Auditing & Attestation Mini Exam 15 — AUD — Auditing & Attestation Mini Exams

Questions in this quiz (10)

1. Which of the following best describes the primary purpose of tests of details in an audit?

   • To evaluate internal control effectiveness
   • To detect material misstatements in account balances
   • To assess fraud risk
   • To understand the entity’s operations

2. An auditor is performing substantive testing on inventory. Which procedure would be most effective for testing the existence assertion?

   • Tracing inventory records to shipping documents
   • Observing the physical inventory count
   • Reviewing inventory turnover ratios
   • Recalculating inventory costs

3. In audit sampling, the risk that the auditor’s procedures fail to detect a misstatement that exists in a sample is known as:

   • Sampling risk
   • Detection risk
   • Non-sampling risk
   • Control risk

4. When performing analytical procedures during the final review stage, the auditor identifies an unexpected decrease in inventory turnover. What is the most appropriate response?

   • Conclude the financial statements are accurate
   • Investigate the cause through additional procedures
   • Accept management’s explanation without verification
   • Ignore the fluctuation if immaterial

5. Which of the following is a substantive analytical procedure?

   • Comparing current-year expenses to prior-year amounts
   • Observing control procedures
   • Confirming receivables with customers
   • Inspecting supporting documents

6. An auditor is testing the valuation of goodwill which involves significant management judgment. Which procedure would be most effective?

   • Confirming goodwill balances with third parties
   • Recalculating amortization expense
   • Evaluating management’s assumptions and impairment analysis
   • Performing analytical procedures on revenue

7. In audit sampling, which of the following would most likely result in a larger sample size?

   • Higher tolerable misstatement
   • Lower assessed risk of material misstatement
   • Higher expected misstatement rate
   • Greater reliance on controls

8. Which of the following is NOT considered a substantive procedure?

   • Substantive analytical procedures
   • Tests of details
   • Tests of controls
   • Confirmation of balances

9. An auditor is testing revenue for completeness. Which procedure would be most effective?

   • Vouching sales invoices to shipping documents
   • Tracing shipping documents to recorded sales
   • Confirming receivable balances
   • Reviewing revenue trends

10. When using audit sampling to test the valuation of receivables, which method would be most appropriate?

    • Random sampling
    • Block sampling
    • Systematic sampling
    • Monetary-unit sampling