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    Ch 7 MC Flashcards

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    ACCT 411

    Ch 7 MC

    56cards William D. Accounting Auditing

    A(n) ________ is the detailed instruction that explains the audit evidence to be obtained during the audit.

    audit procedure

    Which of the following is not one of the four decisions about what evidence to gather and how much of it to accumulate?

    Which accounts must agree to the general ledger

    Audit evidence has two primary qualities for the auditor; relevance and reliability. Given the choices below, which provides the auditor with the most reliable audit evidence?

    Confirmation of accounts receivable balance received from a customer

    Which of the following is not a characteristic of the reliability of evidence?

    Education of auditor

    The auditor must gather sufficient and appropriate evidence during the course of the audit. Sufficient evidence must:

    be persuasive enough to enable the auditor to issue an audit report.

    Audit evidence obtained directly by the auditor will not be reliable if:

    the auditor lacks the competence to evaluate the evidence.

    Appropriateness of evidence is a measure of the:

    quality of evidence.

    Which of the following statements regarding the relevance of evidence is correct?

    To be relevant, evidence must pertain to the audit objective of the evidence.

    Two determinants of the persuasiveness of evidence are:

    appropriateness and sufficiency.

    The two characteristics of the appropriateness of evidence are:

    relevance and reliability

    Which of the following forms of evidence would be least persuasive in forming the auditor's opinion about marketable securities and other investments held by the company?

    Responses to auditor's questions by the president and controller regarding the investments account

    Which of the following statements is not correct?

    The decision of how many items to test should not be influenced by the increased costs of performing the additional tests.

    For audit evidence to be compelling to the auditor it must be sufficient and appropriate. Which statement below is not correct regarding the appropriateness of audit evidence?

    An auditor's opinion, to be economically useful and profitable to the auditing firm needs to be formed within a reasonable time and based on evidence obtained that assures profits for the auditing firm.

    Which of the following is a correct statement regarding audit evidence?

    The auditor must obtain a sufficient amount of relevant and reliable evidence to form an opinion on the fairness of the financial statements.

    Which of the following is the most objective type of evidence?

    The physical count of securities and cash

    Determine which of the following is most correct regarding the reliability of audit evidence.

    If internal controls are effective, evidence obtained is more reliable than when the controls are not effective.

    Evidence is generally considered appropriate when:

    it is relevant to the audit objective being tested.

    Given the economic and time constraints in which auditors can collect evidence about management assertions about the financial statements, the auditor normally gathers evidence that is:

    persuasive.

    Which of the following statements is not a correct statement regarding audit evidence?

    Documentary evidence is more reliable when it is received by the auditor indirectly rather than directly.

    Evidence is usually more persuasive for balance sheet accounts when it is obtained:

    as close to the balance sheet date as possible.

    Which of the following statements is true?

    Evidence obtained directly by the auditor may not be reliable if the auditor lacks the qualifications to evaluate the evidence.

    Which of the following statements relating to the competence of evidential matter is always true?

    Evidence must be both reliable and relevant to be considered appropriate.

    Calculating the gross margin for the current year under audit as a percent of sales and comparing it with previous years is what type of evidence?

    Analytical procedures

    When the auditor develops supporting evidence for amounts posted to account balances with documentary evidence, that process is called:

    vouching.

    An example of an external document that provides reliable information for the auditor is:

    bank statements.

    An example of a document the auditor receives from the client, but which was prepared by someone outside the client's organization, is a:

    vendor invoice.

    The evaluations of financial information through analysis of plausible relationships among financial and nonfinancial data is the definition of:

    analytical procedures.

    When the auditor uses tracing as an audit procedure for tests of transactions she is primarily concerned with which audit objective?

    Completeness

    When the auditor uses the audit procedure vouching she is primarily concerned with which of the following audit objectives when testing classes of transactions?

    Occurrence

    When auditors use documentation to support recorded transactions and amounts, the process is usually called:

    vouching.

    Auditors may decide to replace tests of details with analytical procedures when possible because the:

    analytical procedures are considerably less expensive.

    स्रोत : www.chegg.com

    Auditing Chapter 7 Flashcards

    Start studying Auditing Chapter 7. Learn vocabulary, terms, and more with flashcards, games, and other study tools.

    Auditing Chapter 7

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    1) Which of the following is an accurate statement regarding audit evidence?

    A) Responses to the auditor's questions by client employees is considered highly persuasive evidence.

    B) Audit evidence should provide an absolute level of assurance.

