1multiple choice12The most reliable form of documentary evidence generally is considered to be

documents created by the client. A. true B. false1. a

2. b
2
179_423160_
CORRECT12multiple choice12Analytical procedures are required at the risk assessment stage and as: A.
Tests of internal control. B. Substantive procedures. C. Procedures near the end of the audit. D.
Computer generated procedures.1. a
2. b
3. c
4. d
3
179_402522_
CORRECT13multiple choice12Which of the following statements is generally correct about audit
evidence? A. The auditor's direct personal knowledge, obtained through observation and inspection, is
more persuasive than information obtained indirectly from independent outside sources. B. To be
appropriate, audit evidence must be sufficient. C. Accounting data alone may be considered sufficient
appropriate audit evidence to issue an unqualified opinion on financial statements. D. Appropriateness
of audit evidence refers to the amount of corroborative evidence to be obtained.1. a
2. b
3. c
4. d
1
179_692421_
CORRECT14multiple choice12The components of the risk of misstatement are: Inherent Risk Control Risk
Detection Risk A. Yes Yes Yes B. Yes Yes No C. Yes No No D. No Yes Yes1. a
2. b
3. c
4. d
2
179_257063_
CORRECT15multiple choice12What type of transactions ordinarily have high inherent risk because they
involve management judgments or assumptions in formulating accounting balances? A. Estimation. B.
Nonroutine. C. Qualified. D. Routine.1. a
2. b
3. c
4. d
1
179_465242_
CORRECT16multiple choice12Which of the following is generally true about the sufficiency of audit
evidence? A. The amount of evidence that is sufficient varies directly with the acceptable risk of material
misstatement. B. The amount of evidence concerning a particular account varies inversely with the
materiality of the account. C. The amount of evidence concerning a particular account varies inversely
with the inherent risk of the account. D. When evidence is appropriate with respect to an account it is
also sufficient.1. a
2. b
3. c
4. d
1
179_549258_
CORRECT17multiple choice12Of the following, which is the least persuasive type of audit evidence? A.
Documents mailed by outsiders to the auditor. B. Correspondence between auditor and vendors. C.
Copies of sales invoices inspected by the auditor. D. Computations made by the auditor1. a
2. b
3. c
4. d
3
179_650937_
CORRECT18multiple choice12Which of the following statements relating to audit evidence is the most
accurate statement? A. Audit evidence gathered by an auditor from outside an enterprise is reliable. B.
Accounting data developed under satisfactory conditions of internal control are more relevant than data
developed under unsatisfactory internal control conditions. C. Oral representations made by
management are not valid evidence. D. The auditor must obtain sufficient appropriate audit evidence1.
a
2. b
3. c
4. d
4
179_84900_
CORRECT19multiple choice12During an audit engagement pertinent data are prepared and included in
the audit working papers. The working papers primarily are considered to be: A. A client-owned record
of conclusions reached by the auditors who performed the engagement. B. Evidence supporting
financial statements. C. Support for the auditors' representations as to compliance with generally
accepted auditing standards. D. A record to be used as a basis for the following year's engagement1. a
2. b
3. c
3
179_437705_
CORRECT110multiple choice12If planned detection risk is reduced, the amount of evidence the auditor
accumulates will: A. increase. B. decrease. C. remain unchanged. D. be indeterminate.1. a
2. b
3. c
4. d
1
179_621319_
CORRECT111multiple choice12What is the primary means of dealing with risk in planning decisions
related to audit evidence? A. Selection of more effective tests of details of balances. B. Application of
the audit risk model. C. Establishing a lower preliminary judgment about materiality. D. Allocating
materiality judgment to segments.1. a
2. b
3. c
4. d
2
179_875244_
CORRECT112multiple choice12During financial statement audits, auditors seek to restrict which type of
risk? A. Control risk. B. Detection risk. C. Inherent risk. D. Account risk.1. a
2. b
3. c
4. d
2
179_515142_
CORRECT113multiple choice12Which of the following statements is not true? A. Inherent risk is
inversely related to detection risk. B. Inherent risk is inversely related to evidence. C. Inherent risk is the
susceptibility of the financial statements to material error, assuming no internal controls. D. Inherent
risk is the auditor’s assessment of the likelihood that errors exceeding a tolerable amount exist in a
segment before considering the effectiveness of internal controls.1. a
2. b
3. c
4. d
1
179_225581_
INCORRECT014multiple choice12Failure to detect material dollar errors in the financial statements is a
risk which the auditors primarily mitigate by: A. Performing substantive procedures. B. Performing tests
of controls. C. Assessing control risk. D. Obtaining a client representation letter1. a
2. b
3. c
4. d
1
179_776887_
CORRECT115multiple choice12Audit documentation should be sufficient to allow which individual to
understand the audit work performed, the evidence obtained, and the significant conclusions? A. A
certified public accountant. B. A partner in a CPA firm. C. An experienced auditor. D. The controller at
the company being audited.1. a
2. b
3. c
4. d
3
179_295247_
CORRECT116multiple choice12When the risk of material misstatement for an account is high, the
auditors may perform additional substantive procedures to restrict detection risk to a lower level. A.
