AUDITING - CHAPTER 7 - 1. An auditor has determined that...

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1. An auditor has determined that the appropriate sample size for a particular audit procedure is 50. Which of the following methods can the auditor use to select the 50 items? a.Select the 50 items randomly. b. Select the 50 items with the largest dollar amounts. c.Select one week and examine the first 50 items. d. Any combination of the above three methods. 2. 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. b. 3, 2, 1. c.2, 3, 1. d. 3, 1, 2. 3. Analytical procedures are referred to as "attention-directing" when they highlight a.areas that need more detailed procedures. b. areas of improvement. c.irregularities. d. errors. 4. Which of the following is an example of objective evidence? a.A letter written by client's attorney discussing the likely outcome of outstanding lawsuits. b. The physical count of securities and cash. c.Inquiries of the credit manager about the collectibility of noncurrent accounts receivable. d. Observation of cobwebs on some inventory bins. 5 . The Auditing Standards Board has concluded that analytical procedures are so important that they are required during a.planning and testing phases. b. planning and completion phases. c.testing and completion phases. d. planning, testing, and completion phases. 6. Negative confirmations of accounts receivable are less effective than positive confirmations of accounts receivable because when using negative confirmations, a.they do not produce evidential matter that is statistically quantifiable. b. the auditor cannot infer that all nonrespondents have verified their account information. c.some recipients may report incorrect balances that require extensive follow-up. d. a majority of recipients usually lack the willingness to respond objectively. 7. The following statements were made in a discussion of audit evidence between two CPAs. Which statement is not valid concerning evidential matter? a.I am seldom convinced beyond all doubt with respect to all aspects of the statements being examined. b. I would not undertake that procedure because, at best, the results would only be persuasive and I'm looking for convincing evidence. c.I evaluate the degree of risk involved in deciding the kind of evidence I will gather. d. I evaluate the usefulness of the evidence I can obtain against the cost to obtain it. 8. Which of the following statements is not true? a.A large sample of highly competent evidence is not persuasive unless it is relevant to the objective being tested. b.
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This note was uploaded on 02/22/2010 for the course CCA 401 taught by Professor Mohammad during the Spring '10 term at Abraham Baldwin Agricultural College.

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AUDITING - CHAPTER 7 - 1. An auditor has determined that...

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