chapter 8 final - Chapter 8 Multiple-Choice Questions 1...

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Chapter 8 Multiple-Choice Questions 1. easy Which of the following is not one of the three main reasons why the auditor should properly plan engagements? a a. To enable proper on-the-job training of employees. b. To enable the auditor to obtain sufficient appropriate evidence. c. To avoid misunderstandings with the client. d. To help keep audit costs reasonable. 2. Avoiding misunderstandings with the client is important for: easy a Good client relations Facilitating high-quality work at a reasonable cost a. b. c. d. Yes No Yes No Yes No No Yes 3. easy A measure of how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued is the: b a. inherent risk. b. acceptable audit risk. c. statistical risk. d. financial risk. 4. easy A measure of the auditor’s assessment of the likelihood that there are material misstatements in an account before considering the effectiveness of the client’s internal control is called: d a. control risk. b. acceptable audit risk. c. statistical risk. d. inherent risk. 5. When inherent risk is high, there will need to be: Easy d A lower assessment of audit risk More evidence accumulated by the auditor a. b. c. d. Yes No Yes No Yes No No Yes 6. The auditor is likely to accumulate more evidence when the audit is for a company: easy a Which has large amounts of debt Which is to be sold in the near future Arens/Elder/Beasley
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a. b. c. d. Yes No Yes No Yes No No Yes 7. Which of the following is not typically included in initial audit planning? easy a. Client acceptance/continuation decisions. d b. Determination of the purpose of the audit. c. Obtain an understanding with the client. d. Perform analytical procedures as substantive tests. 8. Initial audit planning involves four matters. Which of the following is not one of these? easy a. Develop an overall audit strategy. b b. Request that bank balances be confirmed. c. Schedule engagement staff and audit specialists. d. Identify the client’s reason for the audit. 9. easy Most auditors assess inherent risk as high for related parties and related-party transactions because: b a. of the unique classification of related-party transactions required on the balance sheet. b. of the lack of independence between the parties. c. of the unique classification of related-party transactions required on the income statement. d. it is required by generally accepted accounting principles. 10. easy Which of the following is not correct regarding the communications between successor and predecessor auditors? a a. The burden of initiating the communication rests with the predecessor auditor. b. The burden of initiating the communication rests with the successor auditor. c.
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chapter 8 final - Chapter 8 Multiple-Choice Questions 1...

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