ACC 241 Chap011. COMPREHENSIVE QUESTIONS BANK. GRADED A+ DOC

True / False Questions 1. Interim testing is ordinarily done prior to the date of the financial statements. True False 2. Auditors are not responsible for evaluating the accuracy of management's estimates but the rea ...

True / False Questions 1. Interim testing is ordinarily done prior to the date of the financial statements. True False 2. Auditors are not responsible for evaluating the accuracy of management's estimates but the reasonableness of those estimates. True False 3. While useful, analytical procedures are not required in the final review stages of the audit. True False 4. The existence of "miscellaneous" revenue or expense accounts may signal the practice of earnings management. True False 5. Auditors' initial source of information about litigation, claims, and assessments is the client's attorney. True False 6. The auditor ordinarily requests the attorney letter directly from the attorneys. True False 7. Attorneys should always provide a dollar estimate of the amount of potential loss for items included in the attorney letter. True False 8. If the attorney's views differ from information provided in the attorney letter, the attorney is not expected to provide additional explanation to auditors. True False 9. A primary purpose of obtaining written representations is for management to acknowledge their responsibility for the fairness of the financial statements. True False 10.Written representations should be dated as of the date of the financial statements. True False 11. If the client refuses to provide written representations, auditors should issue either a qualified opinion or adverse opinion, depending on the importance of the omission. True False 12.The chief executive officer, chief financial officer, or other executive-level client personnel should sign written representations. True False 13.It is ultimately the client's responsibility for adjusting the financial statements for matters identified during the audit. True False 14.The engagement quality review of audit documentation by a different partner focuses on whether all appropriate steps in the audit were performed and whether the referencing among all audit documentation is clear. True False 15.Roll-forward procedures are normally conducted prior to the date of the financial statements. True False 16.Reviewing the latest interim financial statements is one method of identifying subsequent events. True False 17.Subsequent events may provide additional information about a condition that existed at the date of the financial statements. True False 18.Subsequently discovered facts are matters identified by auditors after the date of the financial statements but prior to the date of the auditors' report. True False 19.If a necessary audit procedure has been omitted, auditors should first identify whether individuals are currently relying on the client's financial statements and auditors' reports. True False 20.Auditors' communications with the individuals charged with governance of the client can be provided either during the audit or at the conclusion of the audit. True False Multiple Choice Questions 21. Which of the following events or activities may occur following the audit report release date? A . Interim testing. B. Roll-forward work. C. Subsequent events. D. Subsequently discovered facts. 22. Interim testing normally occurs between what two dates? A. Beginning of the year uaudit and audit report redate. B. Date of the financial statements and audit report releaC. Beginning of the year under audit and date of the finaD. End of the year under audit and date of the auditors' r23. Roll-forward work normally occurs between what two dates? A. Beginning of the year uaudit and audit report redate. B. Date of the financial statements and audit report releaC. Beginning of the year under audit and date of the finaD. Date of the financial statements and date of the audito24. For which of the following objectives would auditors be least likely to use analytical procedures in the completion stages of the audit? A. Obtaining eviderelated to accoutransactions. B. Evaluating the adequacy of evidence gathered in respaccount balances. C. Identifying unusual or unexpected account balances oaccount balances that were not identified during the aD. Evaluating the adequacy of evidence gathered in resprelationships among account balances. 25. Which of the following best describes the auditors' responsibility with respect to management's estimates? A. Verifying the mathemataccuracy of managemeestimates. B. Assessing the likelihood that actual results will be conmanagement's estimates. C. Evaluating the reasonableness of management's estimD. Identifying how the entity's failure to achieve manageminfluence users' decisions. 26. Which of the following would not ordinarily be considered when using analytical procedures to verify the overall reasonableness of revenue and expense accounts? A. Current-year recorded (unaudited) balances. B. Expected balances using a statistical analysis or relataccounts. C. Internal budgets and reports. D. Prior-year balances. 27. Why should auditors be particularly concerned with "miscellaneous" "other," and "clearing" accounts classified as revenues or expenses? A. These accounts are likelyrelate to going-concern matters. B. These accounts are often more difficult to audit using procedures. C. These accounts may represent attempts of earnings mD. These accounts are likely to require the assistance of 28. Which of the following is the most effective method of identifying potential earnings management attempts? A. Analytical procedures. B. Detailed substantive procedures. C. Inquiry of client management and key financial personD. Scanning accounts for unusual items. 29. An important method used by auditors to learn of material contingencies is A. Examining documpossession conceB. Inquiring and discussing them with management. C. Obtaining responses to an attorney letter. D. Confirming accounts receivable with the client's custo 30. Which of the following procedures is not used in auditors' examination of litigation, claims, and assessments? A. Obtaining a deslitigation, claimsmanagement. B. Examining documentary evidence regarding litigation,assessments. C. Reading minutes of meetings of stockholders, directorcommittees. D. Performing analytical procedures. 31. Which of the following is typically not included in the inquiry letter sent to the client's attorneys? A. A disclaimer regardiof settlement of penB. A listing of pending or threatened litigation, claims, or C. An evaluation of the likelihood of an unfavorable outcoD. An estimate of the range of potential loss. 32. Which party should request a letter regarding litigation, claims, and assessments from the client's attorney? A. Attor ney. B. Auditors. C. Client. D. Securities and Exchange Commission or other regula33. To whom should written representations be addressed? A. Audit ors. B. Board of directors.