D for any given class of transactions usually only

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Unformatted text preview: 8. Which of the following statements is not true? 1-96 medium d a. b. c. d. Balance-related audit objectives are applied to account balances. Transaction-related audit objectives are applied to classes of transactions. Balance-related audit objectives are applied to the ending balance in balance sheet accounts. Balance-related audit objectives are applied to both beginning and ending balances in balance sheet accounts. 49. medium b In testing for cutoff, the objective is to determine: a. whether all of the current period’s transactions are recorded. b. whether transactions are recorded in the correct accounting period. c. the proper cutoff between capitalizing and expensing expenditures. d. the proper cutoff between disclosing items in footnotes or in account balances. 50. medium b The detail tie-in objective is not concerned that the details in the account balance: a. agree with related subsidiary ledger amounts. b. are properly disclosed in accordance with GAAP. c. foot to the total in the account balance. d. agree with the total in the general ledger. 51. medium b The detail tie-in is part of the_______ assertion for account balances. a. classification b. valuation and allocation c. rights and obligations d. completeness 52. medium a Which of the following is not a proper match of a transaction-related audit objective and management assertion? a. Accuracy and cutoff. b. Classification and classification. c. Posting and summarization with accuracy. d. Occurrence and occurrence. 53. medium d Which of the following statements is not correct? a. There are many ways an auditor can accumulate evidence to meet overall audit objectives. b. Sufficient appropriate evidence must be accumulated to meet the auditor’s professional responsibility. c. It is appropriate to minimize the cost of accumulating evidence. d. Gathering evidence and minimizing costs are equally important considerations that affect the approach the auditor selects. 54. medium a Two overriding considerations affect the many ways an auditor can accumulate evidence: 1. Sufficient appropriate evidence must be accumulated to meet the auditor’s professional responsibility. 2. Cost of accumulating evidence should be minimized. In evaluating these considerations: a. the first is more important than the second. b. the second is more important than the first. c. they are equally important. d. it is impossible to prioritize them. 55. medium b If the auditor has obtained a reasonable level of assurance about the fair presentation of the financial statements through understanding internal control, assessing control risk, testing controls, and analytical procedures, then the auditor: a. can issue an unqualified opinion. b. can significantly reduce other substantive tests. c. can write the engagement letter. d. needs to perform additional tests of controls so that the assurance level can be increased. 1-97 56. medium d After the auditor has completed all audit procedures, it is necessary to combine the information obtained to reach an overall conclusion as to whether the financial statements are fairly presented. This is a highly subjective process that relies heavily on: a. generally accepted auditing standards. b. the AICPA’s Code of Professional Conduct. c. generally accepted accounting principles. d. the auditor’s professional judgment. 57. medium c Which of the following combinations is correct? a. Existence relates to whether the amounts in accounts are understated. b. Occurrence relates to whether balances exist. c. Existence relates to whether amounts included exist. d. Occurrence relates to whether the amounts in accounts occurred in the proper year. 58. medium b If an auditor conducted an audit in accordance with auditing standards, which of the following would the auditor likely detect? a. Unrecorded transactions. b. Incorrect postings of recorded transactions. c. Counterfeit signatures on paid checks. d. Fraud involving collusion. 59. medium a Which of the following statements best describes the auditor’s responsibility with respect to illegal acts that do not have a material effect on the client’s financial statements? a. Generally, the auditor is under no obligation to notify parties other than personnel within the client’s organization. b. Generally, the auditor is under an obligation to inform the PCAOB. c. Generally, the auditor is obligated to disclose the relevant facts in the auditor’s report. d. Generally, the auditor is expected to compel the client to adhere to requirements of the Foreign Corrupt Practices Act. 60. medium c Which of the following statements best describes the auditor’s responsibility regarding the detection of fraud? a. The auditor is responsible for the failure to detect fraud only when such failure clearly results from nonperformance of audit procedures specifically described in the engagement letter. b. The auditor must extend auditing procedures to actively search for evidence of fraud in all situations. c. The auditor must extend auditing procedures to actively search for evidence of fraud where the examination indicates that fraud may exist. d. The auditor is respon...
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This note was uploaded on 02/04/2014 for the course ACCOUNTING 211 taught by Professor Alikapur during the Fall '13 term at American University of Sharjah.

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