Chapter 5

Question 1

Comparing a sample of shipping documents to related sales invoices is testing for what management assertion.

Answer 1

Completeness

Question 2

In testing the existence assertion for an asset, an auditor ordinarily works from the…

Answer 2

Accounting records to the supporting documents

Question 3

The measure of reliability of audit evidence lies in the auditor’s judgement (T/F)

Answer 3

True

Question 4

Vouchering goes from what to what, and determines what management assertion?

Answer 4

From the GL to the Source Documents, testing the Occurrence assertion

Question 5

Tracing goes from what to what, and determines what management assertion?

Answer 5

From the Source Document to the GL, testing the Completeness assertion.

Question 6

The assurance bucket is filled in what order?

Answer 6

1) Risk Assessment
2) Test of Controls
3) Substantive Analytical Procedures
4) Test of Details

Question 7

What is the primary purpose of final analytical procedures?

Answer 7

Assist the auditor in assessing the validity of the conclusions reached.

Question 8

The substantive analytical procedure know as Trend Analysis is best described by…

Answer 8

The examination of changes in an account over time.

Question 9

An audit document that reflects the major components of an amount reported in the financial statements.

Answer 9

Lead Schedule

Question 10

Audit documentation is property of who?

Answer 10

The Auditor

Question 11

What two functions do working papers serve per auditing standards?

Answer 11

1) Support for the Audit Report

2) Planning, Performance, and Supervision

Question 12

An auditor can rely purely of test of controls for assurance (T/F)

Answer 12

False

Question 13

Confirmations relate to which to assertions

Answer 13

1) Completeness

2) Existence

Question 14

What are two forms of low reliability types of evidence

Answer 14

1) Observations

2) Inquiries

Question 15

What are three forms of highly reliable audit evidence

Answer 15

1) Recalculation
2) Reperformance
3) Inspection of Tangible Assets

Question 16

The bulk of audit evidence is gathered how?

Answer 16

Inspection of records or documents

Question 17

Audit evidence must of what two qualities

Answer 17

Sufficient and Appropriate

Question 18

The characteristics of Sufficiency and Appropriateness of audit evidence has what type of relationship?

Answer 18

Inverse

Question 19

The nature of Audit evidence refers to what?

Answer 19

Form

Question 20

What is one way to receive more reliable evidence from an audit client?

Answer 20

Better Internal Controls

Question 21

Assertions about Classes of Transactions and Events

Answer 21

1) Completeness
2) Cutoff
3) Classification
4) Authorization
5) Accuracy
6) Occurence

Question 22

Assertions about Account Balances

Answer 22

1) Completeness
2) Existence
3) Rights & Obligations
4) Valuation & Allocation

Question 23

Assertions about Presentation and Disclosure

Answer 23

1) Completeness
2) Accuracy & Valuation
3) Occurrence & Rights & Obligations
4) Classification & Understandability

Question 24

The heading of audit documentation must include what?

Answer 24

1. Name of the Client
2. Title of Working Paper
3. Client’s Year-End Date

Question 25

Concepts of Audit Evidence

Answer 25

1. Nature | 2. Sufficiency & Appropriateness

Question 26

Appropriate Evidence refers to what

Answer 26

Quality

Question 27

Sufficient Evidence refers to what

Answer 27

Quanity

Question 28

How long must an auditor keep audit documentation?

Answer 28

7 years

Question 29

The relevance of audit evidence depends on the assertion being tested (T/F)

Answer 29

True

Question 30

The auditor must use his or her professional judgement to determine the amount of audit evidence to be gathered (T/F)

Answer 30

True

Question 31

In testing PPE balances, and auditor may physically inspect new additions listed on the summary of PPE transaction for the year. What assertion T&E assertion is being tested?

Answer 31

Occurence

Question 32

What is the primary purpose of audit procedures?

Answer 32

To gather corroborative evidence about management's assertions

Question 33

A confirmation is used to...

Answer 33

Verify a representation from a third party

Question 34

Vouchering is used primarily to test what type of assertion about classes of transactions.

Answer 34

Occurrence

Question 35

In determining whether transactions have been recorded, the direction of the audit testing should start from the...

Answer 35

Original source document

Question 36

A company's accounting data cannot be considered sufficient audit evidence to support the financial statements (T/F)

Answer 36

True

Question 37

Relationship within which financial statement tend to be most predictable for purposes of analytical procedures applied as substantive procedures?

Answer 37

Income Statement