Question

1. As a part of auditing depreciation expense the auditor tests whether the client has followed a consistent policy and the calculations are correct. Which of the following audit objectives is the auditor addressing?

A) Cut-off

B) Occurrence C) Completeness D) Accuracy

2. The auditor used positive confirmations to test accounts receivable, but several of the confirmations were not returned. Which of the following auditing procedures would the auditor perform on the non-responses?

A) Inspect shipping documents to verify that the products were shipped prior to year-end

B) Inspect the sales invoices included in the balance to verify that the balance was billed prior to year-end

C) Discuss with the credit manager the likelihood that the client will be paid

D) No additional procedures would be performed because it is likely that the customer agrees with the information on the confirmation.

3. Which of the following are relevant to the auditor’s evaluation of depreciation expense?

A) The assigned useful lives of property, plant and equipment

B) The detailed deprecation calculations made by the client

C) Analytical relationships between depreciation expense, accumulated depreciation, and fixed asset balances D) All of the above

4. You obtained a detailed list of all items included in the Other Expenses account on the client’s financial statements, and noted a large number of losses on fixed assets disposed of during the year. You may conclude that:

A) Insured values are greater than book values

B) There are a large number of fully depreciated assets C) Depreciation charges may by insufficient

D) Assigned useful lives of assets are too short

5. Which of the following misstatements is most likely to be discovered during an audit of a bank reconciliation?

A) Failure to include an outstanding check on the bank reconciliation B) Duplicate payment of a vendor's invoice

C) Billing a customer at a lower price than indicated by company policy D) Payment to an employee for more than the hours actually worked

6. The auditor compared the information from a sample of transactions that had been posted to the accounts payable master file to supporting documents. Which audit objective(s) does this test address?

A) Occurrence and accuracy

B) Classification and completeness C) Accuracy and completeness

D) Completeness only

7. The general cash account usually is included in the scope of the audit:

A) only when the ending balance is material

B) only if either the beginning or ending balance is material

C) even if the balance is not material

D) only when the auditor identifies unusual transactions flowing through the account

8. Which of the following things would an auditor do to audit a company’s accounting for contingent liabilities?

A) Confirm identified contingent liabilities with the injured parties

B) Compare the amount of the recorded loss to vendor invoices

C) Perform analytical procedures, including comparing contingent liability balances with prior year amounts D) Obtain information to assess the probability that a loss has been incurred and its amount

Answer 1

1) The correct answer is D
The auditor is trying to check the accuracy of the books which is one of the primary aim of the auditing.