1.A report indicating that the Department of Defense spent $2.78 per nail used in a construction project would most likely be produced by:

a.A Big Four accounting firm.

b.An internal auditor.

c.A Government Accountability Office auditor.

d.An Internal Revenue Service agent.

2.The legal right to perform audits is granted to CPA firms by federal regulations.

a.True

b.False

3.A test for the realizable value objective for the accounts receivable account would be:

a.Confirming a sample of customer accounts.

b.Obtaining an aging of accounts receivable and developing an independent estimation of the allowance for doubtful accounts.

c.Tracing customer accounts to related invoices, shipping documents, and purchase orders.

4.To test the completeness audit objective for employees' payroll expense, items for audit testing should be selected from the:

a.Benefit statements.

b.Approved time cards.

c.Payroll master file.

d.Payroll journal entries.

e.Employment Applications.

5.As the acceptable level of detection risk increases, an auditor may change the:

a.Timing of substantive tests of a balance sheet account by performing them at an interim date rather than year end.

b.Timing of the tests on controls by performing them throughout the year rather than at one time.

c.Assess the level of inherent risk to a lower amount.

d.Increase the sample size to achieve a more effective test.