Audit Study Guide Questions
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1) When planning the audit, the auditor must make the following important decisions except the:
a. assignment of staff to perform audit tests.
b. nature of tests to be performed.
c. characteristics of tests to be performed
d. extent of tests to be performed.
e. timing of tests to be performed
2) The five management assertions outlined in generally accepted auditing standards include all of the following except:
a. rights and obligations.
b. materiality.
c. existence and occurrence.
d. presentation and disclosure.
e. valuation or allocation.
3) With respect to audit objectives, the term validity relates to which of the assertions below?
a. existence and occurrence
b. completeness
c. valuation or allocation
d. presentation and disclosure
e. rights and obligation
4) Specific audit objectives are normally:
a. the same as the categories of management's financial statement assertions.
b. developed for each item in the financial statements and derived from the categories of management's financial statement assertions.
c. derived from the categories of management's financial statement assertions.
d. developed for each item in the financial statements.
e. developed for material items in the financial statements.
5) Which of the following would not be considered underlying accounting data?
a. sales invoices
b. the general ledger
c. books of original entry
d. accounting manuals
e. accounts receivable ledger
6) Which of the following would not be considered corroborating information?
a. canceled checks held by the client
b. confirmation from vendors
c. oral evidence obtained from client personnel
d. the accountant's work sheet
e. other information obtained by the auditor
7) Generally accepted auditing standards recognize two categories of evidential matter: underlying accounting data and corroborating information. In making an audit in accordance with GAAS:
a. corroborating information is always required, while underlying accounting data may be gathered under certain circumstances.
b. underlying accounting data must always be gathered, while corroborating information need only be obtained when the accounting records are not reliable.
c. both categories are required.
d. the auditor may choose the category to use, and omit the other.
e. neither category is required.
8) Which of the following would not be considered an analytical procedure?
a. calculate the gross profit ratio and compare it to the industry figure
b. compare current year's operating expenses to prior year's
c. compare current year's working capital to prior year's
d. divide sales commissions by sales and compare the results to the established commission rate
e. compare the per unit price on a sales invoice to the master price list
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Solution Summary
This solution gives the correct answers with explanations to the auditing questions listed. All questions are answered with explanations in this solution.
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1) When planning the audit, the auditor must make the following important decisions except the:
a. assignment of staff to perform audit tests. <-- This would really be performed by the audit manager or the chief auditor. The other three would be important decisions in the audit itself.
2) The five management assertions outlined in generally accepted auditing standards include all of the following except:
b. materiality. <-- This ...
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