Auditing Chapter 17 Quiz and Chapter 18 Quiz

Auditing Chapter 17 Quiz and Chapter 18 Quiz - 1 Marks: 1...

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1 Marks: 1 For which of the following matters should an auditor obtain written management representations? Choose one answer. a. Management's cost-benefit justifications for not correcting internal control weaknesses b. Management's knowledge of future plans that may affect the price of the entity's stock c. Management's compliance with contractual agreements that may affect the financial statements d. Management's acknowledgment of its responsibility for employees' violations of laws Correct Marks for this submission: 1/1. Question 2 Marks: 1 Reading contracts and loan agreements is one way to identify unrecorded contingent liabilities. Answer: True False Correct Marks for this submission: 1/1. Question 3 Marks: 1 Which of the following is not an audit procedure that the independent auditor would perform with respect to litigation, claims and assessments? Choose one answer. a. Inquire of and discuss with management the policies and procedures adopted for identifying, evaluating, and accounting for litigation, claims, and assessments b. Obtain from management a description and evaluation of litigation, claims, and assessments that existed at the balance sheet date c. Obtain assurance from management that it has disclosed all unasserted claims that the lawyer has advised are likely to be asserted and must be disclosed d. Confirm directly with the client's lawyer that all claims have been recorded in the financial statements Correct Marks for this submission: 1/1. Question 4 Marks: 1 An example of a Type 1 subsequent event is Choose one answer. a. A tornado that destroys a client's factory after the balance sheet date b. An event after the balance sheet date that confirms the auditor's belief (documented prior to the end of the client's fiscal year) that a large portion of the client's inventory is obsolete c. Notification of an IRS audit after the balance sheet date d. The client's Board of Directors unexpectedly resigns after the balance sheet date
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Incorrect Marks for this submission: 0/1. Question 5 Marks: 1 As part of an audit, a CPA often requests a representation letter from the client. Which one of the following is not a valid purpose of such a letter? Choose one answer. a. To provide audit evidence b. To emphasize to the client their responsibility for the fairness of the financial statements c. To satisfy himself or herself that a certain account balance is fairly stated when certain customary auditing procedures are not performed d. To provide possible protection to the CPA against a charge of knowledge in cases where fraud is subsequently discovered to have existed in the accounts Correct Marks for this submission: 1/1. Question 6 Marks: 1 An auditor should obtain evidential matter relevant to all the following factors concerning third- party litigation against a client except the Choose one answer. a. Period in which the underlying cause for legal action occurred
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This note was uploaded on 05/06/2011 for the course AUDITING 4505 taught by Professor Messier during the Spring '11 term at University of Minnesota Duluth.

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Auditing Chapter 17 Quiz and Chapter 18 Quiz - 1 Marks: 1...

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