Test%20Questions%20Chapter%2051-1

Test%20Questions%20Chapter%2051-1 - Chapter 5 Audit...

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Unformatted text preview: Chapter 5 Audit Evidence and Documentation True/False Questions 1. Appropriateness is the measure of the quantity of evidence that must be obtained. Answer: False Difficulty: Easy 2. The most reliable form of documentary evidence generally is considered to be documents created by the client. Answer: False Difficulty: Medium 3. A vendor's invoice is an example of documentary evidence created by a third party and held by the client. Answer: True Difficulty: Medium 4. In performing analytical procedures, the auditors may use dollar amounts, physical quantities, or percentages. Answer: True Difficulty: Medium 5. The primary purpose of a letter of representations is to obtain additional evidence about specific accounts. Answer: False Difficulty: Hard 6. The auditors should propose an adjusting journal entry for all material related-party transactions. Answer: False Difficulty: Hard 7. When inherent risk of an account is high, the auditors may perform additional substantive tests to allow them to restrict detection risk to a lower level. Answer: True Difficulty: Medium 8. Working papers of continuing audit interest usually are filed with the administrative working papers. Answer: False Difficulty: Medium 60 Whittington, Principles of Auditing, Fifteenth Edition Chapter 5 Audit Evidence and Documentation 9. The use of lead schedules is designed to increase the detail of the working trial balance. Answer: False Difficulty: Easy 10. Adjusting journal entries are ordinarily recorded by the client, while reclassifying journal entries need not be recorded. Answer: True Difficulty: Medium 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. Answer: C Difficulty: Medium 12. The components of the risk of misstatement are: Inherent Risk Control Risk Detection Risk A) Yes Yes Yes B) Yes Yes No C) Yes No No D) No Yes Yes Answer: B Difficulty: Medium 13. Audit procedures that help auditors obtain an understanding of the client and its environment to assess the risk of material misstatement are referred to as A) Analytical procedures. B) Risk assessment procedures. C) Tests of controls. D) Tests of details of accounts. Answer: B Difficulty: Easy 61 Whittington, Principles of Auditing, Fifteenth Edition Chapter 5 Audit Evidence and Documentation 14. Which of the following is correct concerning a "fraud risk factor"?...
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Test%20Questions%20Chapter%2051-1 - Chapter 5 Audit...

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