AUDITING CHAPTER 13 EXAM QUESTIONS ANSWERED CORRECTLY! (100% PASS)
Shown below (1 through 5) are the five types of tests which auditors use to determine whether financial statements are fairly stated. Which three are substantive tests?
1. risk assessment procedures
2. tests of controls
3. tests...
Shown below (1 through 5) are the five types of tests which auditors use to determine whether financial
statements are fairly stated. Which three are substantive tests?
1. risk assessment procedures
2. tests of controls
3. tests of transactions
4. analytical procedures
5. tests of details of balances
A) 1, 2, and 3.
B) 3, 4, and 5.
C) 2, 3, and 5.
D) 2, 3, and 4. - Answers B) 3, 4, and 5.
Collectively, procedures performed to obtain an understanding of the entity and its environment,
including internal controls, represent the auditor's:
A) audit strategy.
B) tests of controls.
C) risk assessment procedures.
D) tests of transactions. - Answers C) risk assessment procedures.
3) Which of the following would not be considered further audit procedures?
Which of the following procedures would most likely be performed in response to the auditor's
assessment of the risk of monetary misstatements in the financial statements?
A) Ratio analysis
B) Tests of controls
,C) Tests of details of balances
D) Risk assessment procedures - Answers C) Tests of details of balances
Which of the following further audit procedures are used to determine whether all six transaction
related audit objectives have been achieved for each class of transactions?
A) tests of controls
B) risk assessment procedures
C) substantive tests
D) preliminary analytical procedures - Answers C) substantive tests
You are auditing Rodgers and Company. After performing substantive analytical procedures you
conclude that, for the accounts tested, the client's balance appears reasonable. This may indicate that:
A) details test of balances can be eliminated for those accounts.
B) certain test of balances procedures may be eliminated for those accounts.
C) control tests may be eliminated for those accounts.
D) control tests may be reduced for those accounts. - Answers B) certain test of balances procedures
may be eliminated for those accounts.
The purpose of tests of controls is to provide reasonable assurance that the:
A) accounting treatment of transactions and balances is valid and proper.
B) internal control procedures are functioning as intended.
C) entity has complied with GAAP disclosure requirements.
D) entity has complied with requirements of quality control. - Answers B) internal control procedures
are functioning as intended.
In the context of an audit of financial statements, substantive tests are audit procedures that:
A) may be eliminated under certain conditions.
B) are designed to discover significant subsequent events.
C) are designed to test for dollar misstatements.
D) will increase proportionately with the auditor's reliance on internal control. - Answers C) are designed
to test for dollar misstatements.
, Which of the following is true?
A) tests of details of balances focus on the ending balances for accounts in the client's ending trial
balance
B) tests of details of balances focus on the transactions during the period
C) tests of details of balances focus on the auditor's understanding of internal controls
D) tests of details of balances focus on comparisons of recorded amounts to expectations developed by
the auditor - Answers A) tests of details of balances focus on the ending balances for accounts in the
client's ending trial balance
A system walkthrough is primarily used to:
A) test balances.
B) test details of transactions.
C) gain an understanding of internal controls.
D) determine acceptance of the client. - Answers C) gain an understanding of internal controls.
Risk assessment procedures are performed by auditors during an audit in order to:
A) determine the risk of material misstatement in the financial statements.
B) determine the amount of testing of internal control.
C) determine the extent of testing of details of balances.
D) determine the extent of testing of transactions. - Answers A) determine the risk of material
misstatement in the financial statements.
Tests of controls are directed toward the control's:
A) efficiency.
B) effectiveness.
C) efficiency and effectiveness.
D) cost benefit ratio. - Answers B) effectiveness.
A procedure designed to test for monetary misstatements directly affecting the correctness of financial
statement balances is a:
A) test of controls.
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