Audit Quiz - Chapter 16

Question 1

The Tests of Detailed Balances is premised on the transaction related audit objectives.

Answer 1

False

Question 2

Among other important audit objectives, the balance related audit objectives includes Detail tie-in, Cut-off, Reliable Value (as applicable), and Rights.

Answer 2

True

Question 3

Analytical Procedures are an integral test component of Tests of Detailed Balances.

Answer 3

True

Question 4

The application of analytical procedures are restricted to data available within the client’s operation.

Answer 4

False

Question 5

Analytical Procedures, when applied effectively, yield actual misstatements in account balances and possibly in the financial statements as a whole.

Answer 5

False

Question 6

In addition to applying analytical procedures when testing details of balances, auditors also look for large and unusual items for testing.

Answer 6

True

Question 7

Confirmation of Accounts Receivables is the most important test of details of accounts receivables.

Answer 7

True

Question 8

Confirmations address the existence, accuracy, and cut-off balance related audit objectives.

Answer 8

True

Question 9

The aged trial balance is an essential work tool used in auditing accounts receivables.

Answer 9

True

Question 10

Negative Confirmations of accounts receivable is a very ineffective tool and should be very rarely used.

Answer 10

False

Question 11

A Blank Confirmation request is a type of positive confirmation request.

Answer 11

True

Question 12

A Blank Confirmation request is less effective than a normal positive confirmation request.

Answer 12

False

Question 13

Blank Confirmations usually yield a high response rate.

Answer 13

False

Question 14

Invoice Confirmations are just as effective as normal positive confirmation requests.

Answer 14

False

Question 15

The type of confirmation selected for use depends on the facts and circumstances of each audit.

Answer 15

True

Question 16

Non-responses to positive confirmations require follow-ups.

Answer 16

True

Question 17

Confirmations performed only during the middle of the year can be effective in testing year end balances.

Answer 17

False

Question 18

If non-responses are experienced, the auditor is required to make a determination(i.e. decision) based on such non-response.

Answer 18

False

Question 19

Non-responses to negative confirmations presumes correctness.

Answer 19

True

Question 20

Client’s should participate in the issuance and receipt of accounts receivable confirmations.

Answer 20

False