Question

3. A financial audit is related to which economic factor of production?

a. Allocation of financial capital b. Labor c. Land d. Manufacturing

4.   Which of the following terms is associated with the auditing standard stating: In rare circumstances, the auditor may judge it necessary to depart fron a relevant presumptively mandatory requirement. In such circumstances, the auditor should perform alternative procedures to achieve the intent of the requirement. AU-C200.26

   a. Can        b. May         d. Should     c. Must

  

5. Professional skepticism is best described as:

a. an intent to deceive.

    b. a trustful manner.

    c. a questioning mind.

    d. the ability to follow professional standards.

6. Consider the following statements:

   I. Conceptually, to INCREASE the level of DETECTION RISK, the

       auditor would do MORE substantive testing (i.e. more

       detail testing and/or analytical procedures).

II. Conceptually, as the assessed level of Inherent Risk

       DECREASES, there is MORE of a need to lower detection risk

      to maintain the same overall level of acceptable audit risk.

      a. I is true; II is true.

      b. I is true; II is false.

      c. I is false; II is true.

      d. I is false; II is false.

8. “The risk that the procedures performed by the auditor to

     reduce audit risk to an acceptable low level will not detect

     a misstatement that exists and could be material, either

     individually or when aggregated with other misstatements”

9. Consider the following statements:

    I. Materiality has both quantitative and numerical

        considerations.

    II. The “fraud triangle” involves “incentive”, “opportunity”

        and “rationalization”.

      a. I is true; II is true.

      b. I is true; II is false.

      c. I is false; II is true.

      d. I is false; II is false.

10. Consider the following statements:

    I. Conceptually, the auditor will do enough audit work in an

        account to discover misstatements which individually, or

        in total exceed the amount of tolerable misstatement

        involving the account.

   II. “Tolerable Misstatement” is “the amount of planning

        materiality that is allocated to an account or class of

        transactions”.

      a. I is true; II is true.

      b. I is true; II is false.

      c. I is false; II is true.

      d. I is false; II is false.

12. Consider the following statements:

     I. Analytical procedures can be used in the preliminary

        phase of an audit to suggest areas, or accounts which

        should receive more attention during the audit.

    II. If one is looking for “unusual fluctuations to

        investigate further”, then one would tend to believe that

        the current year’s results are expected to look similar

        to the past year’s results.

   

      a. I is true; II is true.

      b. I is true; II is false.

      c. I is false; II is true.

      d. I is false; II is false.

14. A difference between “error” and “fraud” is:

      a. Interest.

      b. Intent.

      c. Misperception.

11. Which of the following accounts would be part of the

     Revenue Process [revenue cycle]?

      a. Inventory.

      b. Accounts payable.

      c. Bad Debts expense.

      d. Interest expense to finance inventory purchases.

      e. None of the above. None are part of the

          revenue process [revenue cycle].

     refers to:

      a. Audit Risk.

      b. Control Risk.

      c. Detection Risk.

      d. Inherent Risk.

               

Answer 1

3.) A

4.) D

5.) C

6.) C

8.) DETECTION RISK

9) A

10.) A

12.) A

14.) B

11.) A

QUES IS INCOMPLETE LITTLE BIT