1.Consider the following statements: I. Tolerable Misstatement is the amount of planning materiality that is allocated to an account or class of transactions. II. Conceptually, the auditor will do enough audit work in an account to discover misstatements which individually, or in total exceed the amount of tolerable misstatement involving the account.

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. In class, we discussed the notion of an audit philosophy of tests of accounts for overstatement and understatement to gain audit efficiencies. Consider the following statements: I. When accounts payable is tested [i.e. directly; obtain specific evidence] for UNDERstatement; then conceptually, inventory purchases also is tested for UNDERstatement. II. Generally, liabilities would be tested [i.e. directly; obtain specific evidence] for UNDERstatement.

a. I is true; II is true. c. I is false; II is true. b. I is true; II is false. d. I is false; II is false.

3. Consider the following statements: I. For Income Statement accounts, evidence is considered to Be more timely if it involves selecting amounts throughout the period. II. For balance sheet accounts, evidence is considered to be more timely if it involves selecting transactions throughout the period. 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.

4.Management states that all sales transactions which took place were recorded relates to which management assertion? a. Completeness c. Rights and Obligations b. Occurrence d. Accuracy, Valuation and Allocation

5. Determining the proper amounts of depreciation are expensed provides assurance about managements assertions of valuation and allocation and: a. presentation and disclosure. b. completeness. c. rights and allocations. d. existence.