Memorize Tricky Questions

Question 1

An auditor testing reasonabless of dividend income from investment in publicly held company. The auditor most likely would compute the amount that should have been received and recorded by the client

Answer 1

Electronically assessing the details of dividend records on the internet (many dividend accounts, easy to get info electronically)

Question 2

Which prosedures most likely would assist auditor in identifying conditions and events for substantial doubt about going concern?

Answer 2

Confirming with 3rd party details of arrangements to maintain financial support

Question 3

According PCAOB standards which one of the following statements doesn’t reflect qualitative standard considered when evaluating materiality of uncorrected misstatement?

Answer 3

The $ amount of the error

Question 4

The scope of audit is Not restricted when attorneys response to auditor limits response to

Answer 4

Matters to which attorney gave substantial attention in the form of legal representation

Question 5

Which is Not true about Accounting estimates

Answer 5

Accounting estimates is an Approximation

Question 6

In evaluating reasonabless of accounting estimates auditor would least likely to use

Answer 6

Review the minutes of board of directors

Question 7

Auditor concludes there is substantial doubt about entity ability to continue as a going concern for a reasonable period of time. Audit report may include

Answer 7

Disclaimer of Opinion -YES

Except for qualified-NO

Question 8

Which questions auditor includes on internal control questionnaire for Notes Payable

Answer 8

Are Direct Borrowing on notes payable authorized by the board of directors?

Question 9

Auditor testing plant and equipment balances, examinig new additions listed on an analysis of plant and equipment. It’s procedure to obtain evidence concerning management assertion of

Answer 9

Existence

Question 10

Property acquisitions that are missclassified as Maintenance expense would most likely be detected by internal control that provides

Answer 10

Investigation of variances with formal Budgeting System

Question 11

Which of the following statement is CORRECT concerning an auditors required communication with those changed with governance?

Answer 11

This communication should include MANAGEMENT CHANGES IN APPLICATION OF SIGNIFICANT ACCOUNTING POLICIES

Question 12

AR confirmed in interim date. All confirmations are ok. What auditor should perform at year end?

Answer 12

Review supporting documents for new Large balances occuring after interim date

Question 13

Auditor testing LONG term investments woul ordinary use analytical review to ascertain

Answer 13

Completeness of recorded investment income

Question 14

Auditor scans clients INVESTMENT RECORS for period just before and just after year end to determine transfers between categories. Primary purpose to obtain evidence

Answer 14

Understandability, classification, valuation and accuracy

Question 15

Cashiers job description contains COMPATIBLE DUTIES if the cashier receives remittance from mail room and also prepares

Answer 15

Daily deposit slip

Question 16

Auditor most likely would inspect LOAN AGREEMENTS UNDER WHICH ENTITIES INVENTORY ARE PLEAGED TO SUPPORT

Answer 16

PRESENTATION AND DISCLOSURE

Question 17

Authorization of uncollectible write off should be approved in

Answer 17

Treasure department

Question 18

Auditor plan to examine long term debts would include steps that require

Answer 18

Correlating interest expense with outstanding debt

Question 19

“Management prepared a description and evaluation of certain contingencies”

Answer 19

Audit inquiry letter of legal counsel

Question 20

Which statement matches assertion with potential misstatement and audit procedures

Answer 20

Auditor physically examine physical inventory

Question 21

What is the most appropriate method to communicate significant deficiencies which were not corrected from prior year

Answer 21

In writing, referencing prior communication and the date of prior communication

Question 22

Auditor testing LONG TERM INVESTMENTS would use analytical review as primary audit procedures to ascertain reasonabless

Answer 22

COMPLETENESS OF RECORDED INVESTMENT INCOME

Question 23

Which is NOT demonstrate inappropriate segregation of duties

Answer 23

Billing clerk prepare invoices and records resulting increase in AR

Question 24

Which procedures concerning AR auditor performs to obtain audit evidence supporting the effective operation of controls

Answer 24

Observing an entities employee prepare the schedule of past due AR

Question 25

When reporting on conditions relating to internal control observed during the audit of FS auditor should include

Answer 25

Restriction on the use of the report

Question 26

Objectives of audit procedures applied to segment information

Answer 26

The info presented in conformity with GAAP rules for segment info

Question 27

Which is weakness of internal control in investment cycle

Answer 27

Investment not held by independent custodian but in Treasurer office

Question 28

Primary purpose of sending standard confirmation request to financial institutions with which client done business during the year

Answer 28

Corroborate info regarding deposits and loan balances

Question 29

Under properly design of internal control the same employee would match invoice with receiving report and

Answer 29

Recompute calculation on vendors invoice

Question 30

In 1st audit of client auditor was not able to gather sufficient evidence about consistent application of Accounting principles between current and prior year also assets and liability. If amount material auditor would

Answer 30

Be unavailable to express opinion on the current year results of operations and cash flows

Question 31

Auditor unable to obtain sufficient appropriate audit evidence concerning certain transactions due to an inadequacy in the accounting records. Auditor would isdue

Answer 31

Disclaimer or Qualified opinions

Question 32

Which event occuring after issuance of an auditors report most likely would case the auditor to make further inquiries about previously issued financial statements

Answer 32

Discovery of information regarding contingency that existed before FS were issued

Question 33

Which procedures auditor perform to obtain evidence for subsequent event

Answer 33

Inquiring of the entities legal counsel concerning litigations, claims after year end

Question 34

Primary objective to obtain knowledge about entity and environment

Answer 34

Knowledge for risk assessment and audit planning

Question 35

What should be documented in audit plan in addition to NET and planned audit proceduresх

Answer 35

Other audit procedures to comply with GAAS

Question 36

Regression analysis

Answer 36

Provides direct and quantitative measures of the precition of expectations

Question 37

Analytical procedures are most appropriate when testing which type of transactions?

Answer 37

Operating expense transactions

Question 38

Which is a consideration in planning a sample for a test of subsequent cash receipts (it’s a subsequent test of details)

Answer 38

Preliminary judgement about materiality levels

Question 39

Stratified MPU sampling is more efficient because

Answer 39

Produces an estimate having a desired level of precision with smaller sample size

Question 40

Ratios considered engagement partner in overall review stage of audit

Answer 40

COGS/AVERAGE INVENTORY

Question 41

In performing interviews and examinig documents for preliminary work auditor identified business risk associated with plans for new product line

Answer 41

Analyze newly identified risk in conjunction with other risks

Question 42

Auditor is determining sample size for MPU. To calculate sample size he derermins

Answer 42

Variability- YES

Risk of incorrect acceptance-Yes

Question 43

MD&A Control risk

Answer 43

The risk that MM in MD&A won’t be prevented

Question 44

Auditor assesses control risk because

Answer 44

Affect the level of detection risk that Auditor may accept

Question 45

The objective of tests if details performed as test of controls

Answer 45

Evaluate whether internal control operated effectively

Question 46

Auditor should design test if details to ensure that sufficient audit evidence suppots

Answer 46

The planned level of assurance at relevant assertion level

Question 47

Before applying principal substantive test to the details of account at interim date auditor should

Answer 47

Consider whether the amounts of year end balances reasonable predictable

Question 48

Going consern

Answer 48

Disclaimer

Unmodified with emphasis matter