Auditing: Auditing and Financial Statements Essay

Submitted By Sherena-Kaur
Words: 3740
Pages: 15

Spring 2013
Chap 9,11,12
Q- why do we use audit sampling?
a) Effiecient method to gather sufficient audit evidence
b) B) more time consuming than other testing methods.
c) C) higher detection rate than testing the total population
d) Replaces the inquiry assertion
2) Which of the following statistical sampling techniques is least describable for use by auditors?
a) random number table selection
b) block selection
c) systematic selection
d) random number generator selection

3) Which of the following sampling techniques is typically used for tests of controls?
a) mean-per-unit sampling
b) difference sampling
c) attribute sampling
d) probalitity- proportion to size sampling.

4) where is sampling helpful?
a) tests of internal control
b) account balances
c) inquiry
d) both a and b
e) a,b and c
5) Audit sampling is used to test which of the following assertions by management?
a) existence
b) completeness
c) valuation
d) all of these are assertions tested by sampling
6) procedures performed by an auditor may not detect a material misstatement. This type of risk is know as:
a) control risk
b) inherent risk
c) risk of material misstatement
d) detection risk.

7) the term that describes the size of the misstatement that would make a difference in the auditor’s assessment of the total population is referred to as :
a) tolerable misstatement.
b) confidence level
c) nonstatistical sampling
d) detection error rate q 8- A
Q 9- A
Q 10- C
Q 11- D
Q 12- A
Q 13- A
Q 14- D q- 15) which assertion(s) relating to sales is most directly addressed when the auditors compare a sample of shipping documents to related sales invocies:
a) Completeness
b) Existence/occurrence
c) Presentation and disclosure
d) All of the above
16) which of the following is most likely to be an example of fraudulent financial reporting relating to sales:
a) inaccurate billing due to lack of controls.
b) lapping of account receivables
c) recording sales when customer is likely to return the goods.
d) misbilling a client due to input errors.
17) which of the following would provide the most assurance concering the valuation of accounts receivable:
a) trace the amounts in the accounts receivable
B) assess the allowance for uncollectible accounts for reasonableness.
c) compare receivable turnover ratios to industry standards for reasonableness
d) inquire about receivables pledged under loan agreements.
18) which assertion(s) relating to sales is most directly addressed when the auditors compare a sample of shipping documents to related sales invoices:
a) completeness (b) existence/occurrence (c) presentation and disclosure (d) all of the above.
19) Examining on a test basis the purchase invoice and receiving reports for several days before and after the inventory date is performed to:
a) determine that the liability has been recorded for all goods in inventory.
b) make sure shipments and purchases have been recorded in the proper period.
C) both a and b
d) neither a or b.
20) which of the following is least likely to be disclosed regarding inventory of a merchandising company that uses a public warehouse:
a) changes in methods of inventory valuation (b) details of pledged inventory (c) results of the public warehouse certified audit. (d) deduction for valuation allowances for inventory losses.
21) which of the following is the best audit procedure for the discovery of damaged merchandise in a client’s ending inventory?
a) compare quantities of slow moving merchandise. (b) observe merchandise and raw materials during the client’s physical inventory. (C) inquiry of personnel in the warehouse. (d) analytical procedures.
Q 22- D
Q 23- B
Q 24- D
Q 25- B
Q 26- C
Q 27- A
Q 28- D
29) Lapping can occur when:
a) The same person who handles cash receipts also makes entries into the computer system. (b) one vendor’s payment is debited in another accounts payable. (c) when the primary