Test%20Questions%20Chapter%20160 - Chapter 16 Auditing...

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Chapter 16 Auditing Operations True/False Questions 1. Analytical procedures are often used for verification of income statement accounts. Answer: True Difficulty: Easy 2. The Miscellaneous Revenue account should only be analyzed if it is material in amount. Answer: False Difficulty: Medium 3. Internal control over payroll is enhanced when the personnel department distributes payroll checks. Answer: False Difficulty: Easy 4. The auditors have a responsibility to report on all FASB-required supplementary information. Answer: False Difficulty: Medium 5. Subsequent events that provide additional evidence as to conditions that existed at the balance sheet date may result in adjusting journal entries. Answer: True Difficulty: Medium 6. Dual dating of an audit report extends the auditors' liability for disclosure through the later date for all areas of the financial statements. Answer: False Difficulty: Medium 7. If management fails to list an unasserted claim in the letter of inquiry to a lawyer, the lawyer is not required to inform the auditors of the omission. Answer: True Difficulty: Medium 8. Normally, general risk contingencies need not be disclosed in the financial statements. Answer: True Difficulty: Medium 242 Whittington, Principles of Auditing, Fifteenth Edition
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Auditing Operations 9. If not adjusted, a situation in which the total likely misstatement in the financial statements exceeds a material amount is likely to lead to an audit report modification. Answer: True Difficulty: Easy 10. Common to future purchase commitments is the fact that they should be recorded as liabilities at discounted values as of year-end. Answer: False Difficulty: Medium Multiple Choice Questions 11. Analytical procedures are a required as a part of the. A) Detailed tests of balances. B) Internal control assessment. C) Overall review at the conclusion of the audit. D) Substantive testing. Answer: C Difficulty: Medium 12. The statement that best expresses the auditor's responsibility with respect to events occurring between the balance sheet date and the end of his audit is that: A) The auditor has no responsibility for events occurring in the subsequent period unless these events affect transactions recorded on or before the balance sheet date. B) The auditor's responsibility is to determine that a proper cutoff has been made and that transactions recorded on or before the balance sheet date actually occurred. C) The auditor is fully responsible for events occurring in the subsequent period and should extend all detailed procedures through the last day of field work. D) The auditor is responsible for determining that a proper cutoff has been made and performing a general review of events occurring in the subsequent period. Answer: D
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Test%20Questions%20Chapter%20160 - Chapter 16 Auditing...

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