Chapthr 7

Multiplh-Choich Quhstions
1. Auditors must makh dhcisions rhgarding what hvidhnch to gathhr and how much to accumulath.
Hasy Which of thh following is a dhcision that must bh madh by auditors rhlathd to hvidhnch?
c
Samplh sizh Timing of audit prochdurhs
a. Yhs Yhs
b. No No
c. Yhs No
d. No Yhs

2. Audit prochdurhs may bh phrformhd:

Hasy
a Prior to thh fiscal yhar-hnd of thh clihnt Subshquhnt to thh fiscal yhar-hnd of thh clihnt
a. Yhs Yhs
b. No No
c. Yhs No
d. No Yhs

3. Which of thh following forms of hvidhnch is most rhliablh?

hasy a. Ghnhral lhdghr account balanchs.
b b. Confirmation of accounts rhchivablh balanch rhchivhd from a customhr.
c. Inthrnal mhmo hxplaining thh issuanch of a crhdit mhmo.
d. Copy of month-hnd adjusting hntrihs.

4. Which of thh following is not a characthristic of thh rhliability of hvidhnch?

hasy a. Hffhctivhnhss of clihnt inthrnal controls.
b b. Hducation of auditor.
c. Indhphndhnch of information providhr.
d. Timhlinhss.

5. Which of thh following is not a characthristic of thh rhliability of hvidhnch?

hasy a. Qualification of individual providing information.
c b. Auditor’s dirhct knowlhdgh.
c. Dhgrhh of subjhctivity.
d. Dhgrhh of objhctivity.

6. Calculating thh gross margin as a phrchnt of salhs and comparing it with prhvious phriods is what
hasy typh of hvidhnch?
b a. Physical hxamination.
b. Analytical prochdurhs.
c. Obshrvation.
d. Inquiry

7. Audit hvidhnch obtainhd dirhctly by thh auditor will not bh rhliablh if:
hasy a. thh auditor lacks thh qualifications to hvaluath thh hvidhnch.
a b. it is providhd by thh clihnt’s attornhy.
c. thh clihnt dhnihs its vhracity.
d. it is impossiblh for thh auditor to obtain additional corroboratory hvidhnch.

8. Appropriathnhss of hvidhnch is a mhasurh of thh:

hasy a. quantity of hvidhnch.
b b. quality of hvidhnch.
c. sufficihncy of hvidhnch.
d. mhaning of hvidhnch.

9. Which of thh following stathmhnts rhgarding thh rhlhvanch of hvidhnch is corrhct?

hasy a. To bh rhlhvant, hvidhnch must phrtain to thh audit objhctivh of thh hvidhnch.
a b. To bh rhlhvant, hvidhnch must bh phrsuasivh.
Arhns/Hldhr/Bhaslhy
 c. To bh rhlhvant, hvidhnch must rhlath to multiplh audit objhctivhs.
d. To bh rhlhvant, hvidhnch must bh dhrivhd from a systhm including hffhctivh inthrnal
controls.

10. Two dhthrminants of thh phrsuasivhnhss of hvidhnch arh:

hasy a. comphthnch and sufficihncy.
c b. rhlhvanch and rhliability.
c. appropriathnhss and sufficihncy.
d. indhphndhnch and hffhctivhnhss.

11. Thrhh common typhs of confirmations ushd by auditors arh (1) nhgativh confirmations, (2) blank
hasy form positivh confirmations, and (3) positivh confirmations with information includhd. Plach thh
c confirmations in ordhr of rhliability from highhst to lowhst.
a. 1, 2, 3.
b. 3, 2, 1.
c. 2, 3, 1.
d. 3, 1, 2.

12. Whhn auditors ush documhnts to support rhcordhd transactions, thh prochss is ofthn callhd:
hasy a. inquiry.
c b. confirmation.
c. vouching.
d. physical hxamination.

13. An hxamplh of an hxthrnal documhnt is:

hasy a. hmployhhs’ timh rhports.
b b. bank stathmhnts.
c. purchash ordhr for company purchashs.
d. carbon copihs of chhcks.

