Auditing Final

53 Questions  I  By Millerisawesome on April 28, 2010
The auditing quiz for chapter 16.This will be good for studying

  

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1.  Analytical procedures are often used for verification of income statement accounts.
A.
B.
2.  The Miscellaneous Revenue account should only be analyzed if it is material in amount.
A.
B.
3.  Internal control over payroll is enhanced when the personnel department distributes payroll checks.
A.
B.
4.  The auditors have a responsibility to report on all FASB-required supplementary information.
A.
B.
5.  Subsequent events that provide additional evidence as to conditions that existed at the balance sheet date may result in adjusting journal entries.
A.
B.
6.  Dual dating of an audit report extends the auditors' liability for disclosure through the later date for all areas of the financial statements.            
A.
B.
7.  If management fails to list an unasserted claim in the letter of inquiry to a lawyer, the lawyer is not required to inform the auditors of the omission.
A.
B.
8.  Normally, general risk contingencies need not be disclosed in the financial statements.
A.
B.
9.  If not adjusted, a situation in which the total likely misstatement in the financial statements exceeds a material amount is likely to lead to an audit report modification
A.
B.
10.  Common to future purchase commitments is the fact that they should be recorded as liabilities at discounted values as of year-end.
A.
B.
11.  . Analytical procedures are a required as a part of the.
A.
B.
C.
D.
12.  The statement that best expresses the auditor's responsibility with respect to events occurring between the balance sheet date and the end of his audit is that:
A.
B.
C.
D.
13.  Shortly after year-end Zero Corporation was informed of the bankruptcy of Bingo. Zero Corporation showed a receivable of $10,000 due from Bingo as of year-end— none of which seems recoverable. The receivable had been questionable for some time as Bingo had been experiencing financial difficulties for the past several years. Yet, Bingo's bankruptcy did not occur until after Zero Corporation's year-end. Under these circumstances:                                                                                                  The financial statements should be adjusted The event requires financial statement disclosure, but no adjustment The auditor’s report should be modified for a lack of consistency
A.
B.
C.
D.
14.  In auditing the balance sheet, most revenue and expense accounts are also audited. Which accounts are most likely to be audited when auditing Accounts Receivable?
A.
B.
C.
D.
15.  15. Auditors should perform audit procedures relating to subsequent events?
A.
B.
C.
D.
16.  Which of the following procedures would an auditor most likely perform while evaluating audit findings at the conclusion of an audit?
A.
B.
C.
D.
17.  Which of the following ledger accounts would be least likely to be analyzed in detail by auditors?
A.
B.
C.
D.
18.  The audit of which of the following balance sheet accounts does not normally result in verification of an income statement account?
A.
B.
C.
D.
19.  An example of an internal control weakness is to assign the payroll department the responsibility for:
A.
B.
C.
D.
20.  An example of an internal control weakness is to assign the personnel department responsibility for:
A.
B.
C.
D.
21.  Which of the following audit procedures is aimed at determining whether every name on the company payroll is an employee actually on the job?
A.
B.
C.
D.
22.  Which of the following is not a procedure that is designed to provide evidence about the existence of loss contingencies?
A.
B.
C.
D.
23.  Which of the following types of matters do not generally require disclosure in the financial statements?
A.
B.
C.
D.
24.  Material loss contingencies should be recorded in the financial statements if available information indicates it is probable that a loss had been sustained prior to the balance sheet date and the amount of such loss can be reasonably estimated. These considerations will affect the audit report as follows
A.
B.
C.
D.
25.  A refusal by a lawyer to furnish information related to litigation included in the letter of inquiry is likely to result in:
A.
B.
C.
D.
26.  If, after issuing an audit report, the auditors find that they have failed to perform certain significant audit procedures they should first:
A.
B.
C.
D.
27.  Which of the following is not a procedure that auditors typically perform to search for significant events during the subsequent period?
A.
B.
C.
D.
28.  Which of the following subsequent events might require an adjustment to the client's financial statements
A.
B.
C.
D.
29.  Authorization of which of the following is least likely to be found during a review of the minutes of the board of directors?
A.
B.
C.
D.
30.  Which of the following is not a procedure normally performed while completing the audit?
A.
B.
C.
D.
31.  31. Auditors must communicate internal control "significant deficiencies" to:
A.
B.
C.
D.
32.  Which of the following procedures is not a procedure that is completed near the end of the engagement
A.
B.
C.
D.
33.  33. Which of the following information must be reported on in the auditors' report?
A.
B.
C.
D.
34.  . In evaluating whether there is a sufficiently low probability of material misstatement in the financial statements, the auditors accumulate:
A.
B.
C.
D.
35.  35. The review of audit working papers by the audit partner is normally completed:
A.
B.
C.
D.
36.  . One reason why the independent auditors perform analytical procedures on the client's operations is to identify:
A.
B.
C.
D.
37.  Which of the following is an analytical procedure that should be applied to the income statement
A.
B.
C.
D.
38.  It would be appropriate for the payroll accounting department to be responsible for which of the following functions?
A.
B.
C.
D.
39.  Which of the following is the best reason why the auditors should consider observing a client's distribution of regular payroll checks?
A.
B.
C.
D.
40.  40. To minimize the opportunities for fraud, unclaimed cash payroll should be:
A.
B.
C.
D.
41.  The purpose of segregating the duties of distributing payroll checks and hiring personnel is to
A.
B.
C.
D.
42.  A CPA reviews a client's payroll procedures. The CPA would consider internal control to be less than effective if a payroll department supervisor was assigned the responsibility for
A.
B.
C.
D.
43.  A common audit procedure in the audit of payroll transactions involves tracing selected items from the payroll journal to employee time cards that have been approved by supervisory personnel. This procedure is designed to provide evidence in support of the audit proposition that:
A.
B.
C.
D.
44.  Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued?
A.
B.
C.
D.
45.  With respect to issuance of an audit report which is dual dated for a subsequent event occurring after the completion of field work but before issuance of the auditors' report, the auditors' responsibility for events occurring subsequent to the completion of field work is:
A.
B.
C.
D.
46.  An auditor's decision concerning whether or not to "dual date" the audit report is based upon the auditor's willingness to
A.
B.
C.
D.
47.  Auditors often request that the audit client send a letter of inquiry to those attorneys who have been consulted with respect to litigation, claims, or assessments. The primary reason for this request is to provide the auditors with
A.
B.
C.
D.
48.  The auditors' primary means of obtaining corroboration of management's information concerning litigation is
A.
B.
C.
D.
49.  49. Which of the following auditing procedures is ordinarily performed last?
A.
B.
C.
D.
50.  The auditors' best course of action with respect to "other financial information" included in a client prepared annual report containing the auditors' report is to:
A.
B.
C.
D.
51.  In the course of the audit of financial statements for the purpose of expressing an opinion thereon, the auditors will normally prepare a schedule of unadjusted differences for which the auditors did not propose adjustment when they were identified. What is the primary purpose served by this schedule
A.
B.
C.
D.
52.  52. An auditor will ordinarily examine invoices from lawyers primarily in order to:
A.
B.
C.
D.
53.  . The auditor's primary means of obtaining corroboration of management's information concerning litigation is a:
A.
B.
C.
D.
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