ACC 403 quiz 8
This quiz consists of 30 multiple choice questions. The first 15 questions cover the material in Chapter 16. The second 15 questions cover the material in Chapter 17.
Which of the following is likely to be determined first when performing tests of details for accounts receivable?
If the client's internal control for recording sales returns and allowances is evaluated as ineffective:
The understatement of sales and accounts receivable is best uncovered by:
For most audits, a proper cash receipts cutoff is less important than the sales cutoff because the improper cutoff of cash:
Which of the following most likely would be detected by a review of a client's sales cutoff?
Which of the following audit procedure would normally be included in the audit plan when auditing the allowance for doubtful accounts?
When designing tests of details of balances, an important point to remember is:
An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared. This test is to satisfy the audit objective of:
Because of its central role in auditing of accounts receivable, which of the following would normally be one of the first items tested?
Most tests of accounts receivable are based on what schedule, file, or listing?
When do most companies record sales returns and allowances?
A positive confirmation is more reliable evidence than a negative confirmation because:
The audit procedure that provides the auditor with the most appropriate evidence when performing test of details of balances for accounts receivable is:
The most important aspect of evaluating the client's method of obtaining a reliable cutoff is to:
For cash receipts, the occurrence transaction-related audit objective affects which of the following balance-related audit objective?
As the amount of misstatements expected in the population approaches tolerable misstatement, the planned sample size will:
The client's trial balance has a balance of $410,000 for merchandise inventory. As the auditor you are willing to accept a balance that is within $20,000 of either side of the recorded balance. You compute a 95% confidence interval of $395,000 to $425,000. You could therefore:
In monetary unit sampling, a sampling interval of 900 means that:
In estimating the population misstatement, the first step in projecting from the sample to the population is to:
If no exceptions were found in the substantive tests of transactions:
The final step in the evaluation of the audit results is the decision to:
One of the steps involved in planning the sample for the tests of details of balances is to:
If acceptable audit risk is increased, acceptable risk of incorrect acceptance should be:
If an auditor concludes that internal controls are likely to be effective, the preliminary assessment of control risk can be reduced, leading to which of the following impacts on the acceptable risk of incorrect acceptance?
You are auditing Nelson and Company and determined that the sample results support a conclusion that the account is materially misstated, when in fact it was not misstated. This illustrates the risk of:
When using monetary unit sampling, the recorded dollar population is a definition of all the items in the:
The most commonly used method of statistical sampling for tests of details of balances is:
While performing a substantive test of details during an audit, the auditor determined that the sample results supported the conclusion that the recorded account balance was not materially misstated. It was, in fact, materially misstated. This situation illustrates the risk of:
When defining the population and the sampling unit for tests of details of balances:
If an auditor desires a greater level of assurance in auditing a balance, the acceptable risk of incorrect acceptance: