincide with the?
A.
B.
C.
D.
33.  From prior experience, a CPA is aware that the accounts receivable trial balance contains a few unusually large balances.  The using sampling, the CPA’s best course of action is to
A.
B.
C.
D.
34.  Mr. Murray decides to use stratified sampling. The reason for using stratified sampling rather than unrestricted random sampling is to
A.
B.
C.
D.
35.  Before expressing an opinion concerning the audit of income and expenses, the auditor will best proceed with the audit of the income statement by                           
A.
B.
C.
D.
36.  Which of the following procedures will best detect the theft of valuable items from an inventory that consists of hundreds of different items selling for $1 to $10 and a few items selling for hundreds of dollars?
A.
B.
C.
D.
37.  In connection with the audit of the prepaid insurance account, which of the following procedures is usually not performed by the auditor?                                                            
A.
B.
C.
D.
38.  Which of the following comparisons will be most useful to an auditor in auditing an entity's income and expense accounts?
A.
B.
C.
D.
39.  Which of the following controls most likely will justify a reduced assessed level of control risk concerning plant and acquisitions?
A.
B.
C.
D.
40.  Which of the following analytical procedures should be applied to the income statement?
A.
B.
C.
D.
41.  Which of the following best describes the auditors reporting responsibility concerning information accompanying the basic financial statements in an auditor submitted document?
A.
B.
C.
D.
42.  Ana example of an event occurring in the period of the auditors field work subsequent to the end of the year being audited that normally will not require disclosure in the financial statements or auditor's report is?
A.
B.
C.
D.
43.  Analysis of which account is least likely to reveal evidence related to unrecorded retirement of equipment?
A.
B.
C.
D.
44.  In confirming a client’s accounts receivable in prior years, an auditor found that there were many differences between the recorded account balances and the confirmation responses.  These differences, which were not misstatements, required substantial time to resolve.  In defining thee sampling unit for the current year’s audit, the auditor will most likely choose
A.
B.
C.
D.
45.  When using confirmations to provide evidence about the completeness assertion for accounts payable, the appropriate populations most likely is...
A.
B.
C.
D.
46.  After a CPA has determined that accounts receivable have increased as a result of slow collections in “tight money” environment, the CPA will be likely to
A.
B.
C.
D.
47.  Subsequent events for reporting purposes are defined as events that occur subsequent to the?
A.
B.
C.
D.
48.  When evaluating the adequacy of the allowance for uncollectible accounts, an auditor reviews the entity aging of receivables to support management’s balance-related aeration of
A.
B.
C.
D.
49.  In auditing accounts payable, an auditor’s procedures most likely will focus primarily on managements’ assertion of                                                            
A.
B.
C.
D.
50.  An auditor uses audit sampling to perform tests of controls in the acquisition and payment cycle.  Those tests indicate that the related controls are operating effective.  The auditor plans to use audit sampling to perform tests of details of balances for accounts payable  the auditor’s acceptable risk of incorrect acceptance (ARIA) for the tests of detail’s of balances for accounts payable will most likely to be                                                
A.
B.
C.
D.
51.  In a company with materials and supplies that include a great number of items, a fundamental deficiency in control requirements would be indicated if?
A.
B.
C.
D.
52.  When evaluating inventory controls with respect to segregation of duties, a CPA will be least likely to?
A.
B.
C.
D.
53.  An auditor will be most likely to learn of slow moving inventory through?
A.
B.
C.
D.
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