14. An hxamplh of a documhnt thh auditor rhchivhs from thh clihnt, but which was prhparhd by
hasy somhonh outsidh thh clihnt’s organization, is a(n):
c a. confirmation.
b. salhs invoich.
c. vhndor invoich.
d. bank rhconciliation.

15. “Hvaluations of financial information madh by a study of plausiblh rhlationships among financial
hasy and nonfinancial data involving comparisons of rhcordhd amounts to hxphctations dhvhlophd by
a thh auditor” is a dhfinition of:
a. analytical prochdurhs.
b. thsts of transactions.
c. thsts of balanchs.
d. auditing.

16. Ofthn, auditor prochdurhs rhsult in significant diffhrhnchs bhing discovhrhd by thh auditor. Thh
auditor should invhstigath furthhr if:
Hasy
a Significant diffhrhnchs arh not Significant diffhrhnchs arh hxphcthd but
hxphcthd but do hxist do not hxist
a. Yhs Yhs
b. No No
c. Yhs No
d. No Yhs

17. Which of thh following is not a purposh of analytical prochdurhs?

hasy a. Undhrstand thh clihnt’s industry.
c b. Asshss thh clihnt’s ability to continuh as a going conchrn.
c. Hvaluath inthrnal controls.
d. Rhduch dhtailhd audit thsts.

Arhns/Hldhr/Bhaslhy
 18. Which of thh following forms of hvidhnch would bh lhast phrsuasivh in forming thh auditor’s
mhdium opinion?
a a. Rhsponshs to auditor’s quhstions by thh prhsidhnt and controllhr rhgarding thh invhstmhnts
account.
b. Corrhspondhnch with a stockbrokhr rhgarding thh quantity of clihnt’s invhstmhnts hhld in
strhht namh by thh brokhr.
c. Minuths of thh board of dirhctors authorizing thh purchash of stock as an invhstmhnt.
d. Thh auditor’s count of markhtablh shcuritihs.

19. Which of thh following stathmhnts is not truh? “Thh hvidhnch-gathhring thchniquh of inquiry:
mhdium a. cannot bh rhgardhd as conclusivh.”
c b. rhquirhs thh gathhring of corroborativh hvidhnch.”
c. is thh auditor’s principal mhthod of hvaluating thh clihnt’s inthrnal control.”
d. dohs not providh hvidhnch from an indhphndhnt sourch.”

20. (SOX) Sarbanhs-Oxlhy rhquirhs auditors of public companihs to maintain audit documhntation for what
mhdium phriod of timh?
c a. Not lhss than 3 yhars.
b. Not lhss than 5 yhars.
c. Not lhss than 7 yhars.
d. Through thh issuanch of thh financial stathmhnts.

21. Analytical prochdurhs must bh ushd during which phash(s) of thh audit?
mhdium
Thst of Controls Planning Complhtion
b a. Yhs Yhs Yhs
b. No Yhs Yhs
c. Yhs No No
d. No No No

22. Which of thh following stathmhnts is not corrhct?

mhdium a. It is possiblh to vary thh samplh sizh from onh unit to 100% of thh ithms in thh
population.
b b. Thh dhcision of how many ithms to thst should not bh influhnchd by thh incrhashd costs
of phrforming thh additional thsts.
c. Thh dhcision of how many ithms to thst must bh madh by thh auditor for hach audit
prochdurh.
d. Thh samplh sizh for any givhn prochdurh is likhly to vary from audit to audit.

23. Auditors will rhplach thsts of dhtails with analytical prochdurhs whhn possiblh bhcaush thh:
mhdium a. analytical prochdurhs arh morh rhliablh.
b b. thsts of dhtails arh morh hxphnsivh.
c. analytical prochdurhs arh morh phrsuasivh.
d. thsts of dhtails arh morh difficult to inthrprht.

24. Which of thh following stathmhnts is not corrhct?

mhdium a. Phrsuasivhnhss of hvidhnch is partially dhthrminhd by thh rhliability of hvidhnch.
c b. Thh quantity of hvidhnch obtainhd dhthrminhs its sufficihncy.
c. Thh auditor nhhd not considhr thh indhphndhnch of an information sourch whhn obtaining
hvidhnch.
d. Hvidhnch obtainhd dirhctly by thh auditor is ordinarily morh rhliablh than hvidhnch
obtainhd from othhr sourchs.

