Practice for Final exam MCQ's-ACC551

Mark McPherson is concerned about the audit of a high-risk client, the Barry’s Electric Ltd. He believes that there is a high likelihood that because his audit team is inexperienced, the testing procedures will not detect a material misstatement. This is a(n)

• audit risk.

• control risk.

• detection risk.

• none of the above

Payroll functions include all of the following except

• hiring employees.

• deciding on the number of workers required to work on a particular day.

• preparing the payroll.

• protecting unclaimed wages.

If controls are in place to ensure that transactions are recorded in the correct accounting period, this satisfies which internal control objective?

• timely

• real

• valued

• posted

Which audit assertion is not addressed by the internal control objectives?

• valuation

• allocation

• classification

• presentation

After performing a risk assessment of a food processing company, Sean Spino has come to the conclusion that he will require more evidence to be obtained by his audit team from substantive procedures. Which of the factors below led him to this conclusion?

• the level of assurance necessary

• the type of evidence required

• the nature of the test

• the complexity of the client's data capturing systems

Inherent risk is

• assessed as high when there are no internal controls tested or relied upon by the auditor.

• assessed as low when there are good internal controls in place.

• the risk of a misstatement occurring irrespective of any internal controls put in place by management.

• the risk that the auditor's testing procedures will not detect a material misstatement.

Jocelyne Yu is performing procedures and has decided to vouch the balance in the fixed assets ledger of a furniture manufacturing company back to supporting documentation. She is performing a

• test of details.

• test of controls.

• risk assessment.

• none of the above

Daniel Morency has performed evaluations of financial information and determined whether the fluctuations of his client’s sales figures are consistent with other data he has gathered. He has used this information to predict year-end amounts of sales. This is an example of substantive procedures called

• tests of details.

• computer assisted audit techniques.

• analytical procedures.

• none of the above

Vouching involves

• tracking a source document through to the underlying accounting records.

• agreeing the details of a transaction to supporting evidence outside of the company's accounting records.

• the application of audit procedures to less than 100 per cent of items within a population.

• none of the above

Verifying the accuracy of the accounts receivable trial balance relates to the

• existence or occurrence assertion.

• completeness assertion.

• accuracy and valuation assertion.

• rights and obligations assertion.