ACCT 444 Week 3 Quiz

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ACCT 444 Week 3 Quiz

1. (TCO 6) Which of the following statements regarding documentation is not correct? (Points : 3)

Documentation includes examining client records, such as general ledgers and supporting journals.
Internal documents are documents that are generated within the company and used to communicate with external parties.
External documents are documents that are generated outside of the company and are used to communicate the results of a transaction.
All of the above are correct statements


Question 2.2. (TCO 6) Which of the following is not a purpose of analytical procedures? (Points : 3)

Understand the client’s industry
Assess the client’s ability to continue as a going concern
Identify misstatements
Reduce detailed audit tests


Question 3.3. (TCO 6) The Auditing Standards Board has concluded that analytical procedures are so important that they are required during (Points : 3)

planning and testing phases.
planning and completion phases.
testing and completion phases.
planning, testing, and completion phases.


Question 4.4. (TCO 6) Three common types of confirmations used by auditors are (1) negative confirmations where only a response is requested if the debtor disagrees with the amount, (2) positive confirmations with a request for information where the debtor is requested to respond and to include their believed balance, and (3) positive confirmations with the information included where the debtor is requested to respond and to confirm the balance we give them. If they were placed in the order of their competence, from highest to lowest, the sequence would be (Points : 3)

3, 1, 2.
1, 2, 3.
3, 2, 1.
2, 3, 1.


Question 5.5. (TCO 7) The major concern when using nonfinancial data in analytical procedures is the (Points : 3)

accuracy of the nonfinancial data.
source of the nonfinancial data.
type of nonfinancial data.
presence of multiple sources of nonfinancial data.

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Question 6.6. (TCO 7) When inherent risk is high, there will need to be (Points : 3)

more evidence accumulated.
more experienced staff assigned to the work.
either a or b, but not both.
both a and b.


Question 7.7. (TCO 7) Which of the following is not correct regarding the communications between successor and predecessor auditors? (Points : 3)

The burden of initiating the communication rests with the predecessor auditor.
The burden of initiating the communication rests with the successor auditor.
The predecessor auditor must receive their former client’s permission prior to divulging information to the successor auditor.
The predecessor auditor may choose to provide a limited response to a successor auditor.


Question 8.8. (TCO 8) Auditors are responsible for determining whether financial statements are materially misstated, so upon discovering a material misstatement, they must bring it to the attention of (Points : 3)

the audit firm’s managing partner.
no one in particular.
the client’s management.


Question 9.9. (TCO 8) Auditors are _____ to decide on the combined amount of misstatements in the financial statements that they would consider material early in the audit. (Points : 3)

not allowed
strongly encouraged


Question 10.10. (TCO 8) Why do auditors establish a preliminary judgment about materiality? (Points : 3)

To determine the appropriate level of audit experience required for the work
So that the client can know what records to make available to the auditor
To plan the appropriate audit evidence to accumulate and develop an overall audit strategy
None of the above



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