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Audit Quiz 3

Quiz yourself by thinking what should be in each of the black spaces below before clicking on it to display the answer.
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Question
Answer
show expressed or implied representations by management regarding the recognition, measurement, presentation, and disclosure of information on the financial statements  
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show assets or liabilities of the company exist at a given date and recorded transactions have occurred during a given period  
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show existence or occurrence  
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show completeness  
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what is completeness   show
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what is valuation or allocation   show
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show the company holds or controls rights to the assets and liabilities are obligations of the company at a given date  
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what is presentation and disclosure   show
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how would you confirm a company's disclosures for a machine are correct? (presentation and disclosure)   show
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show - inspect purchase invoices - recalculate depreciation expense  
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how would you confirm existence for a company's accounts receivable?   show
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how would you confirm rights and obligations for a company's accounts receivable?   show
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show test the allowance for doubtful accounts  
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why is completeness not a big risk for accounts receivable?   show
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show all the information from whatever source used by the auditor in arriving at the conclusions on which the audit opinion is based  
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show 1. nature of audit evidence 2. sufficiency and appropriateness of audit evidence 3. evaluation of audit evidence  
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what are the different natures of audit evidence you can use?   show
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show measure of the quantity of audit evidence  
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show greater risk of misstatement requires a higher quantity of audit evidence  
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show higher quality audit evidence results in a lower quantity of audit evidence  
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what is appropriateness   show
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what is relevance   show
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show refers to whether a particular type of evidence can be relied upon to signal the true state of an assertion  
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how does the source of the evidence relate to reliability?   show
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how do the effectiveness of internal controls relate to reliability?   show
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show direct observation of evidence is better than evidence obtained indirectly  
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show evidence that is tangible in document form is better than oral representation  
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how do original documents relate to reliability?   show
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show auditor should rely on evidence that is persuasive rather than convincing/conclusive -- auditors can't 100% guarantee their opinion so evidence should point/persuade them in a particular direction  
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show specific acts performed by the auditor to gather evidence about whether specific assertions are being met  
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what is an audit program?   show
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show 1. risk assessment procedures 2. tests of controls 3. substantive procedures  
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what are the 2 parts of substantive procedures?   show
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why is inspection of records and documents important?   show
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show comparing journal/ledger to source documents  
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what direction does tracing/completeness go   show
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what does inspection of tangible assets involve and what assertions does it test   show
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what does observation involve?   show
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what does inquiry involve?   show
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what does confirmation involve?   show
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show determining the mathematical accuracy of documents or records  
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show auditor's independent execution of procedures or controls that were originally performed by company personnel  
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what are examples of accounts that auditors would test with recalculation   show
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show aging of accounts receivable, agreeing total of subsidiary and general ledgers, test counting raw material, tracing billing program price use  
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show evaluations of financial information made by a study of plausible relationships among financial and non financial data  
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show reviewing accounting data to identify significant or unusual items  
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show inspection of tangible assets, reperformanc,e recalculation  
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which 2 evidence types have lower reliability?   show
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show inspection of documents; completeness  
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show recalculation; valuation  
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show inspection; presentation/disclosure  
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show observation; completeness  
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show inquiry; valuation  
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type of audit evidence and assertion: vouch entries in sales journal to sales invoices and related shipping documents   show
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show companies are motivated to understate liabilities  
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why is existence/occurrence a greater risk for an asset account?   show
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what are the 3 functions of audit documentation?   show
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show used to assist the auditor to better understand the business and to plan the nature, timing, and extent of audit procedures  
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show used to obtain evidential matter about particular assertions related to account balances or classes of transactions  
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what is the purpose of final analytical procedures?   show
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show look at sources like financial and operating data, budgets and forecasts, industry publications, competitor information, managements' analyses, analysts' reports  
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how do auditors define tolerable difference   show
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show selecting an item for testing from the accounting records and examining the source documents  
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show selecting a source document and following it into the journal/ledger  
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Created by: graceatnyu