1.

Consider the following statements:

I. A Control Deficiency exists when the design or operation of a control does not allow management

or employees, in the normal course of performing their assigned functions, to prevent or detect

and correct, misstatements on a timely basis.

II. A transaction (audit) trail includes the documents and records that allow an auditor to trace a

transaction from its origination through to its final disposition, or vice versa. [Statement is TRUE}

a. I is true; II is true

b. I is true; II is false

c. I is false; II is true

d. I is false; II is false

2.

Which controls apply to the processing of individual applications, such as sales or payroll, and

help ensure the completeness and accuracy of transaction processing, authorization, and validity.

[see page 204]?

a. Application controls.

b. Data Capture controls.

c. General controls.

d. Output controls

3.

An aged trial balance of accounts receivable is normally used by the auditor to evaluate the

adequacy of the allowance for doubtful accounts involving accounts receivable. The companys

credit terms are 2% 10, net 30. The aged trial balance was made on December 31, year 1. The

auditor reviews the work on January 30, year 2. An outstanding accounts receivable on December

31, year 1 was for a sale invoiced on November 22, year 1 would be classified on the aged trial

balance as:

a. Current.

b. Past due

c. More than 30 days past due.

d. More than 60 days past due.

4.

In which of the following instances would an auditor most likely issue a standard unqualified opinion

WITHOUT an explanatory paragraph?

a. Management disclosures are missing or inadequate.

b. There is substantial doubt about the entitys ability to continue as a going-concern.

c. Due to staffing issues, the audit report was issued later than in previous years.

d. There is an material deviation from GAAP related to capitalizing repairs.

e. None of the above.