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Auditing Theory 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
a. Gaining
b. Making
c. Obtaining
d. Assisting
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
c. Voucher register and sales journal
d. Check register and sales journal
34. The inventory and warehousing cycle can be thought of as comprising
two separate but closely related systems, one involving the actual
physical flow of goods, and the other the
a. internal control over those goods
b. related costs
c. storing of the goods
d. prevention of wastes, obsolenscence, and theft
35. In planning an audit engagement, which of the following is a factor that
affects the independent auditors judgement as to the quantity, type, and
content of working papers?
a. The estimated occurrence rate of attributes
b. The preliminary evaluation based upon initial substantive testing
c. The content of the clients representation letter
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 most likely perform extensive tests for possible
understatement of
a. revenues
b. assets
c. liabilities
d. capital
45. If the auditor is determined to lack independence, a disclaimer of opinion
must be issued
a. in all cases
b. only if it is highly material
c. only if it is material
d. if the client requests it
financial
statements
for
the
prior
year
presented
in
comparative form with audited financial statements for the current year
should be clearly marked to indicate their status and
I. The report on the prior period should be reissued to
accompany the current period report
II. The report on the current period should include as a
separate paragraph description of the responsibility
assumed for the prior periods financial statements
a. I only
b. II only
c. Both I and II
d. Either I or II
48. Compilation services are intended to enable a CPA firm to compete with
a. Management advisory service firms
b. Tax preparation businesses
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) C
22) C
23) A
24) B
25) D
26) D
27) D
28) D
29) A
30) C
31) D
32) C
33) A
34) B
35) D
36) D
37) A
38) B
39) A
40) D
41) B
42) D
43) C
44) C
45) A
46) A
47) D
48) D
49) A
50) A