The MNB Corp. implemented a new computer system to track and record insurance premiums receivable. Due to a program error, a whole series of invoices were appropriately included in revenue but were inappropriately excluded from accounts receivable. The audit objective affected by this issue is

Question 1 options:

a)

Cut-off

b)

Existence

c)

Accuracy

d)

Classification

e)

Completeness

Question 2(1 point)

Which of the following would be considered the least reliable audit evidence?

Question 2 options:

a)

Auditors perform analytical procedures using the preliminary financial results

b)

Auditors attend the year-end inventory count and perform sample counting on the inventory

c)

Auditors obtain third party confirmations from the audit client's customers

d)

Auditors recalculate the depreciation expense for the year

e)

All of the responses are equally reliable

Question 3(1 point)

Which of the following audit procedures would be considered the highest reliable audit evidence?

Question 3 options:

a)

Auditor obtaining copies of invoices from the client

b)

Auditor comparing the key financial ratios to last year

c)

Auditor discussing the allowance for doubtful accounts with the CFO

d)

Auditor observing the company count the inventory at year-end

e)

Auditor recalculating the interest expense

Question 4(1 point)

Which audit objective does the following relate to? The inventory at year-end is being audit tested to ensure the selling price is higher than the inventory cost.

Question 4 options:

a)

Cut-off

b)

Valuation

c)

Accuracy

d)

Existence

e)

Completeness

Question 5(1 point)

Which of the following audit tests would be regarded as a "test of controls"?

Question 5 options:

a)

Examining the bank reconciliation to ensure the person preparing it is a different person from the cash accountant.

b)

Discussing the valuation of inventory with the client

c)

Counting the quantities in the warehouse and comparing them to the perpetual records to verify amounts.

d)

None of the responses provided

e)

Reviewing an aging of receivables with the credit manager to assess the collectability of receivables

Question 6(1 point)

Michael Jones has decided to take a Substantive Audit approach on the audit at a major retailer. Which of the following audit procedures are not consistent with this audit approach?

Question 6 options:

a)

Recalculating an interest expense using confirmed interest rates

b)

Reperforming procedures to ensure the controls are working effectively

c)

Sending a bank confirmation letter for the year-end audit

d)

Attending the year-end inventory count and performing sample counts to ensure the inventory is recorded at the right amounts

e)

All of the responses provided are consistent with a Substantive Audit Approach

Question 7(1 point)

Which of the following are one of the factors that should be considered when the auditor determines their acceptable audit risk?

Question 7 options:

a)

Susceptibility of assets to misappropriation

b)

Client motivation

c)

Presence of related parties

d)

Users of the audited financial statements

e)

All of the responses are key factors when determining acceptable audit risk

Question 8(1 point)

Regency Fire Extinguishers Inc. decided to overstate revenue by recording fake sales. Several fake clients were created and sales were added into the sales journal throughout the year. The management assertion or audit objective affected by these actions is

Question 8 options:

a)

None of the responses provided

b)

Occurrence

c)

Completeness

d)

Accuracy

e)

Classification