Mid-Term Exam (ACCT-422)

Mid-Term Exam (ACCT-422) - ACCT 422 Auditing Theory and...

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ACCT 422 – Auditing Theory and Practice Midterm Examination Due Date: On or before Sunday, March 21, 2010 @ 11:59 p.m. EST Instructions : This exam consists of 5 parts. Your answers to the exam questions should be submitted on a separate answer sheet. Your answer sheet should be submitted as an attachment in your assignment folder under the “Midterm” folder in Microsoft Word or WordPerfect. Please do not write your answers directly in the narrative portion of your assignment folder. Part 1: (Worth total of 52 points) For Part 1, please number your answer sheet from 1 to 40 and provide the letter corresponding to the best answer (eg, 1. A, 2. B, etc.). 1. Which of the following statements is not true? a. Analytical procedures emphasize the overall reasonableness of transactions and balances. b. Tests of controls are concerned with evaluating whether controls are sufficiently effective to justify reducing control risk and thereby reducing analytical procedures. c. Substantive tests of transactions emphasize the verification of transactions recorded in the journals and then posted in the general ledger. d. Tests of details of balances emphasize the ending balances in the general ledger. 2. The audit approach in which the auditor runs his or her own program on a controlled basis to verify the client’s data recorded in a machine language is: a. the test data approach. b. called auditing around the computer. c. the generalized audit software approach. d. the microcomputer-aided auditing approach. 3. Which of the following is a factor that relates to incentives to misappropriate assets? a. Significant accounting estimates involving subjective judgments. b. Significant personal financial obligations. c. Management’s practice of making overly aggressive forecasts. d. High turnover of accounting, internal audit and information technology staff. 4. The initial presumption in the audit of a public company is that control risk is: a. low. b. moderate. c. high. d. low or moderate, but not high. 5. If an auditor believes the chance of financial failure is high and there is a corresponding increase in business risk for the auditor, acceptable audit risk would likely:
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a. be reduced. b. be increased. c. remain the same. d. be calculated using a computerized statistical package. 6. Which of the following statements is not correct with respect to analytical procedures? a. Auditing standards emphasize the need for auditors to develop and use expectations. b. Analytical procedures must be performed throughout the audit. c. Analytical procedures may be performed at any time during the audit. d. Analytical procedures use comparisons and relationships to assess whether account balances appear reasonable. 7.
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This note was uploaded on 04/11/2010 for the course ACCT 422 taught by Professor Blake during the Spring '10 term at MD University College.

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Mid-Term Exam (ACCT-422) - ACCT 422 Auditing Theory and...

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