Strayer ACC 403 Week 11 Final Exam Part 2 NEW
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1. The audit procedure referred to as proof of cash receipts is particularly useful to test:
2. Which of the following is an account that is not affected by the sales and collection cycle?
3. The ________ is a contract between a carrier (e.g., a trucking company) and the seller of goods that dictates the details surrounding the shipment of goods.
4. Who is generally responsible for opening receipts when a company uses a lockbox to speed the handling of cash receipts?
5. What event initiates a transaction in the sales and collection cycle?
6. Auditors often use the ________ to determine the estimated population exception rate.
7. Which of the following occurrences would be least likely to warrant further audit attention for the auditor?
8. The most serious shortcoming of the haphazard sample selection method is:
9. A sample in which every possible combination of items in the population has an equal chance of constituting the sample is a:
10. One of the causes of nonsampling risk is:
11. Communication addressed to the debtor requesting him or her to confirm whether the balance as stated on the communication is correct or incorrect is a:
12. For most audits, a proper cash receipts cutoff is less important than the sales cutoff because the improper cutoff of cash:
13. The audit procedure that provides the auditor with the most appropriate evidence when performing test of details of balances for accounts receivable is:
14. Confirmation of accounts receivable selected from the trial balance is the most common test of details of balances for the ________ of accounts receivable.
15. Which of the following is likely to be determined first when performing tests of details for accounts receivable?
16. In estimating the population misstatement, the first step in projecting from the sample to the population is to:
17. You are auditing Nelson and Company and determined that the sample results support a conclusion that the account is materially misstated, when in fact it was not misstated. This illustrates the risk of:
18. If an auditor concludes that internal controls are likely to be effective, the preliminary assessment of control risk can be reduced, leading to which of the following impacts on the acceptable risk of incorrect acceptance?
19. The client’s trial balance has a balance of $410,000 for merchandise inventory. As the auditor you are willing to accept a balance that is within $20,000 of either side of the recorded balance. You compute a 95% confidence interval of $395,000 to $425,000. You could therefore:
20. The allowance for sampling risk when no misstatements are found in the sample is:
21. Inventory is a complex area to audit for all but which of the following reasons?
22. ________ is normally characterized as a difficult and complex account to audit.
23. If an auditor were concerned with obtaining evidence about the appropriateness of the value of inventory, which of the following tests would be most appropriate?
24. When labor is a significant part of inventory, verifying the proper accounting of these costs should be tested in the:
25. Comparing the physical counts with the perpetual inventory master files satisfies the balance-related audit objective of:
26. When should auditors generally assess a client’s ability to continue as a going concern?
27. The letter of representation obtained from an audit client should be:
28. After the balance sheet date, but prior to the issuance of the audit report, the client suffers an uninsured loss of their inventory as a result of a fire. The amount of the loss is material. The auditor should:
29. Refusal by a client to prepare and sign the representation letter would require the auditor to issue a:
30. When using the probability threshold for contingencies, the likelihood of the occurrence of the event is classified as