View the step-by-step solution to:

Question

<ol><li>The three categories of management assertions are:</li><li><strong>journal

entries, ledgers, and trial balances.</strong></li><li><strong>journal entries, account balances, and financial statements.</strong></li><li><strong>transactions, ledgers, and account balances.</strong></li><li><strong>classes of transactions, account balances, and presentation and disclosure.</strong></li><li><strong>2.</strong> <strong>(LO 1)</strong> The assertion related to recording transactions in the correct accounting period is:</li><li><strong>accuracy.</strong></li><li><strong>completeness.</strong></li><li><strong>cutoff.</strong></li><li><strong>occurrence.</strong></li><li><strong>3.</strong> <strong>(LO 1)</strong> A detailed listing of the specific audit procedures to be used to gather evidence for an account is called the:</li><li><strong>permanent file.</strong></li><li><strong>audit strategy.</strong></li><li><strong>audit program.</strong></li><li><strong>accounting records.</strong></li><li><strong>4.</strong> <strong>(LO 2)</strong> The quantity of evidence that an auditor will gather:</li><li><strong>varies with the assessed risk of material misstatement.</strong></li><li><strong>is the same for most audits because it has to be appropriate.</strong></li><li><strong>depends on the size of the audit team.</strong></li><li><strong>is the same for clients in the same industry.</strong></li><li><strong>5.</strong> <strong>(LO 2)</strong> Which is generally the most reliable form of evidence?</li><li><strong>Internally generated evidence from the client's IT system.</strong></li><li><strong>Internally generated evidence based on discussions with upper management.</strong></li><li><strong>Externally generated evidence held by the client.</strong></li><li><strong>Externally generated evidence sent directly to the auditor.</strong></li><li><strong>6.</strong> <strong>(LO 3)</strong> An external confirmation sent to a bank:</li><li><strong>requests information about the bank balances and loan amounts.</strong></li><li><strong>requests information about interest rates paid on deposits and charged on loans.</strong></li><li><strong>is relevant to the audit of interest revenue and expense.</strong></li><li><strong>All of these answer choices are correct.</strong></li><li><strong>7.</strong> <strong>(LO 3)</strong> When an auditor inspects a tangible asset to support a balance in the client's records, the auditor is gathering evidence to support the:</li><li><strong>completeness assertion.</strong></li><li><strong>existence assertion.</strong></li><li><strong>valuation and allocation assertion.</strong></li><li><strong>rights and obligations assertion.</strong></li><li><strong>8.</strong> <strong>(LO 3)</strong> When an auditor inspects loan documentation and traces the details to recording in the client's records, the auditor is gathering evidence to support the:</li><li><strong>completeness assertion.</strong></li><li><strong>existence assertion.</strong></li><li><strong>valuation and allocation assertion.</strong></li><li><strong>rights and obligations assertion.</strong></li><li><strong>9.</strong> <strong>(LO 3)</strong> Which audit procedure is being used when an auditor checks the calculations in a client-prepared spreadsheet?</li><li><strong>Analytical procedure.</strong></li><li><strong>Recalculation.</strong></li><li><strong>Reperformance.</strong></li><li><strong>Scanning.</strong></li><li><strong>10.</strong> <strong>(LO 4)</strong> If a specialist is engaged to assist with the audit:</li><li><strong>it means the auditor does not have the requisite skill and knowledge to assess the item.</strong></li><li><strong>it means the auditors should not have taken on the audit because they are not qualified.</strong></li><li><strong>the PCAOB must be contacted and permission obtained before the specialist starts work.</strong></li><li><strong>the auditor does not have to take responsibility for the fair presentation of the item in the financial statements.</strong></li><li><strong>11.</strong> <strong>(LO 4)</strong> Before the external auditors decide to use the work performed by the internal auditors, the external auditors must first assess:</li><li><strong>the size of the internal audit function relative to the client.</strong></li><li><strong>the independence of the internal auditors.</strong></li><li><strong>the supervision skills of the internal audit function.</strong></li><li><strong>the competence and objectivity of the internal audit function.</strong></li><li><strong>12.</strong> <strong>(LO 5)</strong> The working papers for a client contain both a permanent and a current file. The difference between the two files is that:</li><li><strong>the permanent file is kept by the audit partner in charge and cannot be altered after the first audit engagement is com­pleted, but the current file can be updated.</strong></li><li><strong>the copy of the permanent file must be sent to a regulator (PCAOB or State Board of Accountancy) and the current file is not.</strong></li><li><strong>the permanent file includes documents that relate to the client and are relevant for more than one year's audit, and the current file includes the details of work completed and evidence gathered that relate to the current year's audit.</strong></li><li><strong>the permanent file cannot be altered, but the current file can be altered.</strong></li></ol>

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes