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becker_kaitei_aud - Following are multiple choice questions...

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Following are multiple choice questions recently released by the AICPA. These questions were released by the AICPA with letter answers only. Our editorial board has provided the accompanying explanations. Please note that the AICPA generally releases questions that it does NOT intend to use again. These questions and content may or may not be representative of questions you may see on any upcoming exams.
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2006 AICPA Newly-Released Auditing Questions - 1 - An auditor observes the mailing of monthly statements to a client's customers and reviews evidence of follow-up on errors reported by the customers. This test of controls most likely is performed to support management's financial statement assertions of: Presentation Existence or and disclosure occurrence a. Yes Yes b. Yes No c. No Yes d. No No ANSWER: Choice "c" is correct. In testing the existence or occurrence assertion, the auditor is concerned that fictitious or overstated receivables may have been recorded. Observing the mailing of monthly statements and reviewing evidence of follow-up on errors reported by customers provides evidence that procedures are in place to identify and correct such errors. Choice "a" is incorrect. Observing the mailing of monthly statements and reviewing evidence of follow-up on errors reported by customers does not provide any assurance regarding how receivables are presented and disclosed in the financial statements. Choice "b" is incorrect. Observing the mailing of monthly statements and reviewing evidence of follow-up on errors reported by customers provides support for the existence or occurrence assertion, but does not provide evidence of proper financial statement presentation and disclosure, as discussed in the explanations for items "c" and "a" above. Choice "d" is incorrect. Observing the mailing of monthly statements and reviewing evidence of follow-up on errors reported by customers provides evidence supporting the existence or occurrence assertion, as discussed in the explanation for item "c" above.
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