Auditing Chapter 6

44 Questions  I  By Kosdaisy on December 11, 2011
Quiz based on Auditing and Assurance Services 14e by Arens

  

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1.  The auditor’s best defense when material misstatements are not uncovered is to have conducted the audit:
A.
B.
C.
D.
2.  If management insists on financial statement disclosures that the auditor finds unacceptable, the auditor can: Issue an adverse audit report                                     Issue a qualified audit report
A.
B.
C.
D.
3.  If management insists on financial statement disclosures that the auditor finds unacceptable, the auditor can do all but which of the following?
A.
B.
C.
D.
4.  Which of the following statements is most correct regarding errors and fraud?
A.
B.
C.
D.
5.  Professional skepticism requires auditors to possess a(n) ______ mind.
A.
B.
C.
D.
6.  The auditor has no responsibility to plan and perform the audit to obtain reasonable assurance that misstatements, whether caused by errors or fraud, that are not ________ are detected.
A.
B.
C.
D.
7.  Which of the following would most likely be deemed a direct-effect illegal act?
A.
B.
C.
D.
8.  Which of the following is the auditor least likely to do when aware of an illegal act?
A.
B.
C.
D.
9.  The auditor gives an audit opinion on the fair presentation of the financial statements and associates his or her name with it when, on the basis of adequate evidence, the auditor concludes that the financial statements are unlikely to mislead:
A.
B.
C.
D.
10.  When engaged to audit the financial statements, it is acceptable for the auditor to draft: The client’s financial statements                                The footnotes to the client’s financial statements
A.
B.
C.
D.
11.  The auditor has considerable responsibility for notifying users as to whether or not the statements are properly stated. This imposes upon the auditor a duty to:
A.
B.
C.
D.
12.  Tests of details of balances are specific procedures intended to:
A.
B.
C.
D.
13.  “The auditor should not assume that management is dishonest, but the possibility of dishonesty must be considered.” This is an example of:
A.
B.
C.
D.
14.  The auditor’s best defense when existing material misstatements in the financial statements are not uncovered in the audit is:
A.
B.
C.
D.
15.  Fraudulent financial reporting is often called:
A.
B.
C.
D.
16.  Which of the following statements is usually true?
A.
B.
C.
D.
17.  Auditing standards make _____ distinction(s) between the auditor’s responsibilities for searching for errors and fraud.
A.
B.
C.
D.
18.  In comparing management fraud with employee fraud, the auditor’s risk of failing to discover the fraud is:
A.
B.
C.
D.
19.  Which of the following statements is correct with respect to the auditor’s responsibilities relative to the detection of indirect-effect illegal acts?
A.
B.
C.
D.
20.  When comparing the auditor’s responsibility for detecting employee fraud and for detecting errors, the profession has placed the responsibility:
A.
B.
C.
D.
21.  When planning the audit, if the auditor has no reason to believe that illegal acts exist, the auditor should:
A.
B.
C.
D.
22.  When the auditor has reason to believe an illegal act has occurred, the auditor should:
A.
B.
C.
D.
23.  When the auditor knows that an illegal act has occurred, the auditor must:
A.
B.
C.
D.
24.  If an auditor uncovers an illegal act at a public company, the auditor must notify:
A.
B.
C.
D.
25.  Why does the auditor divide the financial statements into segments around the financial statement cycles?
A.
B.
C.
D.
26.  Management assertions are:
A.
B.
C.
D.
27.  The most important general ledger account included in and affecting several cycles is the:
A.
B.
C.
D.
28.  Which of the following statements is true regarding the distinction between general audit objectives and specific audit objectives for each account balance?
A.
B.
C.
D.
29.  Which of the following statements about the existence and completeness assertions is not true?
A.
B.
C.
D.
30.  The occurrence assertion applies to _______.
A.
B.
C.
D.
31.  Which of the following management assertions is not associated with transaction-related audit objectives?
A.
B.
C.
D.
32.  Which of the following statements is not true?
A.
B.
C.
D.
33.  In testing for cutoff, the objective is to determine:
A.
B.
C.
D.
34.  The detail tie-in objective is not concerned that the details in the account balance:
A.
B.
C.
D.
35.  The detail tie-in is part of the_______ assertion for account balances.
A.
B.
C.
D.
36.  Which of the following is not a proper match of a transaction-related audit objective and management assertion?
A.
B.
C.
D.
37.  Which of the following combinations is correct?
A.
B.
C.
D.
38.  If an auditor conducted an audit in accordance with auditing standards, which of the following would the auditor likely detect?
A.
B.
C.
D.
39.  Which of the following statements best describes the auditor’s responsibility with respect to illegal acts that do not have a material effect on the client’s financial statements?
A.
B.
C.
D.
40.  Which of the following statements best describes the auditor’s responsibility regarding the detection of fraud?
A.
B.
C.
D.
41.  The primary difference between an audit of the balance sheet and an audit of the income statement is that the audit of the income statement deals with the verification of:
A.
B.
C.
D.
42.  Most illegal acts affect the financial statements:
A.
B.
C.
D.
43.  With respect to the detection of illegal acts, auditing standards state that the auditor provides:
A.
B.
C.
D.
44.  Transaction cycles begin and end:
A.
B.
C.
D.
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