    C) The auditor uses evidence to determine whether the statements are fairly presented.

    D) All evidence must be highly persuasive.

    Click card to see definition 👆

    C

    Terms: Nature of audit evidence

    Diff: Easy Objective: LO 7-1 AACSB:

    Click again to see term 👆

    2) All evidence must have the same level of persuasiveness.

    Click card to see definition 👆

    FALSE

    Terms: Nature of audit evidence

    Diff: Easy Objective: LO 7-1 AACSB:

    Click again to see term 👆

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    Terms in this set (135)

    1) Which of the following is an accurate statement regarding audit evidence?

    A) Responses to the auditor's questions by client employees is considered highly persuasive evidence.

    B) Audit evidence should provide an absolute level of assurance.

    C) The auditor uses evidence to determine whether the statements are fairly presented.

    D) All evidence must be highly persuasive.

    C

    Terms: Nature of audit evidence

    Diff: Easy Objective: LO 7-1 AACSB:

    2) All evidence must have the same level of persuasiveness.

    FALSE

    Terms: Nature of audit evidence

    Diff: Easy Objective: LO 7-1 AACSB:

    3) Auditors use evidence to help them draw conclusions.

    TRUE

    Terms: Nature of audit evidence

    Diff: Easy Objective: LO 7-1 AACSB:

    1) Auditors must make decisions regarding what evidence to gather and how much to accumulate. Which of the following is a decision that must be made by auditors related to evidence?

    A) Sample size

    Timing of audit procedures

    Yes Yes B) Sample size

    Timing of audit procedures

    No No C) Sample size

    Timing of audit procedures

    Yes No D) Sample size

    Timing of audit procedures

    No Yes A

    Terms: Audit evidence decisions

    Diff: Easy Objective: LO 7-2 AACSB:

    2) When can audit procedures be performed?

    A)

    Prior to the fiscal year-end of the client

    Subsequent to the fiscal year-end of the client

    Yes Yes B)

    Prior to the fiscal year-end of the client

    Subsequent to the fiscal year-end of the client

    No No C)

    Prior to the fiscal year-end of the client

    Subsequent to the fiscal year-end of the client

    Yes No D)

    Prior to the fiscal year-end of the client

    Subsequent to the fiscal year-end of the client

    No Yes A

    Terms: Timing of audit procedures

    Diff: Easy Objective: LO 7-2 AACSB:

    3) A(n) ________ is the detailed instruction that explains the audit evidence to be obtained during the audit.

    A) audit objective B) audit procedure C) audit assertion D) audit program B

    Terms: Audit evidence and audit procedures

    Diff: Easy Objective: LO 7-2

    AACSB: Analytic thinking

    6) An audit program is the list of audit procedures for an audit area or an entire audit.

    TRUE

    Terms: Audit program

    Diff: Easy Objective: LO 7-2 AACSB:

    1) Audit evidence has two primary qualities for the auditor; relevance and reliability. Given the choices below, which provides the auditor with the most reliable audit evidence?

    A) general ledger account balances

    B) confirmation of accounts receivable balance received from a customer

    C) internal memo explaining the issuance of a credit memo

    D) copy of month-end adjusting entries

    B

    Terms: Audit evidence qualities of relevance and reliability

    Diff: Easy Objective: LO 7-3

    AACSB: Analytic thinking

    3) The auditor must gather sufficient and appropriate evidence during the course of the audit. Sufficient evidence must

    A) be well documented and cross-referenced in the audit documents.

    B) be based on sources that are external to company.

    C) provide evidence that prove or disprove an audit objective/assertion.

    D) be persuasive enough to enable the auditor to issue an audit report.

    D

    Terms: Sufficient evidence

    Diff: Easy Objective: LO 7-3 AACSB:

    4) Audit evidence obtained directly by the auditor will not be reliable if

    A) the auditor lacks the competence to evaluate the evidence.

    B) it is provided by the client's attorney.

    C) the client denies its veracity.

    D) it is impossible for the auditor to obtain additional corroboratory evidence.

    A

    Terms: Audit evidence obtained directly by auditor

    Diff: Easy Objective: LO 7-3 AACSB:

    5) Appropriateness of evidence is a measure of the

    A) quantity of evidence.

    B) quality of evidence.

    C) sufficiency of evidence.

    D) meaning of evidence.

    B

    Terms: Appropriateness of audit evidence

    Diff: Easy Objective: LO 7-3 AACSB:

    6) Which of the following statements regarding the relevance of evidence is correct?

