Deck 23 Flashcards Preview

Audit > Deck 23 > Flashcards

Flashcards in Deck 23 Deck (24):
1

Two documents most likely to be generated by the revenue cycle are:

Credit memos and sales invoices

2

Fictitious credit sales have been recorded decreases what ratio

Accounts receivable turnover ratio

3

Tightening the credit granting policy increases what ratio

AR turnover ratio

4

Assertion related to loan agreements

Understandability and classification

5

Examining paid invoices provides evidence for what assertion

Valuation, allocation, and accuracy

6

Journal entry when filing for bankruptcy

Dr. Operating expenses (bad debt expense)
Cr. AFDA

7

Scanning the repairs and maintenance account for unusually large amounts is what kind of audit procedure?

Analytical procedure

8

The reconciliation balance should agree with the general ledger balance on what day?

Agree balances to the general ledger on the same day

9

Attribute sampling is more useful for:

Testing controls

10

Classical variables sampling or PPS sampling is more useful for:

Substantive tests of details

11

What is meant by the term GAAS?

Measures of the quality of the auditor's performance

12

Auditing standards deal with:

the quality of performance

13

The most efficient way to obtain information about the trust department’s internal controls is to:

rely on the trust department’s audit report on internal controls placed in operation and their operating effectiveness.

14

What factor is not included in the PCAOB standards as one that should influence the nature and extent of necessary planning activities?

The size of the auditing firm and the number of auditors assigned to the audit.

15

Ratio estimation is most effective when:

There is a correlation between book values and audit amounts

16

Upper deviation rate =

Allowance for sampling risk + sample deviation rate

17

Ratio estimation is most effective when:

There is a correlation between book values and audit amounts

18

Upper deviation rate =

Allowance for sampling risk + sample deviation rate

19

How does an increase in dividends to shareholders or a buyback of stock effect equity?

Decrease in equity

20

Reclassifying the production factories as held-for-sale does what to the ratio of net fixed assets to equity?

Decreases net fixed assets which decreases the ratio

21

You always want to match the receiving report with what document?

Vendor's invoices

22

In auditing payroll, an auditor most likely would:

Compare payroll costs with entity standards or budgets (analytical procedure)

23

Point estimate calculation =

Account balance/(1+ percentage overstated)

24

The legal response should cover what period:

The period up to the date of the auditor's report