Chap005 - Chapter 05 - Audit Evidence and Documentation...

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Unformatted text preview: Chapter 05 - Audit Evidence and Documentation Chapter 05 Audit Evidence and Documentation True / False Questions 1. The professional standards consider calculating depreciation expense a "routine" transaction. True False 2. The most reliable form of documentary evidence generally is considered to be documents created by the client. True False 3. A vendor's invoice is an example of documentary evidence created by a third party and held by the client. True False 4. In performing analytical procedures, the auditors may use dollar amounts, physical quantities, or percentages. True False 5. The primary purpose of a letter of representations is to obtain additional evidence about specific accounts. True False 6. The auditors should propose an adjusting journal entry for all material related-party transactions. True False 5-1 Chapter 05 - Audit Evidence and Documentation 7. When the risk of material misstatement for an account is high, the auditors may perform additional substantive procedures to restrict detection risk to a lower level. True False 8. Working papers of continuing audit interest usually are filed with the administrative working papers. True False 9. The use of lead schedules is designed to increase the detail of the working trial balance. True False 10. Adjusting journal entries are ordinarily recorded by the client, while reclassifying journal entries need not be recorded. True False Multiple Choice Questions 11. To be effective, analytical procedures in the overall review stage of an audit engagement should be performed by. A. The staff accountant who performed the substantive auditing procedures. B. A beginning staff accountant who has had no other work related to the engagement. C. A manager or partner who has a comprehensive knowledge of the client's business and industry. D. The CPA firm's quality control manager. 5-2 Chapter 05 - Audit Evidence and Documentation 12. The components of the risk of misstatement are: A. Option A B. Option B C. Option C D. Option D 13. Financial statement assertions are established for classes of transactions, A. Option A B. Option B C. Option C D. Option D 14. Which of the following is correct concerning a "fraud risk factor"? A. It may affect the auditor's assessment of fraud risk. B. It requires modification of planned audit procedures. C. It is also a material weakness in internal control. D. If it involves senior management, it is likely to result in resignation of the auditor. 15. When performing a financial statement audit, auditors are required to explicitly assess the risk of material misstatement due to: A. Fraud. B. Misappropriation. C. Illegal Acts. D. Business risk....
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Chap005 - Chapter 05 - Audit Evidence and Documentation...

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