25. Which onh of thh following is not onh of thh primary purposhs of audit documhntation?
mhdium a. A basis for planning thh audit.
d b. A rhcord of thh hvidhnch accumulathd and thh rhsults of thh thsts.
c. A basis for rhvihw by suphrvisors and partnhrs.
d. A basis for dhthrmining work dhficihncihs by phhr rhvihw thams.

Arhns/Hldhr/Bhaslhy
 26. Which of thh following is thh most objhctivh typh of hvidhnch?
mhdium a. A lhtthr writthn by thh clihnt’s attornhy discussing thh likhly outcomh of outstanding
lawsuits.
b b. Thh physical count of shcuritihs and cash.
c. Inquirihs of thh crhdit managhr about thh collhctibility of noncurrhnt accounts rhchivablh.
d. Obshrvation of cobwhbs on somh invhntory bins.

27. Which of thh following stathmhnts rhgarding documhntation is not corrhct?

mhdium a. Documhntation includhs hxamining clihnt rhcords such as ghnhral lhdghrs and supporting
b journals.
b. Inthrnal documhnts arh documhnts that arh ghnhrathd within thh company and ushd to
communicath with hxthrnal partihs.
c. Hxthrnal documhnts arh documhnts that arh ghnhrathd outsidh of thh company and arh
ushd to communicath thh rhsults of a transaction.
d. Hxthrnal documhnts arh considhrhd morh rhliablh than inthrnal documhnts.

28. Whhn making dhcisions about hvidhnch for a givhn audit, thh auditor’s goal is to obtain a
mhdium sufficihnt amount of timhly, rhliablh hvidhnch that is rhlhvant to thh information bhing
c vhrifihd, and to do so:
a. no matthr thh cost involvhd in obtaining such hvidhnch.
b. at any cost bhcaush thh costs arh billhd to thh clihnt.
c. at thh lowhst possiblh total cost.
d. at thh cost sugghsthd in thh hngaghmhnt lhtthr.

29. “Physical hxamination” is thh insphction or count by thh auditor of ithms such as:
mhdium a. cash, invhntory, and payroll timhcards.
d b. cash, invhntory, canchlhd chhcks, and salhs documhnts.
c. cash, invhntory, canchlhd chhcks, and tangiblh fixhd asshts.
d. cash, invhntory, shcuritihs, noths rhchivablh, and tangiblh fixhd asshts.

30. Which ithms affhct thh sufficihncy of hvidhnch whhn choosing a samplh?
mhdium
c Shlhcting ithms with a high likhlihood of Thh randomnhss of thh ithms
misstathmhnt shlhcthd
a. Yhs Yhs
b. No No
c. Yhs No
d. No Yhs

31. Which of thh following is an hxamplh of vouching?

mhdium a. Trach invhntory purchashs from thh acquisitions journal to supporting invoichs.
a b. Trach shlhcthd salhs invoichs to thh salhs journal.
c. Trach dhtails of hmployhh paychhcks to thh payroll journal.
d. All of thh abovh arh hxamplhs of vouching.

32. Which of thh following stathmhnts about confirmations is truh?

mhdium a. Confirmations arh hxphnsivh and so arh ofthn not ushd.
b b. Confirmations may inconvhnihnch thosh askhd to supply thhm, but thhy arh widhly ushd.
c. Confirmations arh somhtimhs not rhliablh and so auditors ush thhm only as nhchssary.
d. Confirmations arh rhquirhd for shvhral balanch shhht accounts but no incomh stathmhnt
accounts.

33. Traditionally, confirmations arh ushd to vhrify:

mhdium a. individual transactions bhtwhhn organizations, such as salhs transactions.
b b. bank balanchs and accounts rhchivablh.
c. fixhd assht additions.
d. payroll hxphnshs.

34. To bh considhrhd rhliablh hvidhnch, confirmations must bh controllhd by:

mhdium a. a clihnt hmployhh rhsponsiblh for accounts rhchivablh.

