Chapter8 - final - CHAPTER 8 Multiple-Choice Questions 1....

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CHAPTER 8 Multiple-Choice Questions 1. easy Which of the following is not one of the three main reasons why the auditor should properly plan engagements? a a. To enable proper on-the-job training of employees. b. To enable the auditor to obtain sufficient appropriate evidence. c. To avoid misunderstandings with the client. d. To help keep audit costs reasonable. 2. Avoiding misunderstandings with the client is important for: easy a. good client relations. d b. facilitating high-quality work at a reasonable cost. c. either a or b, but not both. d. both a and b. 3. easy A measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued is the: b a. inherent risk. b. acceptable audit risk. c. statistical risk. d. financial risk. 4. easy A measure of the auditor’s assessment of the likelihood that there are material misstatements in an account before considering the effectiveness of the client’s internal control is called: d a. control risk. b. acceptable audit risk. c. statistical risk. d. inherent risk. 5. When inherent risk is high, there will need to be: easy a. more evidence accumulated. d b. more experienced staff assigned to the work. c. either a or b, but not both. d. both a and b. 6. The auditor is likely to accumulate more evidence when the audit is for a company: easy a. whose stock is publicly traded. d b. which has large amounts of debt. c. which is to be sold in the near future. d. All three of the above. 7. Which of the following is not typically included in initial audit planning? easy a. Client acceptance/continuation decisions. d b. Determination of the purpose of the audit. c. Obtain an understanding with the client. d. Perform preliminary analytical procedures. 8-1
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8. Initial audit planning involves four matters. Which of the following is not one of these? easy a. Develop an overall audit strategy. b b. Request that bank balances be confirmed. c. Schedule engagement staff and audit specialists. d. Identify the client’s reason for the audit. 9. easy Most auditors assess inherent risk as high for related parties and related-party transactions because: c a. of the accounting disclosure requirement. b. of the lack of independence between the parties. c. both a and b. d. it is required by generally accepted accounting principles. 10. easy Which of the following is not correct regarding the communications between successor and predecessor auditors? a a. The burden of initiating the communication rests with the predecessor auditor. b. The burden of initiating the communication rests with the successor auditor. c. The predecessor auditor must receive their former client’s permission prior to divulging information to the successor auditor d. The predecessor auditor may choose to provide a limited response to a successor auditor. 11.
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This note was uploaded on 04/17/2010 for the course FINANCE 342 taught by Professor Dorthy during the Spring '10 term at University of Advancing Technology.

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Chapter8 - final - CHAPTER 8 Multiple-Choice Questions 1....

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