true B. false1. a
2. b
1
179_703011_
CORRECT117multiple choice12Working papers of continuing audit interest usually are filed with the
administrative working papers. A. true B. false1. a
2. b
2
179_621056_
CORRECT118multiple choice12Which of the following is not a primary consideration when assessing
inherent risk? A. Nature of client’s business. B. Existence of related parties. C. Frequency and intensity of
management’s review of accounting transactions and records. D. Susceptibility to defalcation.1. a
2. b
3. c
4. d
3
179_618054_
CORRECT119multiple choice12Further audit procedures include: Risk assessment procedures Tests of
controls A. Yes Yes B. Yes No C. No Yes D. No No1. a
2. b
3. c
4. d
3
179_666432_
CORRECT120multiple choice12Which of the following statements relating to the competence of
evidential matter is always true? A. Evidential matter gathered by an auditor from outside an enterprise
is reliable. B. Accounting data developed under satisfactory conditions of internal control are more
relevant than data developed under unsatisfactory conditions. C. Oral representations made by
management are not valid. D. Evidence gathered by auditors must be both valid and relevant to be
considered competent.1. a
2. b
3. c
4. d
4
179_640527_
CORRECT121multiple choice12Which of the following is not a primary purpose of audit working papers?
A. To coordinate the examination. B. To assist in preparation of the audit report. C. To support the
financial statements. D. To provide evidence of the audit work performed.1. a
2. b
3. c
4. d
3
179_574049_
CORRECT122multiple choice12An auditor plans to apply substantive tests to the details of asset and
liability accounts as of an interim date rather than as of the balance sheet date. The auditor should be
aware that this practice A. Eliminates the use of certain statistical sampling methods that would
otherwise be available. B. Presumes that the auditor will reperform the tests as of the balance sheet
date. C. Should be especially considered when there are rapidly changing economic conditions. D.
Potentially increases the risk that errors which exist at the balance sheet date will not be detected.1. a
2. b
3. c
4. d
4
179_728598_
CORRECT123multiple choice12In evaluating an entity's accounting estimates, one of the auditor's
objectives is to determine whether the estimates are A. Prepared in a satisfactory control environment.
B. Consistent with industry guidelines. C. Based on verifiable objective assumptions. D. Reasonable in
the circumstances1. a
2. b
3. c
4. d
4
179_754381_
CORRECT124multiple choice12Working papers that record the procedures used by the auditor to gather
evidence should be: A. Considered the primary support for the financial statements being examined. B.
Viewed as the connecting link between the books of account and the financial statements. C. Designed
to meet the circumstances of the particular engagement. D. Destroyed when the audited entity ceases
to be a client.1. a
2. b
3. c
4. d
3
179_650205_
CORRECT125multiple choice12In the context of an audit of financial statements, substantive tests are
audit procedures that A. May be eliminated under certain conditions. B. Are designed to discover
significant subsequent events. C. May be either tests of transactions, direct tests of financial balances, or
analytical tests. D. Will increase proportionately with the auditor's assessment of control risk1. a
2. b
3. c
4. d
3
179_915720_
CORRECT126multiple choice12The auditor typically does not assess control risk and inherent risk for: A.
each audit objective. B. each cycle. C. each account. D. the overall audit.1. a
2. b
3. c
4. d
4
179_679907_
CORRECT127multiple choice12Which of the following is not a basic procedure used in an audit? A. Risk
assessment procedures. B. Substantive procedures. C. Tests of controls. D. Tests of direct evidence.1. a
2. b
3. c
4. d
4
179_117401_
CORRECT128multiple choice12Although the quantity, type, and content of working papers will vary with
the circumstances, the working papers generally would include the: A. Copies of those client records
examined by the auditor during the course of the engagement. B. Evaluation of the efficiency and
competence of the audit staff assistants by the partner responsible for the audit. C. Auditor's comments
concerning the efficiency and competence of client management personnel. D. Auditing procedures
followed and the testing performed in obtaining audit evidence.1. a
2. b
3. c
4. d
4
179_23838_
CORRECT129multiple choice12Inherent risk is _______ related to detection risk and _______ related to
the amount of audit evidence. A. directly, inversely B. directly, directly C. inversely, inversely D.
inversely, directly1. a
2. b
3. c
4. d
1
179_542121_
INCORRECT030multiple choice12Inherent risk is often low for an account such as: A. inventory. B.
marketable securities. C. cash. D. accounts receivable.1. a
2. b
3. c
4. d
4
179_216563_
CORRECT1TOTAL POINTS GAINED28