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Question 1 2 out of 2 points Testing the information on the aged trial balance for detail tie-in is a necessary audit procedure, which would normally include: Answer Selected Answer: Test-footing the total column and the columns depicting the Comparing the total of the aged trial balance with the general ledger aging accounts receivable account Yes Correct Answer: Test-footing the total column and the columns depicting the Comparing the total of the aged trial balance with the general ledger aging accounts receivable account Yes Question 2 2 out of 2 points Which of the following is the principle "weakness" of using negative confirmations for your tests of details of balances for accounts receivable? Answer Selected Answer: conclusions drawn from receiving no reply may not be correct Yes Yes

Correct Answer: conclusions drawn from receiving no reply may not be correct Question 3 2 out of 2 points Most tests of accounts receivable are based on what schedule, file, or listing? Answer Selected Answer: Aged accounts receivable trial balance. Correct Answer: Aged accounts receivable trial balance. Question 4 2 out of 2 points When do most companies record sales returns and allowances? Answer Selected Answer: During the accounting period in which the return occurs. Correct Answer: During the accounting period in which the return occurs. Question 5 2 out of 2 points Audit procedures designed to uncover credit sales made after the client's fiscal year end that relate to the current year being audited provide evidence for which of the following audit objective?

Answer Selected Answer: cutoff Correct Answer: cutoff Question 6 2 out of 2 points Tests of which balance-related audit objective are normally performed first in an audit of the sales and collection? Answer Selected Answer: Detail tie-in Correct Answer: Detail tie-in Question 7 0 out of 2 points The correct accounting for accounts receivable accounts with credit balances, provided they are significant, would be: Answer Selected Answer: written off. Correct Answer: reclassified as accounts payable.

Question 8 0 out of 2 points An auditor is performing a credit analysis of customers with balances over 60 days due. She is most likely obtaining evidence for which audit related objective? Answer Selected Answer: existence Correct Answer: realizable value Question 9 0 out of 2 points In performing your audit you noticed that often times goods are shipped that are not matched with the corresponding sales invoice. This control deficiency could cause: Answer Selected Answer: understatement of revenues and inventory. Correct Answer: understatement of revenues and overstatement of inventory. Question 10 2 out of 2 points For cash receipts, the occurrence transaction-related audit objective affects which of the following balance-related audit objective? Answer

Selected Answer: Completeness Correct Answer: Completeness Question 11 0 out of 2 points An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared. This test is performed to satisfy the audit objective of: Answer Selected Answer: existence. Correct Answer: completeness. Question 12 0 out of 2 points The audit procedure of tracing sales invoices to shipping documents will provide the auditor evidence that: Answer Selected Answer: goods shipped were billed to customers. Correct Answer: billed sales were shipped. Question 13

2 out of 2 points The most important test of details of balances to determine the existence of recorded accounts receivable is: Answer Selected Answer: the confirmation of customers' balances. Correct Answer: the confirmation of customers' balances. Question 14 2 out of 2 points For most audits, inherent risk for accounts receivable is moderate or low except for which balance-related audit objectives? Answer Selected Answer: Realizable value and cutoff. Correct Answer: Realizable value and cutoff. Question 15 2 out of 2 points Cutoff misstatements occur when: Answer Selected Answer: The auditor fails to Subsequent period Current period

obtain the end-of-year transactions are bank statement recorded in the directly from the bank, obtaining current period instead the statement which includes the two succeeding weeks No Correct Answer: The auditor fails to obtain the end-of-year bank statement Subsequent period directly from the transactions are bank, obtaining instead the statement recorded in the which includes the two succeeding weeks current period No Question 16 2 out of 2 points Yes Yes

transactions are recorded in the subsequent period

Yes

Current period transactions are recorded in the subsequent period Yes

Tests for rates of occurrence are appropriately used in all but which of the following situations? Answer Selected Answer: Testing of internal controls Yes Correct Answer: Substantive testing of Substantive testing of transactions details of balances Yes No

Testing of internal controls Yes Question 17 0 out of 2 points

Substantive testing of Substantive testing of transactions details of balances Yes No

If acceptable audit risk is increased, acceptable risk of incorrect acceptance should be: Answer Selected Answer: reduced. Correct Answer: increased. Question 18 2 out of 2 points Which of the following is not a type of statistical method that provides results in dollar terms? Answer Selected Answer: Attributes sampling Correct Answer: Attributes sampling Question 19 2 out of 2 points The method used to measure the estimated total error amount in a population when there

is both a recorded value and an audited value for each item in the sample is: Answer Selected Answer: difference estimation. Correct Answer: difference estimation. Question 20 2 out of 2 points What is the purpose of applying stratified sampling to a population? Answer Selected Answer: To avoid items that may contain misstatements No Correct Answer: To avoid items that may contain misstatements No Question 21 2 out of 2 points The final step in the evaluation of the audit results is the decision to: Answer To emphasize certain items and deemphasize others Yes To emphasize certain items and deemphasize others Yes

Selected Answer: accept the population as fairly stated or to require further action. Correct Answer: accept the population as fairly stated or to require further action. Question 22 2 out of 2 points In estimating the population misstatement, the first step in projecting from the sample to the population is to: Answer Selected Answer: make a point estimate. Correct Answer: make a point estimate. Question 23 2 out of 2 points You are auditing Nelson and Company and determined that the sample results support a conclusion that the account is materially misstated, when in fact it was not misstated. This illustrates the risk of: Answer Selected Answer: incorrect rejection. Correct Answer: incorrect rejection. Question 24

2 out of 2 points As the amount of misstatements expected in the population approaches tolerable misstatement, the planned sample size will: Answer Selected Answer: increase. Correct Answer: increase. Question 25 2 out of 2 points The auditor is concerned with the audited value rather than the error amount of each item in the sample when using: Answer Selected Answer: mean-per-unit estimation. Correct Answer: mean-per-unit estimation. Question 26 2 out of 2 points When selecting a sample size for substantive tests of balances which factor, other factors being equal, would result in a larger sample? Answer Selected Answer:

smaller tolerable misstatement Correct Answer: smaller tolerable misstatement Question 27 2 out of 2 points The risk the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance under audit is greater than the tolerable misstatement is: Answer Selected Answer: the acceptable risk of incorrect acceptance. Correct Answer: the acceptable risk of incorrect acceptance. Question 28 2 out of 2 points When errors are found in a sample, auditors in practice generally make the assumption: Answer Selected Answer:

that the actual sample errors are representative of the population errors.

Correct Answer: that the actual sample errors are representative of the population errors. Question 29 2 out of 2 points

Which of the following does not have to be considered in determining the initial sample size of a test of details? Answer Selected Answer: acceptable risk of incorrect rejection Correct Answer: acceptable risk of incorrect rejection Question 30 2 out of 2 points The auditors principal objective when using a sample of tests of details of balances is whether the: Answer Selected Answer: account balance being audited is fairly stated. Correct Answer: account balance being audited is fairly stated. Sunday, December 16, 2012 1:47:49 PM EST OK