Audit exam questions: assertions, evidence

4. Auditors are more concerned with the COMPLETENESS assertion for expenditures than the OCCURENCE assertion because:
A. Clients are more likely to overstate than understate expenses
B. Clients are more likely to understate than overstate expenses
C. It is difficult to determine when services have been performed
D. The reserve for warranty expenses often is understated

5. Which of the following procedures would ordinarily be expected to best reveal unrecorded sales at the balance sheet date?
A. Compare shipping documents with sales records
B. Apply gross profit rates to inventory disposed of during the period
C. Trace payments received subsequent to the balance sheet date
D. Send accounts receivable confirmation requests

6. Which of the following types of audit evidence is the most persuasive?
A. Prenumbered customer invoices.
B. Client computations for asset depreciation.
C. Vendor confirmation of purchases.
D. Observing client purchase requisitions.

7. Auditors may use POSITIVE (requires a response) and/or NEGATIVE (no response is expected unless an exception is found) forms of CONFIRMATION REQUESTS for accounts receivable. To reduce risk efficiently, an auditor most likely will use
A. The positive form to confirm all balances regardless of size
B. A combination of the two forms, with the positive form used for large balances and the negative form used for the small balances
C. A combination of the two forms, with the positive form used for trade receivables and the negative form for other receivables
D. The positive form when controls related to receivables are satisfactory and the negative form when controls related to receivables are unsatisfactory