Audit Exam 3 Part 3 Flashcards - Quizlet

1/22/2021 Audit Exam 3 Part 3 Flashcards | Quizlet
Audit Exam 3 Part 3

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TAGS RELATED TO THIS SET
Could Have Been Caused Available For Sale Securities Non Current Asset
Terms in this set (21)
https://quizlet.com/343384119/audit-exam-3-part-3-flash-cards/ 1/15
In an audit of other A. Determining that the asset is written off

assets, all of the on a periodic basis
following are done
except
A. Determining that the

asset is written off on a
periodic basis
B. Confirming that the

asset exists
C. Determining the basis

of the carrying amount
of the asset
D. Determining whether
the asset is fairly
presented in the financial
statements
The auditor's primary A. Authentic

objectives in an audit of
an investment in
securities do not include
determining whether the
securities are
A. Authentic
B. The property of the

client
C. In existence
D. Properly classified on
the balance sheet
Which of the following A. Confirmation by the debtor is an
statements regarding the acceptable alternative to inspection
audit of negotiable
notes receivable in
bearer form is not
correct?
A. Confirmation by the
debtor is an acceptable
alternative to inspection
B. Materiality of the
amount involved is a
factor considered when
selecting the accounts to
be confirmed
C. Physical inspection of
a note by the auditor
does not provide
conclusive evidence
D. Notes receivable
discounted with
recourse need to be
confirmed
Which of the following is A. Examination of paid checks issued in

the least effective audit payment of securities purchased
procedure regarding the
existence assertion for
the securities held by the
auditee?
A. Examination of paid
checks issued in
payment of securities
purchased
B. Vouching all changes

during the year to
supporting documents
C. Simultaneous count of
liquid assets
D. Confirmation from the

custodian
An auditor's analytical A. An error in recording amortization of

procedures indicate a the excess of the investor's cost over the
lower than expected investment's underlying carrying amount.
return on an equity
method investment. This
situation most likely
could have been caused
by
A. An error in recording
amortization of the
excess of the investor's
cost over the
investment's underlying
carrying amount.
B. The investee's decision

to reduce cash dividends
declared per share of its
common stock
C. An error in recording
the unrealized gain from

an increase in the fair
value of available-for-
sale securities in the
income account for
trading securities
D. A substantial
fluctuation in the price
of the investee's
common stock on a
national stock exchange
When auditing prepaid C. Lien on the plant equipment

insurance, an auditor
discovers that the
original insurance policy
on plant equipment is
not available for
inspection. The policy's
absence most likely
indicates the possibility
of a(n)
A. Insurance premium
due but not recorded
B. Deficiency in the co-

insurance provision
C. Lien on the plant

equipment
D. Understatement of
insurance expense
A company owns a 30% D. Audited financial statements of the

voting interest in another investee
entity. Assuming the
investor did not elect the
fair value option, which
of the following provides
the best form of audit
evidence pertaining to
the annual measurement
of the investment?
A. Market quotations of
the investee's stock
B. Current fair value of

the investee's assets
C. Historical cost of the

investee's assets
D. Audited financial
statements of the
investee
Deferred charges, such B. Reported on the balance sheet as a

as the costs of direct- non-current asset
response advertising,
usually should be
A. Disallowed by the
auditor
B. Reported on the
balance sheet as a non-
current asset
C. Written off
immediately as a current
operating expense
D. Converted to
deferred credits by
periodic transactions
A corporate balance A. A patent attorney

sheet indicates that one
of the corporate assets
is a patent. An auditor
will most likely obtain
evidence regarding the
continuing validity and
existence of this patent
by obtaining a written
representation from
A. A patent attorney
B. A regional state patent

office
C. The patent inventor
D. The patent owner
The auditor can best B. Confirmation with the bond trustee

verify a client's bond
sinking-fund transactions
and year-end balance
by
A. Confirmation with
individual holders of
retired bonds
B. Confirmation with the

bond trustee
C. Recomputation of
interest, interest payable,
and amortization of
bond discount or
premium
D. Examination and
count of the bonds
retired during the year
The best audit D. Direct confirmations with the client's

procedure for commodity traders
determining the
existence of open
commodity futures
contracts at year end is
the review of
A. Canceled checks in
the subsequent period
B. Available broker trade

advices
C. The replies to the

standard confirmation
requests sent to financial
institutions
D. Direct confirmations
with the client's
commodity traders
An audit plan for A. Examining bond trust indentures

noncurrent debt should
include steps that
require
A. Examining bond trust

indentures
B.Inspecting the
accounts payable
subsidiary ledger
C. Investigating credits
to the bond interest
income account
D.Verifying the existence

of the bondholders
An auditor's purpose in B. Classification and understandability

reviewing the renewal of
a note payable shortly
after the balance sheet
date most likely is to
obtain evidence
concerning relevant
assertions about
A. Existence
B. Classification and
understandability
C. Completeness
D. Valuation and
allocation
During an audit, Mr. Wick B. Balloon payment

learns that the audit
client was granted a 3-
month waiver of the
repayment of principal
on the installment loan
with Blank Bank without
an extension of the
maturity date. With
respect to this loan, the
audit program used by
Mr. Wick is least likely to
include a verification of
the
A. Interest expense for

the year
B. Balloon payment
C. Total liability at year

end
D. Installment loan
payments
The audit procedures A. Accrued liabilities usually pertain to

used to verify accrued services of a continuing nature whereas
liabilities differ from accounts payable are the result of
those employed for the completed transactions
verification of accounts
payable because
A. Accrued liabilities
usually pertain to
services of a continuing
nature whereas accounts
payable are the result of
completed transactions
B. Accrued liability
balances are less
material than accounts
payable balances
C. Evidence supporting
accrued liabilities is
nonexistent, whereas
evidence supporting
accounts payable is
readily available
D. Accrued liabilities at
year end will become
accounts payable during
the following year
A loss contingency may D. General business risks

require recognition in
the financial statements.
An accrual is not
normally made as a
result of
A. Guarantees of
indebtedness incurred
by others
B. Repurchase
commitments
C. Pending litigation or
threats of expropriation
D. General business risks
In an audit of equity, an A. Capital stock transactions are properly

auditor is most authorized
concerned that
A. Capital stock
transactions are properly
authorized
B. Stock splits are

capitalized at par or
stated value on the
dividend declaration
date
C. Dividends during the

year under audit were
approved by the
shareholders
D. Changes in the
accounts are verified by
a bank serving as a
registrar and stock
transfer agent
The auditor does not C. A four-for-one stock split

expect the client to debit
retained earnings for
which of the following
transactions?
A. A 10% stock dividend
B. A 60% stock dividend
C. A four-for-one stock
split
D. An appropriation of
retained earnings for
treasury stock
A company declared D. Appropriate amounts were transferred

and paid a stock from retained earnings to capital stock
dividend. Its and additional paid-in-capital
independent external
auditor should
determine that
A. The officers
authorized the issuance
of the stock dividend
B. The stock dividend

was properly recorded
by means of a
memorandum entry only
C. Shareholders
received their additional
shares by confirming
year-end holdings with
them
D. Appropriate amounts
were transferred from
retained earnings to
capital stock and
additional paid-in-
capital
The auditor is concerned C. Record date

with establishing that
dividends are paid to
client corporation
shareholders who hold
stock as of the
A. Issue date
B. Declaration date
C. Record date
D. Payment date
With respect to treasury D. Treasury stock is recorded at cost rather

stock, the auditor should than par value
not object to which of
the following?
A. Restrictions on
retained earnings have
not been met
B. Dividends have been

paid on treasury stock
C. The treasury stock

certificates have been
destroyed
D. Treasury stock is
recorded at cost rather

than par value
THIS SET IS OFTEN IN FOLDERS WITH...
Chapter 9: Auditing Chapter 10
41 terms 24 terms
NoHooks monicamarie14
Chapter 5 Test Bank audit ch. 11
60 terms 25 terms
Mdelpi3 mln700

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1/22/2021 Audit Exam 3 Part 3 Flashcards | Quizlet

Audit Exam 3 Part 3

TAGS RELATED TO THIS SET

Terms in this set (21)

In an audit of other A. Determining that the asset is written off

A. Determining that the

B. Confirming that the

C. Determining the basis

The auditor's primary A. Authentic

B. The property of the

Which of the following is A. Examination of paid checks issued in

B. Vouching all changes

D. Confirmation from the

An auditor's analytical A. An error in recording amortization of

B. The investee's decision

the unrealized gain from

When auditing prepaid C. Lien on the plant equipment

B. Deficiency in the co-

C. Lien on the plant

A company owns a 30% D. Audited financial statements of the

B. Current fair value of

C. Historical cost of the

Deferred charges, such B. Reported on the balance sheet as a

A corporate balance A. A patent attorney

B. A regional state patent

C. The patent inventor

D. The patent owner

The auditor can best B. Confirmation with the bond trustee

B. Confirmation with the

The best audit D. Direct confirmations with the client's

B. Available broker trade

C. The replies to the

An audit plan for A. Examining bond trust indentures

A. Examining bond trust

D.Verifying the existence

An auditor's purpose in B. Classification and understandability

During an audit, Mr. Wick B. Balloon payment

A. Interest expense for

C. Total liability at year

The audit procedures A. Accrued liabilities usually pertain to

A loss contingency may D. General business risks

D. General business risks

In an audit of equity, an A. Capital stock transactions are properly

B. Stock splits are

C. Dividends during the

The auditor does not C. A four-for-one stock split

A. A 10% stock dividend

B. A 60% stock dividend

A company declared D. Appropriate amounts were transferred

B. The stock dividend

The auditor is concerned C. Record date

With respect to treasury D. Treasury stock is recorded at cost rather

B. Dividends have been

C. The treasury stock

recorded at cost rather

THIS SET IS OFTEN IN FOLDERS WITH...

Chapter 9: Auditing Chapter 10

Chapter 5 Test Bank audit ch. 11

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