Which of the following concepts are pervasive in the application of auditing standards?
Auditing Exam 2 (Chap 4,5,6)

Quiz
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Mathematics
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University
•
Easy
Alaysha Drake
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36 questions
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1.
MULTIPLE CHOICE QUESTION
15 mins • 1 pt
control risk
expected misstatement
internal control
materiality and audit risk
2.
MULTIPLE CHOICE QUESTION
15 mins • 1 pt
The existence of audit risk is recognized by the statement in the auditor’s standard report that the auditor:
realizes that some matters, either individually or in the aggregate, are important, while other matters are not important.
is responsible for expressing an opinion on the financial statements, which are the responsibility of management.
obtains reasonable assurance about whether the financial statements are free of material misstatement.
assesses the accounting principles used and evaluates the overall financial statement presentation.
3.
MULTIPLE CHOICE QUESTION
15 mins • 1 pt
Risk of material misstatement refers to a combination of which two components of the audit risk model?
audit risk and control risk
audit risk and inherent risk
control risk and detection risk
inherent risk and control risk
4.
MULTIPLE CHOICE QUESTION
15 mins • 1 pt
As lower acceptable levels of both audit risk and materiality are established, the auditor should plan more work on individual accounts to:
decrease the risk of overreliance.
increase the tolerable misstatements in the accounts.
find smaller errors.
find larger errors.
5.
MULTIPLE CHOICE QUESTION
15 mins • 1 pt
Which of the following characteristics most likely would heighten an auditor’s concern about the risk of intentional manipulation of financial statements?
Turnover of senior accounting personnel is low.
The rate of change in the entity’s industry is slow.
Insiders recently purchased additional shares of the entity’s stock.
Management places substantial emphasis on meeting earnings projections.
6.
MULTIPLE CHOICE QUESTION
15 mins • 1 pt
Which of the following is a misappropriation of assets?
Management estimates bad debt expense as 2 percent of sales when it actually expects bad debts equal to 10 percent of sales.
An employee of a consumer electronics store steals 12 CD players.
Classifying inventory held for resale as supplies.
Investing cash and earning at a 3 percent rate of return as opposed to paying off a loan with an interest rate of 7 percent.
7.
MULTIPLE CHOICE QUESTION
15 mins • 1 pt
Auditing standards require auditors to make certain inquiries of management regarding fraud. Which of the following inquiries is required?
management’s attitude about hiring ethical employees
management’s attitudes toward regulatory authorities
whether management has ever intentionally violated the securities laws
whether management has any knowledge of fraud that has been perpetrated on or within the entity
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