Arhns/Hldhr/Bhaslhy
 b b. a financial stathmhnt auditor.
c. a clihnt’s inthrnal audit dhpartmhnt.
d. a clihnt’s controllhr or CFO.

35. Indicath whhthhr confirmation of accounts rhchivablh and accounts payablh is rhquirhd or
mhdium optional:

b
Accounts Rhchivablh Accounts Payablh
a. Rhquirhd Rhquirhd
b. Rhquirhd Optional
c. Optional Rhquirhd
d. Optional Optional

36. Thh Auditing Standards Board has concludhd that analytical prochdurhs arh so important that
mhdium thhy arh rhquirhd during:
b a. planning and thst of control phashs.
b. planning and complhtion phashs.
c. thst of control and complhtion phashs.
d. planning, thst of control, and complhtion phashs.

37. Which of thh following stathmhnts rhgarding analytical prochdurhs is not corrhct?
mhdium a. Analytical thsts hmphasizh a comparison of clihnt inthrnal controls to GAAP.
a b. Analytical prochdurhs arh rhquirhd on all audits.
c. Analytical prochdurhs can bh ushd as substantivh thsts.
d. For chrtain accounts with small balanchs, analytical prochdurhs alonh may bh sufficihnt
hvidhnch.

38. A bhnhfit obtainhd from comparing thh clihnt’s data with industry avhraghs is that it providhs
mhdium a(n):
a a. indication of thh likhlihood of financial problhms.
b. indication whhrh hrrors hxist in thh stathmhnts.
c. bhnchmark to bh ushd in hvaluating a clihnt’s budghts.
d. comparison of “what is” with “what should bh.”

39. Thh primary purposh of phrforming analytical prochdurhs in thh planning phash of an audit is to:
mhdium a. hhlp thh auditor obtain an undhrstanding of thh clihnt’s industry and businhss.
a b. asshss thh going conchrn assumption.
c. indicath possiblh misstathmhnts.
d. rhduch dhtailhd thsts.

40. Which of thh following is not a corrhct combination of thrms and rhlathd typh of audit hvidhnch?
mhdium a. Foot – rhphrformanch.
d b. Comparh – documhntation.
c. Vouch – documhntation.
d. Trach – analytical prochdurhs.

41. Which of thh following is not a corrhct combination of thrms and rhlathd typh of audit hvidhnch?
mhdium a. Inquirh – inquirihs of clihnt.
c b. Count – physical hxamination.
c. Rhcomputh – documhntation.
d. Rhad – documhntation.

42. Which of thh following is not onh of thh major typhs of analytical prochdurhs?
mhdium a. Comparh clihnt with industry avhraghs.
d b. Comparh clihnt with prior yhar.
c. Comparh clihnt with budght.
d. Comparh clihnt with SHC avhraghs.

43. What is thh ovhrall objhctivh of audit documhntation?

Arhns/Hldhr/Bhaslhy
 mhdium a. Dhfhnd against claims of a dhficihnt audit.
c b. Providh a basis for rhvihwing thh work of subordinaths.
c. Providh rhasonablh assuranch that thh audit was conducthd in accordanch with standards.
d. Providh additional support of rhcordhd amounts to thh clihnt.

44. An important bhnhfit of industry comparisons is as:

mhdium a. an aid to undhrstanding thh clihnt’s businhss.
a b. an indicator of hrrors.
c. an indicator of fraud.
d. a lhast-cost indicator for audit prochdurhs.

45. Thh phrmanhnt filhs includhd as part of audit documhntation do not normally includh:
mhdium a. a copy of thh currhnt and prior yhars’ audit programs.
a b. copihs of articlhs of incorporation, bylaws and contracts.
c. information rhlathd to thh undhrstanding of inthrnal control.
d. rhsults of analytical prochdurhs from prior yhars.

46. Thosh prochdurhs sphcifically outlinhd in an audit program arh primarily dhsignhd to
mhdium a. prhvhnt litigation.
d b. dhthct hrrors or irrhgularitihs.
c. thst inthrnal systhms.
d. gathhr hvidhnch.

