0. The audit risk model, identified in the AICPAs Professional Standards includes all of the following component risks, except for

a. Control risk.

b. Sampling risk.

c. Inherent risk.

d. Detection risk.

e. All of the above are specifically included in the audit risk model.

1. Before sending positive confirmation requests to a sample of an entitys customers to verify the entitys accounts receivable, a member of the audit team should verify that

a. The subsidiary ledger for accounts receivable supports the general ledger balance at the date chosen for confirmation.

b. There are no prematurely recorded or improper accounts receivable items.

c. There are no accounts receivable items that should have been recorded that were not recorded.

d. There are no accounts receivable items that have been pledged as collateral for the entitys debts.

e. There are no material uncollectible customer account balances.

2. Which of the following procedures would an auditor most likely perform for December year-end accounts receivable confirmation when the auditor did not receive replies to second requests?

a. Replace the non-responding customers accounts with other customers accounts and send confirmation requests to those replacement customers.

b. Intensify the study of the internal control structure concerning the revenue cycle.

c. Increase the assessed level of detection risk for the existence assertion.

d. Inspect the receiving records documenting the merchandise purchased from the companys suppliers.

e. Review the cash receipts journal for customers payments in January and February following year-end.

3. Positive confirmation of accounts receivable is considered to be more effective than negative confirmation of accounts receivable because

a. A majority of recipients usually lack the willingness to respond.

b. Respondents to negative confirmations are more likely to report incorrect balances that require extensive follow-up procedures.

c. Non-respondents to negative confirmations may not have verified their balances.

d. Negative confirmations fundamentally address the completeness assertion.

e. The response rate is normally lower for negative confirmation, which requires a larger amount of time to perform alternate procedures.

4. Which of the following sets of information does an auditor usually confirm on one form?

a. Cash in bank and collateral for loans.

b. Accounts payable and purchase commitments.

c. Inventory on consignment and contingent liabilities.

d. Accounts receivable and accrued interest payable.

e. Accounts payable and accounts receivable.