1. Which of the following statements is TRUE regarding the financial statement audit by an external auditor? a. Sampling techniques are not allowed by GAAS as they have not been verified as to producing "audit-appropriate results. b. Sampling techniques are inherent throughout much of the audit process. c. Sampling techniques are approved by GAAS for use during substantive testing but not approved for use for test of controls purposes. d. Sampling techniques are approved by GAAS for use when testing balance sheet accounts for audit purposes but not allowed when testing income statement accounts for audit purposes. 2. Which of the following statements is TRUE regarding the concepts of KITING and LAPPING? a. Kiting involves the manipulation of cash payments to suppliers whereas Lapping involves the manipulation of credit sales collections. b. Lapping involves the improper recording of credit sales transactions as they affect Accounts Receivable and Sales Revenue whereas Kiting involves the manipulation of bank transfers between cash accounts. c. Kiting involves the manipulation of bank transfers between cash accounts whereas Lapping involves the manipulation of credit sales collections. d. Lapping involves the manipulation of bank transfers between cash accounts whereas Kiting involves the manipulation of credit sales collections. 3. Each of the following might by itself, form a valid basis for an auditor to decide to omit a test except for: A. Difficulty and expense involve in testing a particular item. B. Assessment of control risk at a low level. C. Inherent risk involved. D. Relationship between the cost of obtaining evidence and its usefulness 4. Proper authorization of write-offs of uncollectible accounts should be approved in which of the following departments? A. Accounts receivable. B. Credit C. Accounts payable. D. Treasurer E. Sales. 5. In addition to evaluating frequency of deviations in tests of controls, an auditor should also consider qualitative aspects of the deviations. The auditor would most likely give broader consideration to the implications of a deviation if it was: A. The only deviation identified from the sample. B. Identical to a deviation identified during the prior year audit. C. Caused by an employee's misunderstanding of instructions. D. Initially concealed by a forged document