Professional Documents
Culture Documents
Ch05-audit-risk-and-materiality 1
ANSWER: D
ANSWER: A
ANSWER: D
ANSWER: D
ANSWER: D
ANSWER: A
ANSWER: A
ANSWER: D
ANSWER: A
ANSWER: C
ANSWER: D
ANSWER: B
ANSWER: B
ANSWER: A
ANSWER: B
ANSWER: D
ANSWER: A
ANSWER: B
19. In applying analytical procedures, the auditor discovered
that gross profit as a percent of sales declined sharply
during the current year. A possible cause might be
a. The client has significant amounts of obsolete
inventory carried at full cost.
b. A significant quantity of finished goods located in a
distant warehouse was inadvertently omitted from the
ending inventory.
c. Recorded sales included goods that were shipped the
following year.
d. Depreciation of office equipment was overstated.
ANSWER: B
ANSWER: A
ANSWER: C
ANSWER: D
ANSWER: A
ANSWER: B
ANSWER: A
ANSWER: D
ANSWER: B
ANSWER: B
ANSWER: D
ANSWER: B
31. With respect to errors and fraud, the auditor should plan to
a. Search for errors or fraud that would have a
material effect on the financial statements.
b. Discover errors or fraud that would have a material
effect on the financial statements.
c. Search for errors that would have a material effect and
for fraud that would have either material or
immaterial effects on the financial statements.
d. Search for fraud that would have a material
effect and for errors that would have either
material or immaterial effects on the financial
statements.
ANSWER: B
32. Why should the auditor plan more work on individual accounts
as lower acceptable levels of both audit risk and
materiality are established?
a. To find smaller errors.
b. To find larger errors.
c. To increase the tolerable error in the accounts.
d. To decrease the risk of overreliance.
ANSWER: A
ANSWER: B
a. Yes Yes No
b. Yes No Yes
c. No Yes Yes
d. Yes Yes Yes
ANSWER: D
ANSWER: B
d. Return on sales.
ANSWER: B
ANSWER: A
ANSWER: B
ANSWER: A
ANSWER: C
COMPLETION:
ANSWER: DOCUMENT
43. High inherent risk, combined with high control risk, should
lead the auditor to the aggregate materiality
threshold.
ANSWER: INTENT
47. Inasmuch as its complement forms the basis for the audit
opinion, overall audit risk should be set .
ANSWER: LOW
ANSWER: DETECTION
ANSWER: INTEGRITY
ANSWER: RISK-DRIVEN
ANSWER: QUALITATIVE
MATCHING
SOLUTION:
1. a,c,e
2. a,f
3. c,g
4. a
5. a
6. b,c,e
7. d,f
PROBLEM/ESSAY
Required:
SOLUTION:
SOLUTION:
SOLUTION: