Question 1

In a probability proportional to size (PPS)  sample, all population physical audit units with an amount equal to or greater than the amount of the interval will automatically be included in the sample if the auditor uses:

Accepted Answer

A)   stratified selection.
B)   block selection.
C)   systematic selection.
D)   random selection.

Question 2

Tolerable misstatements for overstatements and understatements:

Accepted Answer

A)   must be expressed in percentages.
B)   must be set at the same amount.
C)   must be different amounts.
D)   may be different amounts.

Question 3

Which of the following is not a term relevant to sampling for tests of details?

Accepted Answer

A)   Analysis of misstatements.
B)   Define the exception conditions.
C)   Estimate misstatements in the population.
D)   Acceptable risk of incorrect acceptance.

Question 4

Which of the following is the auditor least likely to consider when estimating misstatements in the population?

Accepted Answer

A)   Prior experience with the client.
B)   Results of current year tests of controls.
C)   Results of analytical procedures already performed.
D)   Acceptable audit risk.

Question 5

The statistical results when MUS is used are called exception bounds.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following does not need to be considered when the auditor generalizes from the sample to the population?

Accepted Answer

The answer of Which of the following does not need...

Question 7

Tests of controls and tests of transactions for the acquisition and payment cycle are normally divided into two broad areas. What are these areas?

Accepted Answer

Tests of controls and tests of...

Question 8

Which of the following is an effective internal accounting control over cash payments?

Accepted Answer

A)   A check- signing machine with two signatures should be used.
B)   Checks should be prepared only by persons responsible for cash receipts and disbursements.
C)   Spoiled checks that have been voided should be disposed of immediately.
D)   Signed checks should be mailed under the supervision of the check signer.

Question 9

A failure to record acquisitions of goods most likely will affect all but which of the following?

Accepted Answer

A)   Cash.
B)   Accounts payable.
C)   Net income.
D)   Retained earnings.

Question 10

When auditors sample for tests of details of balances, the objective is to determine whether the:

Accepted Answer

A)   account balance being audited is fairly stated.
B)   transactions being audited are free of misstatements.
C)   controls being tested are operating effectively.
D)   transactions and account balances being audited are fairly stated.

Question 11

What are the three primary types of sampling methods used for calculating dollar misstatements in auditing?

Accepted Answer

Nonstatistical sampl...

Question 12

The audit of the acquisition and payment cycle often takes ________ time to audit than other cycles.

Accepted Answer

A)   less
B)   no less
C)   more
D)   about the same

Question 13

Assume that during cutoff testing you determined that the last receiving report number for inventory was 24986. Which of the following receiving report numbers would you not expect to be included in inventory and accounts payable at year- end?

Accepted Answer

A)   24980
B)   19773
C)   23019
D)   24990

Question 14

The test of details of balances procedure to 'trace from account payable list to vendors' invoices and statements' satisfies the objective of:

Accepted Answer

A)   detail tie- in.
B)   classification.
C)   completeness.
D)   occurrence.

Question 15

Cutoff misstatements can occur for:

Accepted Answer

The answer of Cutoff misstatements can occur for: ...

Question 16

The computer- generated file that includes all acquisition transactions during a given period is the:

Accepted Answer

A)   Accounts payable file.
B)   Purchase approval file.
C)   Acquisitions transaction file.
D)   Cash disbursements file.

Question 17

Accounting standards require that sales returns and allowances be matched with related sales:

Accepted Answer

A)   if required by industry practice.
B)   if the amounts are material.
C)   if practical.
D)   any of the above.

Question 18

The primary factor affecting the auditor's decision about ARIA is assessed inherent risk.

Accepted Answer

A) True 
 B)False

Question 19

The receipt of goods and services in the normal course of business represents the date clients normally recognize:

Accepted Answer

A)   income.
B)   the liability.
C)   expenses.
D)   warranty assets.

Question 20

Accounting standards require that material sales returns and allowances be:

Accepted Answer

A)   recorded in the period when the credit memo is issued.
B)   recorded as a debit to the sales account.
C)   matched with related sales.
D)   recorded in the period when the merchandise is returned.

Exam 6: Completing the Tests in the Sales and Collection Cycle: Accounts Receivable, Audit Sampling for Tests of Details of Balances, and Audit of the Acquisition and Payment Cycle

A failure to record acquisitions of goods most likely will affect all but which of the following?

Correct AnswerverifiedShow Answer

When auditors sample for tests of details of balances, the objective is to determine whether the:

Correct AnswerverifiedShow Answer

Which of the following is the auditor least likely to consider when estimating misstatements in the population?

Correct AnswerverifiedShow Answer

Tolerable misstatements for overstatements and understatements:

Correct AnswerverifiedShow Answer

The computer- generated file that includes all acquisition transactions during a given period is the:

Correct AnswerverifiedShow Answer

What are the three primary types of sampling methods used for calculating dollar misstatements in auditing?

Correct AnswerverifiedNonstatistical sampl...View AnswerShow Answer

Cutoff misstatements can occur for:

Correct AnswerverifiedShow Answer

Accounting standards require that sales returns and allowances be matched with related sales:

Correct AnswerverifiedShow Answer

Tests of controls and tests of transactions for the acquisition and payment cycle are normally divided into two broad areas. What are these areas?

Correct AnswerverifiedTests of controls and tests of...View AnswerShow Answer

Accounting standards require that material sales returns and allowances be:

Correct AnswerverifiedShow Answer

The test of details of balances procedure to 'trace from account payable list to vendors' invoices and statements' satisfies the objective of:

Correct AnswerverifiedShow Answer

Assume that during cutoff testing you determined that the last receiving report number for inventory was 24986. Which of the following receiving report numbers would you not expect to be included in inventory and accounts payable at year- end?

Correct AnswerverifiedShow Answer

The audit of the acquisition and payment cycle often takes ________ time to audit than other cycles.

Correct AnswerverifiedShow Answer

The statistical results when MUS is used are called exception bounds.

Correct AnswerverifiedShow Answer

Which of the following is an effective internal accounting control over cash payments?

Correct AnswerverifiedShow Answer

The primary factor affecting the auditor's decision about ARIA is assessed inherent risk.

Correct AnswerverifiedShow Answer

Which of the following is not a term relevant to sampling for tests of details?

Correct AnswerverifiedShow Answer

The receipt of goods and services in the normal course of business represents the date clients normally recognize:

Correct AnswerverifiedShow Answer

In a probability proportional to size (PPS) sample, all population physical audit units with an amount equal to or greater than the amount of the interval will automatically be included in the sample if the auditor uses:

Correct AnswerverifiedShow Answer

Which of the following does not need to be considered when the auditor generalizes from the sample to the population?

Correct AnswerverifiedShow Answer

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Nonstatistical sampl...
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Tests of controls and tests of...
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