Topic 5 questions 07

Topic 5 questions 07 - Topic 5 tutorial question

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ACCT3101 – topic 5 audit evidence (ARENS ch 6) questions 6.21 (Objectives 4, 5, 6) The following questions deal with analytical procedures. Choose the best response. A Analytical procedures are: (1) statistical tests of financial information designed to identify areas requiring intensive investigation (2) calculations of financial information made by a computer (3) substantive tests of financial information made by a study and comparison of relationships among data (4) diagnostic tests of financial information that may not be classified as evidential matter. B Significant unexpected fluctuations identified by analytical procedures will usually necessitate a(n): (1) consistency qualification (2) understanding of the client’s internal control (3) explanation in the representation letter (4) auditor investigation. C Which of the following situations has the best chance of being detected when a public accountant compares 20X3 revenues and expenses with the prior year and investigates all changes exceeding a fixed percentage? (1) An increase in property rates has not been recognised in the company’s 20X3 accrual. (2) The cashier began lapping accounts receivable in 20X3. (3) Because of worsening economic conditions, the 20X3 provision for doubtful debts was inadequate. (4) The company changed its capitalisation policy for small tools in 20X3. 1
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D Your analytical procedures and other tests of Dey Company Ltd reveal that the firm’s poor financial condition makes it unlikely that it will survive as a going concern. Assuming that the financial statements have otherwise been prepared in accordance with accounting standards, what disclosure should you make of the company’s precarious financial position? (1)
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This note was uploaded on 08/24/2010 for the course ACCT 3101 taught by Professor Drmarcsim during the Two '09 term at Queensland.

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Topic 5 questions 07 - Topic 5 tutorial question

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