Professional Documents
Culture Documents
Quizzer Auditing Theory
Quizzer Auditing Theory
1. A control which relates to all parts of the EDP system is called a(n)
a. Systems control
c. Applications control
b. General control
d. Universal control
2. Which of the following is not an output control?
a. Proper authorization of transaction
b. Control totals
c. Check digits
d. Adequate documents
3. Should the auditor feel, after obtaining an understanding of the EDP internal
control structure, that control risk cannot be reduced, he or she will
a. Issue a disclaimer
b. Issue an adverse opinion
c. Increase the sample size for tests of controls
d. Expand the substantive testing portion of the audit
4. The real-time feature normally would be least useful when applied to
accounting for a firms
a. Bank-account balances
b. Property and depreciation
c. Customer accounts receivable
d. Merchandise inventory
5. A sample in which the characteristics in the sample are the same as those of
the population is a
a. Random sample
c. Attributes sample
b. Variables sample
d. Representative sample
6. Establishing a route through the random number table
a. Is an arbitrary decision
b. Needs to be done in advance of choosing the numbers
c. Is essential and the route must be followed consistently
d. Requires that all three of the above is true
7. When an auditor goes through a population and selects items for the sample
without regard to their size, source, or other distinguishing characteristics, it
is called
a. Block selection
b. Haphazard selection
c. Systematic selection
d. Statistical selection
8. Which of the following may be used to reduce the risk of non sampling errors?
a. Increasing the size of audit samples
b. Stratifying audit samples
c. Adequately planning audit samples
d. Using statistical sampling techniques
b. Detect fraud
c. Evaluate management
d. Evaluate internal control
18.An auditor most likely would analyze inventory turnover rates to obtain
evidence concerning managements assertions about
a. Existence or occurrence
b. Rights and obligations
c. Presentation and disclosure
d. Valuation and allocation
19.To which type of the following matters would materiality limits not apply when
obtaining client representations?
a. Losses from sales commitments.
b. Unasserted claims and assessments
c. Irregularities involving management
d. Noncompliance with contractual agreements
20.Which of the following procedures is more likely to be performed i a review
engagement of a non-public entity that i n a compilation engagement?
a. Gaining an understading of the entitys business transactions
b. Making a preliminary assessment of control risk
c. Obtaining a representation letter from the chief executive officer
d. Assisting the entity i adjusting the accounting records
21.In auditing accounts payable, an auditors procedures most likely would focus
primarily o managements assertion of
a. Existence or occurrence
b. Presentation and disclosure
c. Completeness
d. Valuation or allocation
22.Before goods are shipped on account, a properly authorized person must
a. Prepare the sales invoice
b. Approve the journal entry
c. Approve credit
d. Verify that the unit price is accurate
23.Which of the following is not a auditors concern about a key authorization
point in the sales/collection cycle
a. The receiving room must have authorization before releasing items to
inventory control
b. Credit must be authorized before sale
c. Goods must be shipped after the authorization
d. Prices must be authorized
24.Whenever footing ad comparisons are restricted to journals, master file
records, and ledgers, the process is
a. Valuation
c. Cutoff
b. Summarization
d. Completeness
25.The most significant effect of the results of the tests of controls substantive
tests of transactions in tha sales and collection cycle is on
a. Allowance for uncollectible accounts
b. Bad debts expense account
c. Confirmation of accounts receivable
d. Income tax payable
26.There is a difference between internal control objectives and audit objectives.
Which of the following is not an audit objective?
a. Validity
c. Valuation
b. Completeness
d. Authorization
27.For effective internal control, employees maintaining the accounts receivable
subsidiary ledger should not also approve
a. Employee overtime wages
b. Credit granted to customers
c. Write-offs of customer accounts
d. Cash disbursement
28.The general cash account is considered significant in almost all audits
a. Where the ending balance is material
b. Where either the beginning balance is material
c. Even when the ending balance is immaterial
d. Except those of not-for-profit organizations
29.Sales order form and invoice blanks should be controlled in the
a. Sales order section of the sales department
b. Billing clerk in the accounting department
c. Credit manager in the credit department
d. Sales manager in the sales department
30.Which of the following is a substantive test of transactions
a. Review personnel policies
b. Account for a sequence of payroll checks
c. Reconcile the disbursements i the payroll journal with the disbursements
on the payroll bank statement
d. Examine printouts of transactions rejected by the computer as having
invalid employee numbers
31.The information typically needed to prepare a production order would not
include a
a. Sales forecast
c. Inventory plan
b. Production plan
d. Bill of materials
32.The substantive test which requires the auditor to trace from a file of
receiving reports to the acquisitions journal satisfies the objective of
a. Validity
c. Completeness
b. Authorization
d. Valuation
33.An auditor usually examines receiving reports to support entries in the
a. Voucher register and sales return journal
b. Sales journal and sales return journal
d. general ledger
41.The confirmation of accounts receivable is most closely associated with
a. business risk
b. detection risk
c. inherent risk
d. relative risk
42.The clients physical count of inventories is lower than the inventory
quantities in the perpetual records. This could be the result of a failure to
record
a. purchases
b. purchases discounts
c. sales
d. sales discounts
43.The most likely technique for the current year audit of goodwill which was not
acquired three years ago by a continuing audit client.
a. Confirmation
b. Observation
c. Recomputation
d. Inquiry
44.The auditor will
understatement of
a. revenues
b. assets
c. liabilities
d. capital
most
likely
perform
extensive
tests
for
possible
II.
a.
b.
c.
d.
I only
II only
Both I and II
Either I or II
ANSWER KEY
1) B
2) B
3) D
4) B
5) D
6) D
7) B
8) C
9) D
10) A
11) A
12) D
13) A
14) A
15) C
16) D
17) A
18) D
19) C
20) C
21)
22)
23)
24)
25)
C
C
A
B
D
26)
27)
28)
29)
30)
31)
32)
33)
34)
35)
36)
37)
38)
39)
40)
41)
42)
43)
44)
45)
46)
47)
48)
49)
50)
D
D
D
A
C
D
C
A
B
D
D
A
B
A
D
B
D
C
C
A
A
D
D
A
A