Chapter 13

Chapter 13 - Chapter 13 Multiple-Choice Questions 1. easy b...

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Chapter 13 Multiple-Choice Questions 1. easy A listing of all the things which the auditor will do to gather sufficient, competent evidence is the: b a. audit strategy. b. audit program. c. audit procedure. d. audit risk model. 2. easy Shown below (1 through 5) are the five types of tests which auditors use to determine whether financial statements are fairly stated. Which three are substantive tests? b 1. procedures to obtain an understanding of internal control 2. tests of controls 3. tests of transactions 4. analytical procedures 5. tests of details of balances a. 1, 2, and 3. b. 3, 4, and 5. c. 2, 3, and 5. d. 2, 3, and 4. 3. easy Collectively, procedures performed to obtain an understanding of the entity and its environment, including internal controls, represent the auditor’s: c a. audit strategy. b. tests of controls. c. risk assessment procedures. d. tests of transactions. 4. For efficiency, tests of controls are frequently done at the same time as: easy a. analytical procedures. c b. compliance tests. c. tests of transactions. d. tests of details of balances. 5. easy Which of the following procedures are frequently performed in response to the auditor’s assessment of the risk of material misstatement? c a. Ratio analysis b. Tests of controls c. Tests of details of balances d. Risk assessment procedures 6. In which stage(s) of an audit are analytical procedures not performed? easy a. In the planning stage. b b. In the test of controls stage. c. In the completion stage. d. In conjunction with tests of transactions and tests of details of balances. 7. Tests of controls may include which of the following types of evidence? easy a Reperformance Observation a. Yes Yes b. No No Arens/Elder/Beasley
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c. Yes No d. No Yes 8. The purpose of tests of controls is to provide reasonable assurance that the: easy a. accounting treatment of transactions and balances is valid and proper. b b. internal control procedures are functioning as intended. c. entity has complied with GAAP disclosure requirements. d. entity has complied with requirements of quality control. 9. In the context of an audit of financial statements, substantive tests are audit procedures that: easy a. may be eliminated under certain conditions. c b. are designed to discover significant subsequent events. c. may be either tests of transactions, tests of balances, or analytical tests. d. will increase proportionately with the auditor’s reliance on internal control. 10. Which of the following is not useful for obtaining an understanding of internal controls? medium a. Make inquiries of the client’s personnel. c b. Examine documents and records. c. Read industry trade magazines. d. Observe client activities and operations. 11.
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This note was uploaded on 06/20/2011 for the course ACCT 451 taught by Professor Scribner during the Fall '10 term at NMSU.

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Chapter 13 - Chapter 13 Multiple-Choice Questions 1. easy b...

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