ac316_8 - AC 316 CHAPTER 7 AUDIT EVIDENCE 1. Which of the...

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7-1 AC 316 CHAPTER 7 AUDIT EVIDENCE 1. Which of the following “decisions” are relevant to the auditor’s evidence accumulation? a. Type of audit procedure to use. b. # of items to examine. c. Timing of audit procedures. d. All of the above are relevant. 2. Audit procedures are normally performed a. early in the accounting period being examined. b. throughout the accounting period being examined, but with emphasis on the transactions near the end. c. within one to three months after the close of the accounting period. d. during all three of the above periods. 3. Which of the following forms of evidence is most reliable? a. General ledger account balances. b. Confirmation of A/R balance received from a customer. c. Internal memo explaining the issuance of a credit memo. d. Copy of month-end adjusting entries. 4. Evidence obtained directly by the auditor is more competent than information obtained indirectly. Which of the following is not an example of the auditor’s direct knowledge? a. Physical examination. b. Observation. c. Computation. d. Inquiry. 5. When an auditor calculates the gross margin as a percent of sales and compares it with previous periods, this type of evidence is called a. physical examination. b. analytical procedures. c. observation. d. inquiry 6. Evidence obtained directly by the auditor will not be reliable if a. the auditor lacks the qualifications to evaluate the evidence. b. it is provided by the client’s attorney. c. the client denies its veracity. d. it is impossible for the auditor to obtain additional corroboratory evidence. 7. For a given audit procedure, the evidence obtained from a sample of 200 would ordinarily be a. more sufficient than from a sample of one hundred.
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7-2 b. less sufficient than from a sample of one hundred. c. more competent than from a sample of one hundred. d. less competent than from a sample of one hundred. 8. Auditors routinely examine selected items from a much larger population. Which of the following methods might an auditor use in selecting the items to examine? a. Select the items that are largest. b. Select items randomly. c. Select items that are most likely to contain misstatements. d. All of the above are appropriate methods. 9. Which of the following statements regarding the relevance of evidence is correct? a. To be relevant, evidence must pertain to the question at hand. b. To be relevant, evidence must be persuasive. c. To be relevant, evidence must relate to multiple audit objectives. d. To be relevant, evidence must be evaluated in terms of the general audit objectives. 10. Three common types of confirmations used by auditors are (1) negative confirmations, (2) positive confirmations with a request for information, (3) positive confirmations with the information included. If they were placed in the order of their competence, from highest to lowest, the sequence would be a. 1, 2, 3.
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This note was uploaded on 01/20/2010 for the course ECONO econ132 taught by Professor Anderson during the Fall '09 term at UCSB.

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ac316_8 - AC 316 CHAPTER 7 AUDIT EVIDENCE 1. Which of the...

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