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Audit Quizzes with All Correct Answers

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Audit Quizzes with All Correct Answers Analytical procedures are conducted at the planning stage of the audit to: a) Identify where fraud has occurred b) Enhanced the understanding of a client c) Aid in the identification of risk and enhance the understanding of a client d) Aid in the iden...

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  • September 12, 2024
  • 20
  • 2024/2025
  • Exam (elaborations)
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Audit Quizzes with All Correct
Answers
Analytical procedures are conducted at the planning stage of the audit to:

a) Identify where fraud has occurred
b) Enhanced the understanding of a client
c) Aid in the identification of risk and enhance the understanding of a client
d) Aid in the identification of risk - Answer ✔ C

The classification assertion states that transactions and events have been recorded in
the proper accounts

a) True
b) False - Answer ✔ A

Analytical procedures are used at which of the following stages of an audit?

a) Final review
b) Planning
c) Execution
d) All of the above - Answer ✔ D

Which of the following is an example of a liquidity ratio?

a) Cost of sales divided by average inventory
b) Gross profit divided by net sales
c) Liabilities divided by equity
d) Profit divided by average assets - Answer ✔ A

When internal controls are effective

a) There will be an increased reliance on substantive tests of classes ok transactions
and account balances
b) Control risk will be assessed as high
c) The organization is less likely to achieve its strategic and operating objective
d) The organization is more likely to achieve its strategic and operating objective -
Answer ✔ D

Which of the following is NOT an example of an internal control for the sales process?

,a) The credit committee reviews the customer credit limits on a quarterly basis
b) Approved purchase orders are reconciled to their related purchase invoice
c) An IT application control that only allows customer orders to be processed if they do
not exceed the approved customer credit limit
d) Sales invoices automatically generate from order documents - Answer ✔ B

A combined audit strategy is chosen when
a) Inherent risk is assessed as high
b) Audit risk is assessed as low
c) Detection risk is assessed as low
d) Control risk is assessed as medium - Answer ✔ D

Under a substantive approach

a) The auditor gains the minimum necessary knowledge of the client's system of IC. The
auditor doesn't test the internal controls
b) The auditor gains a detailed knowledge of the client's system of IC. The auditor tests
the IC to determine their operating effectiveness
c) The auditor gains a detailed knowledge of the client's system of IC. The auditor
doesn't test the IC
d) The auditor isn't required to gain an understanding of the client's system of IC, nor to
test the IC - Answer ✔ A

When discussing an IC weakness with a client, the auditor discusses the implication of
the weakness identified to:

a) Explain to the client the nature of the weakness
b) Explain to the client what could go wrong as a result of the weakness
c) Provide the client with a reasonable recommendation to address the weakness
d) Explain how to prevent the weakness in the future - Answer ✔ B

Segregation of incompatible duties:

a) Is a guarantee that grad won't occur
b) Are applicable only to those employed in senior management positions
c) Means that different people are assigned responsibility for different parts of the same
process
d) Is equivalent to a performance review by a supervisor - Answer ✔ C

Detective controls do not include

a) Reconciliation
b) Authorization
c) Review of results
d) Segregation of duties - Answer ✔ B

, Which of the following is not a type of control

a) IT automated controls
b) Reconciliations
c) Substantive controls
d) IT application controls - Answer ✔ C

The following control is a preventative control:
Sales invoices are automatically priced using a master pricing file

a) True
b) False - Answer ✔ A

The following control is a detective control:
Amounts cannot be paid to employees without first matching a valid SIN number to the
employee master file

a) True
b) False - Answer ✔ B

Which of the following examples of substantive procedures can be performed prior to
year end

a) Confirming the client's bank balance
b) Attending the client's annual inventory count
c) Testing additions and disposals to the fixed register
c) Performing confirmations of AR - Answer ✔ C

Verifying the valuation assertion for inventory involves which of the following:

a) Verifying the cost of inventory
b) Verifying the NRV of inventory
c) Physically inspecting inventory for signs of damage
d) All of the above - Answer ✔ D


Matt Stairs performed work for a client in the real estate business and issued a Notice to
Reader. What degree of assurance does a Notice to Reader provide to the user of the
statements?

a) None of the above
b) Reasonable assurance
c) No assurance
d) Moderate assurance - Answer ✔ C

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