    A) To be relevant, evidence must pertain to the audit objective of the evidence.

    स्रोत : quizlet.com

    Chapter 7: Audit Evidence Flashcards by Kia Rainey

    Study Chapter 7: Audit Evidence flashcards from Kia Rainey's Florida International University class online, or in Brainscape's iPhone or Android app. ✓ Learn faster with spaced repetition.

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    1

    Which of the following is an accurate statement regarding audit evidence?

    A) Responses to the auditor's questions by client employees is considered highly persuasive evidence.

    B) Audit evidence should provide an absolute level of assurance.

    C) The auditor uses evidence to determine whether the statements are fairly presented.

    D) All evidence must be highly persuasive.

    C) The auditor uses evidence to determine whether the statements are fairly presented.

    2

    All evidence must have the same level of persuasiveness.

    TRUE OR FALSE FALSE 3

    Auditors use evidence to help them draw conclusions.

    TRUE OR FALSE TRUE 4

    A(n) ________ is the detailed instruction that explains the audit evidence to be obtained during the audit.

    A) audit objective B) audit procedure C) audit assertion D) audit program B) audit procedure 5

    Which of the following is notone of the four decisions about what evidence to gather and how much of it to accumulate?

    A) which audit procedures to use

    B) which accounts must agree to the general ledger

    C) when to perform the procedures

    D) what sample size to select for a given procedure

    B) which accounts must agree to the general ledger

    6

    When making audit evidence decisions,

    A) the auditor decides which items in the population to test before determining the sample size.

    B) the sample size for any given procedure must remain constant from audit to audit.

    C) audit engagement software can assist the auditor in making evidence decisions.

    D) the auditor is required to use the sample sizes that are determined by the PCAOB

    C) audit engagement software can assist the auditor in making evidence decisions.

    7

    An audit program is the list of audit procedures for an audit area or an entire audit.

    TRUE OR FALSE TRUE 8

    Audit evidence has two primary qualities for the auditor; relevance and reliability. Given the choices below, which provides the auditor with the most reliable audit evidence?

    A) general ledger account balances

    B) confirmation of accounts receivable balance received from a customer

    C) internal memo explaining the issuance of a credit memo

    D) copy of month-end adjusting entries

    B) confirmation of accounts receivable balance received from a customer

    9

    Which of the following is nota characteristic of the reliability of evidence?

    A) effectiveness of client internal controls

    B) education of auditor

    C) independence of information provider

    D) timeliness

    B) education of auditor

    10

    The auditor must gather sufficient and appropriate evidence during the course of the audit. Sufficient evidence must

    A) be well documented and cross-referenced in the audit documents.

    B) be based on sources that are external to company.

    C) provide evidence that prove or disprove an audit objective/assertion.

    D) be persuasive enough to enable the auditor to issue an audit report.

    D) be persuasive enough to enable the auditor to issue an audit report.

    11

    Audit evidence obtained directly by the auditor will notbe reliable if

    A) the auditor lacks the competence to evaluate the evidence.

    B) it is provided by the client's attorney.

    C) the client denies its veracity.

    D) it is impossible for the auditor to obtain additional corroboratory evidence.

    A) the auditor lacks the competence to evaluate the evidence.

    12

    Appropriateness of evidence is a measure of the

    A) quantity of evidence.

    B) quality of evidence.

    C) sufficiency of evidence.

    D) meaning of evidence.

    B) quality of evidence.

    13

    Which of the following statements regarding the relevance of evidence is correct?

    A) To be relevant, evidence must pertain to the audit objective of the evidence.

    B) To be relevant, evidence must be persuasive.

    C) To be relevant, evidence must relate to multiple audit objectives.

    D) To be relevant, evidence must be derived from a system including effective internal controls.

    A) To be relevant, evidence must pertain to the audit objective of the evidence.

    14

    Two determinants of the persuasiveness of evidence are

    A) competence and sufficiency.

    B) relevance and reliability.

    C) appropriateness and sufficiency.

    D) independence and effectiveness.

    C) appropriateness and sufficiency.

    15

    The two characteristics of the appropriateness of evidence are

    A) relevance and timeliness.

    B) relevance and accuracy.

    C) relevance and reliability.

    D) reliability and accuracy.

    C) relevance and reliability.

    16

    Which of the following forms of evidence would be least persuasive in forming the auditor's opinion about marketable securities and other investments held by the company?

    स्रोत : www.brainscape.com

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