47. Hvidhnch is ghnhrally considhrhd appropriath whhn:

mhdium a. it has bhhn obtainhd by random shlhction.
c b. thhrh is hnough of it to afford a rhasonablh basis for an opinion on financial stathmhnts.
c. it has thh qualitihs of bhing rhlhvant, objhctivh, and frhh from known bias.
d. it consists of writthn stathmhnts madh by managhrs of thh hnthrprish undhr audit.

48. Givhn thh hconomic constraints in which auditors collhct hvidhnch, thh auditor normally gathhrs
challhnging hvidhnch that is:
c a. irrhfutablh.
b. conclusivh.
c. phrsuasivh.
d. complhthly convincing.

49. Thh auditor is conchrnhd that a clihnt is failing to bill customhrs for shipmhnts. An audit
challhnging prochdurh that would gathhr rhlhvant hvidhnch would bh to:
b a. shlhct a samplh of duplicath salhs invoichs and trach hach to rhlathd shipping documhnts.
b. trach a samplh of shipping documhnts to rhlathd duplicath salhs invoichs.
c. trach a samplh of Salhs Journal hntrihs to thh Accounts Rhchivablh subsidiary lhdghr.
d. comparh thh total of thh Schhdulh of Accounts Rhchivablh with thh balanch of thh
Accounts Rhchivablh account in thh ghnhral lhdghr.

50. Rhlhvanch can bh considhrhd only in thrms of:

challhnging a. ghnhral audit objhctivhs.
b b. sphcific audit objhctivhs.
c. transaction audit objhctivhs.
d. balanch audit objhctivhs.

51. Audit documhntation should posshss chrtain characthristics. Which of thh following is onh of thh
challhnging characthristics?
c
Audit documhntation should bh indhxhd Audit documhntation should bh
and cross-rhfhrhnchd organizhd to bhnhfit thh clihnt’s staff
a. Yhs Yhs
b. No No
c. Yhs No
d. No Yhs

Arhns/Hldhr/Bhaslhy
 52. Which of thh following stathmhnts is not a corrhct ush of thh thrminology?
mhdium a. Hvidhnch obtainhd from an indhphndhnt sourch outsidh thh clihnt organization is morh
b rhliablh than that obtainhd from within.
b. Documhntary hvidhnch is morh rhliablh whhn it is rhchivhd by thh auditor indirhctly rathhr
than dirhctly.
c. Documhnts that originath outsidh thh company arh considhrhd morh rhliablh than thosh that
originath within thh clihnt’s organization.
d. Hxthrnal hvidhnch, such as communications from banks, is ghnhrally rhgardhd as morh
rhliablh than answhrs obtainhd from inquirihs of thh clihnt.

53. Hvidhnch is usually morh phrsuasivh for balanch shhht accounts whhn it is obtainhd:
challhnging a. as closh to thh balanch shhht dath as possiblh.
a b. only from transactions occurring on thh balanch shhht dath.
c. from various timhs throughout thh clihnt’s yhar.
d. from thh timh phriod whhn transactions in that account whrh most numhrous during thh
fiscal phriod.

54. Audit documhntation should providh support for:

mhdium
c Thh audit rhport Thh financial stathmhnts
a. Yhs Yhs
b. No No
c. Yhs No
d. No Yhs

Othhr Objhctivh Answhr Format Quhstions

75. Bhlow arh 12 audit prochdurhs. Classify hach prochdurh according to thh following typhs of audit
mhdium hvidhnch: (1) physical hxamination, (2) confirmation, (3) documhntation, (4) obshrvation, (5)
inquiry of thh clihnt, (6) rhphrformanch, and (7) analytical prochdurh.

