36.Segregating the responsibility of approving credit from initiating sales orders reduces the risk of

a)Theft

b)Processing errors

c)Bad debts

d)Fictitious sales

37.Which of the following would be considered the most appropriate form of evidence?

a)Verbal confirmation from a vendor

b)Bank statement

c)Solicitors letter

d)Representation letter

38.In considering the relationship between materiality and audit evidence, the auditor would conclude that

a)For an account balance that is less than the tolerable misstatement, there is no need for evidence

b)The lower the materiality level, the greater the amount of evidence required

c)The higher the materiality level, the greater the amount of evidence required

d)It doesn't matter whether you are auditing inventories or prepaid expenses the amount of evidence will be the same.

39.What type of audit procedure is the examination of registration certificates?

a)Vouching

b)Enquiry

c)Observation

d)Inspection

40.What would be an appropriate base to compare a material error in the cut-off of sales invoices?

a)Turnover

b)Total assets

c)Equity

d)Net profit after tax