Test Bank For Principles of Auditing & Other Assurance Services with Connect 20th Edition

1.

The professional standards consider calculating depreciation expense a “routine” transaction. 
 
True    False

2.

The most reliable form of documentary evidence generally is considered to be documents created by the client. 
 
True    False

3.

A vendor’s invoice is an example of documentary evidence created by a third party and held by the client. 
 
True    False

4.

In performing analytical procedures, the auditors may use dollar amounts, physical quantities, or percentages. 
 
True    False

5.

The primary purpose of a letter of representations is to obtain additional evidence about specific accounts. 
 
True    False

6.

The auditors should propose an adjusting journal entry for all material related-party transactions. 
 
True    False

7.

When the risk of material misstatement for an account is high, the auditors may perform additional substantive procedures to restrict detection risk to a lower level. 
 
True    False

8.

Working papers of continuing audit interest usually are filed with the administrative working papers. 
 
True    False

9.

The use of lead schedules is designed to increase the detail of the working trial balance. 
 
True    False

10.

Adjusting journal entries are ordinarily recorded by the client, while reclassifying journal entries need not be recorded.  
 
True    False

11.

To be effective, analytical procedures performed near the end of the audit should be performed by 
 

A.  The partner performing the quality review of the audit.

B.  A beginning staff accountant who has had no other work related to the engagement.

C.  A manager or partner who has a comprehensive knowledge of the client’s business and industry.

D.  The CPA firm’s quality control manager.

12.

The components of the risk of misstatement are:

  Inherent Risk Control Risk Detection Risk

A. Yes Yes Yes

B. Yes Yes No

C. Yes No No

D. No Yes Yes

A.  Option A

B.  Option B

C.  Option C

D.  Option D