exam

Question 1

What are the assertions for the income statement

Answer 1

Completeness, occurrence, accuracy, cut-off, classification

Question 2

What are the assertions for the balance sheet

Answer 2

Existence, rights and obligations, completeness, valuation and allocation

Question 3

What is occurrence for the income statement

Answer 3

Have the transactions that have been recorded and occurred actually happened such as did the sales actually happen

Question 4

What is completeness in the income statement

Answer 4

All transactions that should be recorded have been recorded

Question 5

What is accuracy in the income statement

Answer 5

have things been recorded at the right amount

Question 6

What is cut off in the income statement

Answer 6

Transactions have been recorded in the correct accounting period

Question 7

What is classification in the income statements

Answer 7

transactions have been recorded in the proper accounts

Question 8

What is the test for occurrence

Answer 8

Select a sample of entries from the sales general ledger and then match to the source document such as sales invoice

Question 9

What is the test for completeness

Answer 9

Select a sample of customer orders and trace the sales invoices to the sales account in the general ledger

Question 10

What is the existence in the balance sheet

Answer 10

Assets, liabilities do they actually exist

Question 11

What is the rights and obligations in the balance sheet

Answer 11

does the entity hold the control and rights over the assets and liabilities

Question 12

what is completeness in the balance sheet

Answer 12

All assets that should be recorded are recorded

Question 13

What is valuation and allocation in the balance sheet

Answer 13

Ensuring the assets are valued at the right amount not over or under stated

Question 14

Most important assertions for cash

Answer 14

Existence, completeness, rights and obligations

Question 15

What procedure can auditors do to test cash

Answer 15

request bank comfirmation, bank reconciliation

Question 16

What are the most important assertions for sales

Answer 16

Occurrence, cut-off and accuracy

Question 17

What procedure can auditors do to test sales

Answer 17

the occurrence test, match prices between sales invoice and master price list, check that the sales before and after balance date are in the right period

Question 18

What are the important assertions for accounts receivable

Answer 18

Existence, valuation and completeness

Question 19

What procedure can auditors do to test accounts receivable

Answer 19

Debtor confirmation, substantive testing of sales invoices,

Question 20

What is the important assertions for purchases

Answer 20

accuracy, completeness and cut-off

Question 21

What procedure can auditors do to test purchases

Answer 21

do the completeness test, check the dollar amount on the purchase documents, check the dates before and after balance date to make sure they are in the right period.

Question 22

What is the important assertions for inventory

Answer 22

Existence and valuation

Question 23

What procedure can auditors do to test inventory

Answer 23

inspect the stock take, analytical procedures, pricing testing,

Question 24

What is an unmodified opinion

Answer 24

The report is true and fair

Question 25

what is a modified opinion

Answer 25

where there might be a material misstatement

Question 26

What is the modification that doesn't effect the auditors opinion

Answer 26

Emphasis of matter

Question 27

Modifications that effect the auditors opinion

Answer 27

Qualified opinion, adverse opinion and disclaimer opinion

Question 28

What is an adverse opinion

Answer 28

indicating that a company's financial statements are misrepresented, misstated, and do not accurately reflect its financial performance - does it effect the whole report

Question 29

What is a disclaimer opinion

Answer 29

the auditor could not obtain sufficient evidence to form an opinion on the financial statements

Question 30

What is emphasis of matter opinion

Answer 30

that everything is allgood but there is something they need to disclose

Question 31

What is going concern

Answer 31

a company that is financially stable enough to meet its obligations and continue its business for the foreseeable future.

Question 32

Subsequent events - adjusting

Answer 32

when there is changes in the financial report between the balance date and the authorisation date

Question 33

Examples of an adjusting event

Answer 33

Bankruptcy of client after year end which is considered a doubtful debt

Question 34

Subsequent events - non adjusting

Answer 34

do no result in changes in the financial statements

Question 35

Examples of non adjusting events

Answer 35

loss of assets due to fire or flood

Question 36

If there is a problem with the material what opinion should be given

Answer 36

Qualified`

Question 37

If the problem effects the whole financial statement and is pervasive then which opinion

Answer 37

Adverse

Question 38

What are the 7 objectives for internal controls

Answer 38

Real, recorded, valued, classified, summerised, posted and timely

Question 39

What does real refer too and what assertions effect it

Answer 39

no duplication transactions - occurrence, existence

Question 40

What does recorded refer too and what assertions effect it

Answer 40

to prevent wrong transactions - accuracy, completeness

Question 41

What does value refer too and what assertions effect it

Answer 41

that the correct amount is allocated to transactions - accuracy, valuation

Question 42

What does classified refer too and what assertions effect it

Answer 42

the transaction is charged to the right account - accuracy, valuation and classification

Question 43

What does summerised refer too and what assertions effect it

Answer 43

that the total of the transaction is correct - accuracy, value

Question 44

What does posted refer too and what assertions effect it

Answer 44

that accumulated totals in the general ledger are correct - accuracy, classification

Question 45

What does timely refer too and what assertions effect it

Answer 45

that transactions are recorded in the right period - cut-off completeness

Question 46

how can entities monitor internal controls

Answer 46

security of assets and records, segregation of duties, performance review budget vs actual,

Question 47

how could approving credit be more controled

Answer 47

have a credit limit, have a credit committee,

Question 48

how could shipping goods be more controled

Answer 48

having picking and delivery documents, monthly reconciliation on picking slips,

Question 49

How could processing orders be more controled

Answer 49

three way match order with order doc, dispatch doc and sales invoice

Question 50

What procedures need to be done for accuracy

Answer 50

Making sure the time sheets are matching the invoice and pre numbered, matching the sales invoices with the master price sheet

Question 51

What procedure need to be done for completeness

Answer 51

Match the source document with a general ledger, test for cut off, invoices not yet being recorded, bank confirmation

Question 52

What procedures need to be done for occurrence

Answer 52

Match the general ledger to the source documents, match the sales journal to the pre numbered receipts

Question 53

What procedures need to be done for existence

Answer 53

Debtor confirmation, stock takes

Question 54

What procedures need to be done for valuation

Answer 54

Bank confirmation,

Question 55

Cut-off procedures

Answer 55

examine the invoices for the new year to see if they are in the right period