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PRACTICE QUESTIONS FOR COMPREHENSIVE FINAL EXAM THE FULL JOURNEY WITH CORRECT ANSWERS
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PRACTICE QUESTIONS FOR COMPREHENSIVE FINAL EXAM THE FULL JOURNEY WITH CORRECT ANSWERS
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PRACTICE QUESTIONS FOR COMPREHENSIVE FINALEXAM
THE FULL JOURNEY WITH CORRECT ANSWERS
I. Risk Assessment and Audit Planning
Auditing Standards, Assertions & Directional Testing
1. In testing the existence assertion for an asset, an auditor ordinarily works from the
a. Financial statements to the potentially unrecorded items.
b. Potentially unrecorded items to the financial statements.
c. Accounting records to the supporting evidence.
d. Supporting evidence to the accounting records.
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, PRACTICE QUESTIONS FOR COMPREHENSIVE FINAL
EXAM
THE FULL JOURNEY WITH CORRECT ANSWERS
2. In determining whether transactions have been recorded, the direction of the audit
testing should be from the
a. General ledger balances.
b. Adjusted trial balance.
c. Original source documents.
d. General journal entries.
3. Which of the following is not one of the standards pertaining to the auditor’s fieldwork?
a. The work is to be adequately planned and assistants, if any, are to be properly
b. supervised.
Due professional care is to be exercised in the planning and performance of
the audit and the preparation of the report.
c. Sufficient competent evidential matter is to be obtained through inspection,
observation, inquiries, and confirmations to afford a reasonable basis for
an opinion regarding the financial statements under audit.
d. A sufficient understanding of internal control is to be obtained to plan the audit
and to determine the nature, timing, and extent of tests to be performed.
4. Financial statement assertions are established for account balances,
Classes of transactions Disclosures
a. Yes Yes
b. Yes No
c. No Yes
d. No No
5. Which of the following is not a financial statement assertion relating to account
balances?
a. Completeness.
b. Existence.
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, PRACTICE QUESTIONS FOR COMPREHENSIVE FINAL
EXAM
THE FULL JOURNEY WITH CORRECT ANSWERS
c. Rights and obligations.
d. Valuation and competence.
6. Which of the following is not an assertion relating to classes of transactions?
a. Accuracy.
b. Consistency.
c. Cutoff.
d. Occurrence.
Audit Risk Model & Risk Assessment Procedures
7. Holding other planning considerations equal, a decrease in the amount of misstatement in
a class of transactions that an auditor could tolerate most likely would cause the auditor
to
a. Apply the planned substantive tests prior to the balance sheet date.
b. Perform the planned auditing procedures closer to the balance sheet date.
c. Increase the assessed level of control risk for relevant financial
statement assertions.
d. Decrease the extent of auditing procedures to be applied to the class of
transactions.
8. When issuing an unqualified opinion, the auditor who evaluates the audit findings should
be satisfied that the
a. Amount of know misstatement is documented in the management
representation letter.
b. Estimate of the total likely misstatement is less than a material amount.
c. Amount of known misstatement is acknowledged and recorded by the client.
9. Estimate of the total likely misstatement includes the adjusting entries already recorded by
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, PRACTICE QUESTIONS FOR COMPREHENSIVE FINAL
EXAM
THE FULL JOURNEY WITH CORRECT ANSWERS
the clientWhich of the following audit risk components may be assessed in nonquantitative
terms?
Control risk Detection risk Inherent risk
a. Yes Yes No
b. Yes No Yes
c. Yes Yes Yes
d. No Yes Yes
10. Inherent risk and control risk differ from detection risk in that they
a. Arise from the misapplication of auditing procedures.
b. May be assessed in either quantitative or non-quantitative terms.
c. Exist independently of the financial statement audit.
d. Can be changed at the auditor’s discretion.
11. The risk that an auditor will conclude, based on substantive tests, that a material
misstatement does not exist in an account balance when, in fact, such misstatement does
exist is referred to as
a. Sampling risk.
b. Detection risk.
c. Nonsampling risk
d. Inherent risk
12. On the basis of the audit evidence gathered and evaluated, an auditor decides to increase
the assessed level of control risk from that originally planned. To achieve an overall audit
risk level that is substantially the same as the planned audit risk level, the auditor would
a. Decrease substantive testing.
b. Decrease detection risk.
c. Increase inherent risk.
d. Increase materiality levels.
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