Which of the following statements is correct regarding the costs involved in obtaining evidence? (Points : 5)

Cost of obtaining evidence is a valid reason for excluding that evidence from the audit. Physical examination is the most expensive type of audit evidence. The least expensive type of evidence is analytical procedures. Each of the above is correct

Which of the following audit tests would be regarded as a test of a control? (Points : 5)

Review the prelisting in the cash receipts book to determine whether cash is prelisted daily. Reconcile the recorded cash receipts on the prelisting with the cash receipts journal and the bank statement for a 1-month period. Compare the quantity and description of items on shipping documents with the related duplicate sales invoices. Trace recorded sales in the sales journal to the related accounts receivable master file, and compare the customer name, date, and amount for each one.

In setting materiality guidelines for current assets, the two standard setters, FASB and the AICPA, provide the following guidelines to practitioners (Points : 5)

both agree that it should be greater than 5%. both agree that materiality should be set at an amount greater than 10% of current assets. both agree that materiality should be set at an amount greater than 10% of current assets. no specific materiality guidelines are provided by either of them.

The use of prenumbered sales invoices is meant to prevent (Points : 5)

the failure to bill or record sales. duplicate billings and recording of sales. Both A and B Neither A nor B

An auditor concludes that there is a material inconsistency in the other information in an annual report to shareholders containing audited financial statements. The auditor believes that the financial statements do not require revision, but the client is unwilling to revise or eliminate the material inconsistency in the other information. Under these circumstances, what action would the auditor most likely take next? (Points : 5)

Consider the situation closed because the other information is not in the audited financial statements. Issue an except for qualified opinion after discussing the matter with the client's audit committee. Disclaim an opinion on the financial statements after explaining the material inconsistency in a other-matter paragraph. Communicate this matter with those charged with governance.