Exam 2 act 402 ch7b

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Exam 2 act 402 ch7b
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2012-04-02 05:54:10
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Exam 2 act 402 ch7b
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  1. a. Which of the following types of documentary evidence should the auditor consider to be the most reliable?
    (1) A sales invoice issued by the client and supported by a delivery receipt from an outside trucker.
    (2) Confirmation of an account payable balance mailed by and returned directly to the auditor.
    (3) A check, issued by the company and bearing the payee’s endorsement, that is included with the bank statements mailed directly to the
    auditor.
    (4) An audit schedule prepared by the client’s controller and reviewed by the client’s treasurer.
  2. (2) Confirmation of an account payable balance mailed by and returned directly to the auditor.
  3. (4) An audit schedule prepared by the client’s controller and reviewed by the client’s treasurer.
    b. Which of the following statements concerning audit evidence is true?
    (1) To be appropriate, audit evidence should be either persuasive or relevant, but need not be reliable.
    (2) The measure of the quantity and quality of audit evidence lies in the auditor’s judgment.
    (3) The difficulty and expense of obtaining audit evidence concerning an account balance is a valid basis for omitting the test.
    (4) A client’s accounting records can be sufficient audit evidence to support the financial statements.
    (1) To be appropriate, audit evidence should be either persuasive or relevant, but need not be reliable.
  4. c. Audit evidence can come in different forms with different degrees of persuasiveness. Which of the following is the least persuasive type of
    evidence?
    (1) Vendor’s invoice
    (2) Bank statement obtained from the client
    (3) Computations made by the auditor
    (4) Prenumbered sales invoices
    (4) Prenumbered sales invoices
  5. d. Which of the following presumptions is correct about the reliability of audit evidence?
    (1) Information obtained indirectly from outside sources is the most reliable audit evidence.
    (2) To be reliable, audit evidence should be convincing rather than merely persuasive.
    (3) Reliability of audit evidence refers to the amount of corroborative evidence obtained.
    (4) Effective internal control provides more assurance about the reliability of audit evidence.
    (4) Effective internal control provides more assurance about the reliability of audit evidence.
  6. a. Which of the following is not a primary purpose of audit documentation?
    (1) To coordinate the audit.
    (2) To assist in preparation of the audit report.
    (3) To support the financial statements.
    (4) To provide evidence of the audit work performed.
    (3) To support the financial statements.
  7. b. During an audit engagement, pertinent data are compiled and included in the audit files. The audit files primarily are considered to be
    (1) a client-owned record of conclusions reached by the auditors who performed the engagement.
    (2) evidence supporting financial statements.
    (3) support for the auditor’s representations as to compliance with auditing standards.
    (4) a record to be used as a basis for the following year’s engagement.
    (3) support for the auditor’s representations as to compliance with auditing standards.
  8. c. Although the quantity, type, and content of audit documentation will vary with the circumstances, audit documentation generally will include
    the
    (1) copies of those client records examined by the auditor during the course of the engagement.
    (2) evaluation of the efficiency and competence of the audit staff assistants by the partner responsible for the audit.
    (3) auditor’s comments concerning the efficiency and competence of client management personnel.
    (4) auditing procedures followed and the testing performed in obtaining audit evidence.
    (4) auditing procedures followed and the testing performed in obtaining audit evidence.
  9. d. The permanent file of an auditor’s working papers most likely would include copies of the
    (1) lead schedule.
    (2) attorney’s letters.
    (3) bank statements.
    (4) debt agreements.
    4) debt agreements.

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