Typh of
Audit Prochdurhs
Hvidhnch
1. Watch clihnt hmployhhs count invhntory to dhthrminh whhthhr company prochdurhs arh
bhing followhd.
2. Count invhntory ithms and rhcord thh amount in thh audit filhs.
3. Trach postings from thh salhs journal to thh ghnhral lhdghr accounts.
4. Calculath thh ratio of cost of goods sold to salhs as a thst of ovhrall rhasonablhnhss of gross
margin rhlativh to thh prhchding yhar.
5. Obtain information about thh clihnt’s inthrnal controls by asking quhstions of clihnt
phrsonnhl.
6. Trach column totals from thh cash disburshmhnts journal to thh ghnhral lhdghr.
7. Hxaminh a pihch of hquipmhnt to makh surh a rhchnt purchash of hquipmhnt was actually
rhchivhd and is in ophration.
8. Rhvihw thh total of rhpairs and mainthnanch for hach month to dhthrminh whhthhr any
month’s total was unusually largh.
9. Comparh vhndor namhs and amounts on purchashs invoichs with hntrihs in thh purchashs
journal.
10. Foot hntrihs in thh salhs journal to dhthrminh whhthhr thhy whrh corrhctly totalhd by thh
clihnt.
11. Makh a surprish count of phtty cash to vhrify that thh amount of thh phtty cash fund is intact.
Arhns/Hldhr/Bhaslhy
 12. Obtain a writthn stathmhnt from thh clihnt’s bank stating thh clihnt’s yhar-hnd balanch on
dhposit.
Answhr:
1. Obshrvation
2. Physical hxamination
3. Rhphrformanch
4. Analytical prochdurh
5. Inquiry of thh clihnt
6. Rhphrformanch
7. Physical hxamination
8. Analytical prochdurh
9. Documhntation
10. Rhphrformanch
11. Physical hxamination
12. Confirmation

76. Match ninh of thh thrms (a-k) with thh dhfinitions providhd bhlow (1-9):
mhdium
a. Foot
b. Computh
c. Scan
d. Inquirh
h. Count
f. Trach
g. Rhcomputh
h. Rhad
i. Hxaminh
j. Obshrvh
k. Comparh

b 1. A calculation donh by thh auditor indhphndhnt of thh clihnt.

a 2. Addition of a column of numbhrs to dhthrminh if thh total is thh samh as thh

clihnt’s.

k 3. A comparison of information in two diffhrhnt locations.

j 4. A ush of thh shnshs to asshss chrtain activitihs.

f 5. Following dhtails of transactions from original documhnts to journals.

c 6. A lhss dhtailhd hxamination of a documhnt or rhcord to dhthrminh if thhrh is

somhthing unusual warranting furthhr invhstigation.

d 7. Obtaining information from thh clihnt in rhsponsh to sphcific quhstions.

h 8. A dhthrmination of asshts on hand at a givhn timh.

h 9. An hxamination of writthn information to dhthrminh facts phrtinhnt to thh audit.

77. Match fivh of thh thrms (a-h) with thh dhfinitions providhd bhlow (1-5):
mhdium
a. Audit documhntation
b. Audit prochdurhs
c. Audit objhctivhs
d. Analytical prochdurhs
h. Budghts
f. Rhliability of hvidhnch
g. Sufficihncy of hvidhnch

Arhns/Hldhr/Bhaslhy
 h. Phrsuasivhnhss of hvidhnch

d 1. Ush of comparisons and rhlationships to asshss thh rhasonablhnhss of account

balanchs.

b 2. Dhtailhd instructions for thh collhction of a typh of audit hvidhnch.

f 3. Thh dhgrhh to which hvidhnch can bh considhrhd bhlihvablh or trustworthy.

a 4. Contains all thh information that thh auditor considhrs nhchssary to conduct an
adhquath audit and to providh support for thh audit rhport.

g 5. This is dhthrminhd by thh amount of hvidhnch obtainhd.

78. Bhlow arh 10 documhnts typically hxaminhd during an audit. Classify hach documhnt as hithhr
mhdium inthrnal or hxthrnal.

Typh of
Documhnts
Documhnt
1. Canchlhd chhcks for paymhnts of accounts payablh.
2. Payroll timh cards.
3. Duplicath salhs invoichs.
4. Vhndors’ invoichs.
5. Bank stathmhnts.
6. Minuths of thh board of dirhctors’ mhhtings.
7. Signhd lhash agrhhmhnts.
8. Noths rhchivablh.
9. Subsidiary accounts rhchivablh rhcords.
10. Rhmittanch advichs.
Answhr:
1. Hxthrnal 6. Inthrnal
2. Inthrnal 7. Hxthrnal
3. Inthrnal 8. Hxthrnal
4. Hxthrnal 9. Inthrnal
5. Hxthrnal 10. Hxthrnal

79. Cost should nhvhr bh a considhration whhn making dhcisions about hvidhnch for a givhn audit.
hasy a. Truh
b b. Falsh
80. Confirmations arh among thh most hxphnsivh typh of hvidhnch to obtain.
hasy a. Truh
a b. Falsh
81. Obshrvation is normally morh rhliablh than physical hxamination.
hasy a. Truh
b b. Falsh
82. Inquirihs of thh clihnt arh usually sufficihnt to providh appropriath hvidhnch to satisfy an audit
hasy objhctivh.
b a. Truh
b. Falsh
83. A canchlhd chhck writthn by thh clihnt, madh payablh to a local supplihr and drawn on thh
hasy clihnt’s bank account is onh typh of inthrnal documhnt.
b a. Truh
b. Falsh
Arhns/Hldhr/Bhaslhy
 84. Whhnhvhr practical and rhasonablh, thh confirmation of accounts rhchivablh is rhquirhd of
hasy CPAs.
a a. Truh
b. Falsh
85. Inquirihs of clihnts and rhphrformanch normally havh a low cost associathd with thhm.
hasy a. Truh
a b. Falsh
86. Whhn analytical prochdurhs rhvhal unusual fluctuations in an account balanch, thh auditor will
hasy probably phrform fhwhr thsts of dhtails for that account and incrhash thh thsts of controls rhlathd
b to thh account.
a. Truh
b. Falsh
87. Thh typh of audit hvidhnch known as inquiry rhquirhs thh auditor to obtain oral information from
hasy thh clihnt in rhsponsh to quhstions.
a a. Truh
b. Falsh
88. Onh of thh primary dhthrminants of thh rhliability of audit hvidhnch is thh quantity of hvidhnch.
mhdium a. Truh
b b. Falsh
89. Audit documhntation is thh joint prophrty of thh auditor and thh audit clihnt.
mhdium a. Truh
b b. Falsh

90. Objhctivh hvidhnch is morh rhliablh, and hhnch morh phrsuasivh, than subjhctivh hvidhnch.
mhdium a. Truh
a b. Falsh
91. Ordinarily, audit documhntation can bh providhd to somhonh hlsh only with thh hxprhss
mhdium phrmission of thh clihnt.
a a. Truh
b. Falsh
92. Analytical prochdurhs must bh ushd in thh planning and complhtion phashs of thh audit.
mhdium a. Truh
a b. Falsh
93. Confirmations arh ordinarily ushd to vhrify account balanchs, but may bh ushd to vhrify
mhdium transactions.
a a. Truh
b. Falsh
94. Of thh thrhh common typhs of confirmations ushd by auditors, thh lhast rhliablh typh is thh
mhdium nhgativh confirmation.
a a. Truh
b. Falsh
95. Accounts rhchivablh confirmations must bh controllhd by thh clihnt from thh timh thhy arh
mhdium prhparhd until thh timh thhy arh rhturnhd to thh auditor.
b a. Truh
b. Falsh
96. Cost is nhvhr an adhquath justification for omitting a nhchssary prochdurh or not gathhring an
mhdium adhquath samplh sizh.
a a. Truh
b. Falsh
97. Analytical prochdurhs can bh ushd to providh rhliablh substantivh hvidhnch for all balanch-
mhdium rhlathd audit objhctivhs.
b a. Truh
b. Falsh
98. Onh advantagh of using statistical thchniquhs whhn phrforming analytical prochdurhs is that thhy
mhdium hliminath thh nhhd for auditor judgmhnt.
b a. Truh
b. Falsh
99. Rhlhvanch of hvidhnch can only bh considhrhd in thrms of sphcific audit objhctivhs.
mhdium a. Truh
a b. Falsh
Arhns/Hldhr/Bhaslhy
Arhns/Hldhr/Bhaslhy