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Question(s) / Instruction(s):

1. Users can reasonably expect audited financial statements to be (Points : 4)
       complete and contain all important financial disclosures, be free from material misstatements and be presented fairly.
       complete and contain all-important financial disclosures, be free from material misstatements and be presented fairly according to GAAP.
       complete, be accurate and be presented fairly according to GAAP.
       complete and contain all-important financial disclosures, be free from all misstatements and be presented fairly according to the substance of GAAP.

 

 

2. Sampling risk is the risk that (Points : 4)
       the sample will not contain characteristics representative of the population such that inferences made about that population will be incorrect.
       the population will not contain characteristics representative of the sample such that inferences made about that sample will be incorrect.
       Neither A nor B is correct.
       Both A and B are correct.

 

 

3. Backup controls, used to prevent data and software loss would include procedures to: (Points : 4)
       load balance in the event of heavy traffic across the network.
       constantly monitor the network for intrusion and attack.
       provide an alternate form of electricity to the corporate facilities.
       fail-over to a mirrored storage device in the event of interruption or loss.

 

 

!4. In an audit of financial statements, the risk of the high rate of return of products sold includes that of (Points : 4)
       sales that are recorded improperly.
       an estimate of accrued returns that reduces net income.
       a reduction of net sales for an increase to the sales returns and allowance account.
       consignment goods that are returned and forwarded to third parties.

 

 

5. An auditor is concerned with materiality for which of the following reasons? (Points : 4)
       to assess internal control
       to comply with the quality assurance standards of GAAS
       to determine the effects of misstatements on the users of financial information
       to cut down on audit procedures and testing

 

 

 

6. Vouching recorded transactions involves taking a sample from the journal and tracing them back to the source documents to ensure they occurred. (Points : 4)
       True
       False

 

 

7. An auditor can utilize a cross-sectional analysis for a client operating in multiple locations to identify areas of further inventory testing. (Points : 4)
       True
       False

 

 

8. Auditors will perform an analysis of leases using SFAS 13 criteria and other EITF statements to substantiate the accounting treatment. (Points : 4)
       True
       False

 

 

9. The extent of procedures is affected mostly by: (Points : 4)
       the sheer volume of procedures to be applied by the auditor.
       the time of year in which the client takes a physical inventory in the warehouse.
       the auditors judgment that misstatements are probable in certain balances.
       the availability of the clients staff at or near the balance sheet date.

 

 

10. Which of the following is the best example of the control objective in the revenue cycle that all transactions are recorded accurately? (Points : 4)
       Sales are recorded at the invoice price expected to be collected from customers.
       Sales orders have sequential numbering.
       Recorded sales transactions are evidenced by valid invoices and shipping documents.
       Credits to customer accounts are classified as liabilities.

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