Audit Final Exam Questions with All Correct Answers
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Course
Audit
Institution
Audit
Audit Final Exam Questions with All Correct Answers
Which of the following is not a reason for the special significance attached by the auditors to the verification of inventories? - Answer The existence of inventories is inherently difficult to substantiate
Which of the following audit pro...
Audit Final Exam Questions with
All Correct Answers
Which of the following is not a reason for the special significance attached by the
auditors to the verification of inventories? - Answer ✔ The existence of inventories is
inherently difficult to substantiate
Which of the following audit procedures most likely would procedures would provide
assurance that a manufacturing entity's inventory valuation is proper? - Answer ✔
Testing the entity's computation of standard overhead rates
Which of the following is not a control that should be established for purchases of
equipment? - Answer ✔ Requiring that the department that ordered the equipment is the
same that requested the equipment
The auditors typically observe all major items or property, plant and equipment every
year. T or F? - Answer ✔ FALSE
For which of the following ledger accounts would the auditor be most likely to analyze
the details to identify understatements of equipment acquisitions? - Answer ✔ Repairs
and maintenance expense
Internal control over accounts payable is improved when: - Answer ✔ Vendor
statements are reconciled with the accounts payable ledger
Overstatement of financial results can involve failure to record a transaction. T of F? -
Answer ✔ TRUE
Which of the following best describes the auditors' approach to the audit of accrued
liabilities? - Answer ✔ Test computations
For a corporation that does NOT utilize the services of an independent registrar and
stock transfer agent, which of the following represents a weakness in internal control
over stock issuance? - Answer ✔ Stock certificates are signed immediately upon receipt
from the printer
An audit plan for the examination of the retained earnings account should include a step
that requires verification of the... - Answer ✔ Authorization for both cash and stock
dividends
, The miscellaneous revenue account should only be analyzed if it is material in amount.
T or F? - Answer ✔ FALSE
The auditors used statistical sampling for the audit of inventory and calculated an
estimated an estimated total audited value of $1,100,000; the client's book value for
inventory is $1,200,000. This misstatement is property classified as a: - Answer ✔
Projected misstatement
Auditors have a responsibility to report on all FASB-required supplementary information
for publicly-traded companies. T or F? - Answer ✔ FALSE
A basis for modification paragraph in the audit of the financial statements of a nonpublic
company: - Answer ✔ Is only included with qualified, adverse, or disclaimers of opinion
When reporting on comparative financial statements where the financial statements of
the prior period have been examined by a predecessor auditor whose report is NOT
presented, the successor auditor should indicate in the report: - Answer ✔ The type of
opinion expressed by the predecessor auditor
When an adverse opinion is expressed on the financial statements of a nonpublic
company, the opinion paragraph should include a direct reference to: - Answer ✔ A
separate basis for modification paragraph or section
Which of the following attributes is more essential for an auditor than of management?
a) Keeping informed on current professional developments
b) Integrity
c) competence
d) Independence - Answer ✔ d) Independence
The attest function - Answer ✔ Includes the preparation of a report of the CPA's
findings.
A summary of findings rather than assurance is most likely to be included in a(n) -
Answer ✔ agreed-upon procedures report
Financial Statements are prepared following a(n) - Answer ✔ applicable financial
reporting framework
Which of the following is most likely to be included in a public company financial
statement audit report?
A) the name of the engagement partner
B) the year the auditor began serving the company
C) the audit was performed in accordance with GAAS
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