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Auditing Chapter 7

51 Questions  I  By Kosdaisy
Auditing Chapter 7
Quiz based on Auditing and Assurance Services 14e by Arens

  
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Question Excerpt

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1.  Which of the following forms of evidence is most reliable?
A.
B.
C.
D.
2.  Which of the following is not a characteristic of the reliability of evidence?
A.
B.
C.
D.
3.  Which of the following is not a characteristic of the reliability of evidence?
A.
B.
C.
D.
4.  Audit evidence obtained directly by the auditor will not be reliable if:
A.
B.
C.
D.
5.  Appropriateness of evidence is a measure of the:
A.
B.
C.
D.
6.  Calculating the gross margin as a percent of sales and comparing it with previous periods is what type of evidence?
A.
B.
C.
D.
7.  Auditors must make decisions regarding what evidence to gather and how much to accumulate. Which of the following is a decision that must be made by auditors related to evidence? Sample size   Timing of audit procedures
A.
B.
C.
D.
8.  Which of the following statements regarding the relevance of evidence is correct?
A.
B.
C.
D.
9.  Two determinants of the persuasiveness of evidence are:
A.
B.
C.
D.
10.  Three common types of confirmations used by auditors are (1) negative confirmations, (2) blank form positive confirmations, and (3) positive confirmations with information included. Place the confirmations in order of reliability from highest to lowest.
A.
B.
C.
D.
11.  When auditors use documents to support recorded transactions, the process is often called:
A.
B.
C.
D.
12.  An example of an external document is:
A.
B.
C.
D.
13.  An example of a document the auditor receives from the client, but which was prepared by someone outside the client’s organization, is a(n):
A.
B.
C.
D.
14.  “Evaluations of financial information made by a study of plausible relationships among financial and nonfinancial data involving comparisons of recorded amounts to expectations developed by the auditor” is a definition of:
A.
B.
C.
D.
15.  Often, auditor procedures result in significant differences being discovered by the auditor. The auditor should investigate further if:  Significant differences are not expected but do exist   Significant differences are expected but do not exist
A.
B.
C.
D.
16.  Which of the following is not a purpose of analytical procedures?
A.
B.
C.
D.
17.  Which of the following statements is not true?   “The evidence-gathering technique of inquiry:
A.
B.
C.
D.
18.  Which of the following forms of evidence would be least persuasive in forming the auditor’s opinion?
A.
B.
C.
D.
19.  Analytical procedures must be used during which phase(s) of the audit? Test of Controls   Planning    Completion
A.
B.
C.
D.
20.  Which of the following statements is not correct?
A.
B.
C.
D.
21.  Auditors will replace tests of details with analytical procedures when possible because the:
A.
B.
C.
D.
22.  Which of the following statements is not correct?
A.
B.
C.
D.
23.  Which of the following is the most objective type of evidence?
A.
B.
C.
D.
24.  Which of the following statements regarding documentation is not correct?
A.
B.
C.
D.
25.  When making decisions about evidence for a given audit, the auditor’s goal is to obtain a sufficient amount of timely, reliable evidence that is relevant to the information being verified, and to do so:
A.
B.
C.
D.
26.  “Physical examination” is the inspection or count by the auditor of items such as:
A.
B.
C.
D.
27.  Which items affect the sufficiency of evidence when choosing a sample? Selecting items with a high likelihood of misstatement   The randomness of the items selected
A.
B.
C.
D.
28.  Which of the following is an example of vouching?
A.
B.
C.
D.
29.  Which of the following statements about confirmations is true?
A.
B.
C.
D.
30.  Traditionally, confirmations are used to verify:
A.
B.
C.
D.
31.  To be considered reliable evidence, confirmations must be controlled by:
A.
B.
C.
D.
32.  Indicate whether confirmation of accounts receivable and accounts payable is required or optional: Accounts Receivable   Accounts Payable
A.
B.
C.
D.
33.  The Auditing Standards Board has concluded that analytical procedures are so important that they are required during: 
A.
B.
C.
D.
34.  Which of the following statements regarding analytical procedures is not correct?
A.
B.
C.
D.
35.  A benefit obtained from comparing the client’s data with industry averages is that it provides a(n):
A.
B.
C.
D.
36.  The primary purpose of performing analytical procedures in the planning phase of an audit is to:
A.
B.
C.
D.
37.  Which of the following is not a correct combination of terms and related type of audit evidence?
A.
B.
C.
D.
38.  Which of the following is not a correct combination of terms and related type of audit evidence?
A.
B.
C.
D.
39.  Which of the following is not one of the major types of analytical procedures?
A.
B.
C.
D.
40.  Evidence is generally considered appropriate when:
A.
B.
C.
D.
41.  Given the economic constraints in which auditors collect evidence, the auditor normally gathers evidence that is:
A.
B.
C.
D.
42.  Relevance can be considered only in terms of:
A.
B.
C.
D.
43.  Which of the following statements is not a correct use of the terminology?
A.
B.
C.
D.
44.  Evidence is usually more persuasive for balance sheet accounts when it is obtained:
A.
B.
C.
D.
45.  Which of the following statements is not true?
A.
B.
C.
D.
46.  Which of the following statements is not correct?
A.
B.
C.
D.
47.  Which of the following discoveries through the use of analytical procedures would indicate a relatively high risk of financial failure?
A.
B.
C.
D.
48.  Physical examination is usually the least expensive type of audit evidence    Cost of obtaining evidence may be a factor in deciding whether to obtain that evidence
A.
B.
C.
D.
49.  A common comparison occurs when the auditor calculates the expected balance and compares it with the actual balance. The auditor’s expected account balance may be determined by:
A.
B.
C.
D.
50.  Two analytical procedures available to the auditor are: ·         Compare current year’s balances with the preceding year. ·         Compare details of a particular account’s balance with the preceding year.  Shortcomings of these two procedures are that:
A.
B.
C.
D.
51.  Which of the following statements relating to the competence of evidential matter is always true?
A.
B.
C.
D.
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