Chapter 7

Chapter 7 - Chapter 7 Multiple-Choice Questions 1. Easy c...

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Chapter 7 Multiple-Choice Questions 1. Easy c Auditors must make decisions regarding what evidence to gather and how much to accumulate. Which of the following is a decision that must be made by auditors related to evidence? Sample size Timing of audit procedures a. b. c. d. Yes No Yes No Yes No No Yes 2. Audit procedures may be performed: Easy a Prior to the fiscal year-end of the client Subsequent to the fiscal year-end of the client a. b. c. d. Yes No Yes No Yes No No Yes 3. Which of the following forms of evidence is most reliable? easy a. General ledger account balances. b b. Confirmation of accounts receivable balance received from a customer. c. Internal memo explaining the issuance of a credit memo. d. Copy of month-end adjusting entries. 4. Which of the following is not a characteristic of the reliability of evidence? easy a. Effectiveness of client internal controls. b b. Education of auditor. c. Independence of information provider. d. Timeliness. 5. Which of the following is not a characteristic of the reliability of evidence? easy a. Qualification of individual providing information. c b. Auditor’s direct knowledge. c. Degree of subjectivity. d. Degree of objectivity. 6. easy Calculating the gross margin as a percent of sales and comparing it with previous periods is what type of evidence? b a. Physical examination. b. Analytical procedures. c. Observation. d. Inquiry 7. Audit evidence obtained directly by the auditor will not be reliable if: easy a. the auditor lacks the qualifications to evaluate the evidence. a b. it is provided by the client’s attorney. c. the client denies its veracity. d. it is impossible for the auditor to obtain additional corroboratory evidence. 8. Appropriateness of evidence is a measure of the: easy a. quantity of evidence. Arens/Elder/Beasley
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b b. quality of evidence. c. sufficiency of evidence. d. meaning of evidence. 9. Which of the following statements regarding the relevance of evidence is correct? easy a. To be relevant, evidence must pertain to the audit objective of the evidence. a b. To be relevant, evidence must be persuasive. c. To be relevant, evidence must relate to multiple audit objectives. d. To be relevant, evidence must be derived from a system including effective internal controls. 10. Two determinants of the persuasiveness of evidence are: easy a. competence and sufficiency. c b. relevance and reliability. c. appropriateness and sufficiency. d. independence and effectiveness. 11. easy c Three common types of confirmations used by auditors are (1) negative confirmations, (2) blank form positive confirmations, and (3) positive confirmations with information included. Place the confirmations in order of reliability from highest to lowest. a.
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Chapter 7 - Chapter 7 Multiple-Choice Questions 1. Easy c...

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