AACA - Final Exam UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Which of the following procedures would an auditor most likely perform to test controls relating to
management's assertion about the completeness of cash receipts for cash sales at a retail outlet?
A. Observe the consistency of the employees' use of cash registers and tapes.
B. Inquire about employees' access to recorded but undeposited cash.
C. Trace deposits in the cash receipts journal to the cash balance in the general ledger.
D. Compare the cash balance in the general ledger with the bank confirmation request. - CORRECT
ANSWER A. Observe the consistency of the employees' use of cash registers and tapes.
To provide assurance that each voucher is submitted and paid only once, an auditor most likely would
examine a sample of paid vouchers and determine whether each voucher is
A. supported by a vendor's invoice.
B. stamped "paid" by the check signer.
C. prenumbered and accounted for.
D. approved for authorized purchases. - CORRECT ANSWER B. stamped "paid" by the check
signer.
The auditor looks for an indication on duplicate sales invoices to see if the invoices have been
verified. This is an example of
A. a test of details of balances.
B. a test of control.
,C. a substantive test of transactions.
D. both a test of control and a substantive test of transactions - CORRECT ANSWER B. a test
of control.
Which of the following controls may prevent the failure to bill customers for some shipments?
A. Each shipment should be supported by a prenumbered sales invoice that is accounted for.
B. Each sales order should be approved by authorized personnel.
C. Sales journal entries should be reconciled to daily sales summaries.
D. Each sales invoice should be supported by a shipping document. - CORRECT ANSWER A.
Each shipment should be supported by a prenumbered sales invoice that is accounted for.
The size of a sample designed for dual-purpose testing should be
A. The larger of the samples that would otherwise have been designed for the two separate purposes.
B. The smaller of the samples that would otherwise have been designed for the two separate purposes.
C. The combined total of the samples that would otherwise have been designed for the two separate
purposes.
D. More than the larger of the samples that would otherwise have been designed for the two separate
purposes, but less than the combined total of the samples that would otherwise have been designed for
the two separate purposes. - CORRECT ANSWER A. The larger of the samples that would
otherwise have been designed for the two separate purposes.
An auditor, who, before the completion of the engagement, is requested to change the engagement to
one which provides a lower level of assurance, should consider the appropriateness of doing so. If the
auditor concludes that there is reasonable justification to change the engagement and if the audit work
performed complies with the PSAs applicable to the changed engagement, the report issued would be
that appropriate for the revised terms of engagement and would include reference to:
I. The original engagement.
II. Any procedures that may have been performed in the original engagement.
A. I only.
B. II only.
C. Both I and II.
,D. Neither I nor II. - CORRECT ANSWER D. Neither I nor II.
An entity installed antivirus software on all its personal computers. The software was designed to
prevent initial infections, stop replication attempts, detect infections after their occurrence, mark
affected system components, and remove viruses from infected components. The major risk in relying
on antivirus software is that it may
A. Consume too many system resources.
B. Interfere with system operations.
C. Not detect certain viruses.
D. Make software installation too complex. - CORRECT ANSWER C. Not detect certain
viruses.
Which of the following procedures relating to the examination of accounts payable could the auditor
delegate entirely to the client's employees?
A. Test footings in the accounts payable ledger.
B. Reconcile unpaid invoices to vendors' statements.
C. Prepare a schedule of accounts payable.
D. Mail confirmations for selected account balances. - CORRECT ANSWER C. Prepare a
schedule of accounts payable.
Which of the following procedures would an auditor most likely perform for year-end accounts
receivable confirmation when the auditor did not receive replies to second requests?
A. Review the cash receipts journal for the month prior to year-end.
B. Intensify the study of internal control concerning the revenue cycle.
C. Increase the assessed level of detection risk for the existence assertion.
D. Inspect the shipping records documenting the merchandise sold to the debtors. - CORRECT
ANSWER D. Inspect the shipping records documenting the merchandise sold to the debtors.
Each time an auditor draws a conclusion based on evidence from a sample, an additional risk,
sampling risk, is introduced. An example of sampling risk is
, A. Improperly applying a proper audit procedure to sample data.
B. Properly applying an improper audit procedure to sample data.
C. Projecting the results of sampling beyond the population tested.
D. Drawing an erroneous conclusion from sample data. - CORRECT ANSWER D. Drawing an
erroneous conclusion from sample data.
Which of the following questions would not appear in an internal control questionnaire relating to
cash disbursements?
A. Are all disbursements except for petty cash made by check?
B. Are imprinted and prenumbered checks used and is a check protection device used in printing the
check amount?
C. Is each check supported by an approved voucher?
D. Are prelistings made of all cash receipts? - CORRECT ANSWER D. Are prelistings made of
all cash receipts?
Which of the following observations, made during the preliminary survey of a local department store's
disbursement cycle, reflects a control strength?
A. Individual department managers use prenumbered forms to order merchandise from vendors.
B. The receiving department is given a copy of the purchase order complete with a description of
goods, quantity ordered, and extended price for all merchandise ordered.
C. The treasurer's office prepares checks for suppliers based on vouchers prepared by the accounts
payable department.
D. Individual department managers are responsible for the movement of merchandise from the
receiving dock to storage or sales areas as appropriate. - CORRECT ANSWER C. The
treasurer's office prepares checks for suppliers based on vouchers prepared by the accounts payable
department.
Which of the following statements is incorrect?
A. When inventory is material to the financial statements, the auditor should obtain sufficient
appropriate audit evidence regarding its existence and condition by attendance at physical inventory
count unless impracticable.
QUESTIONS AND CORRECT ANSWERS
Which of the following procedures would an auditor most likely perform to test controls relating to
management's assertion about the completeness of cash receipts for cash sales at a retail outlet?
A. Observe the consistency of the employees' use of cash registers and tapes.
B. Inquire about employees' access to recorded but undeposited cash.
C. Trace deposits in the cash receipts journal to the cash balance in the general ledger.
D. Compare the cash balance in the general ledger with the bank confirmation request. - CORRECT
ANSWER A. Observe the consistency of the employees' use of cash registers and tapes.
To provide assurance that each voucher is submitted and paid only once, an auditor most likely would
examine a sample of paid vouchers and determine whether each voucher is
A. supported by a vendor's invoice.
B. stamped "paid" by the check signer.
C. prenumbered and accounted for.
D. approved for authorized purchases. - CORRECT ANSWER B. stamped "paid" by the check
signer.
The auditor looks for an indication on duplicate sales invoices to see if the invoices have been
verified. This is an example of
A. a test of details of balances.
B. a test of control.
,C. a substantive test of transactions.
D. both a test of control and a substantive test of transactions - CORRECT ANSWER B. a test
of control.
Which of the following controls may prevent the failure to bill customers for some shipments?
A. Each shipment should be supported by a prenumbered sales invoice that is accounted for.
B. Each sales order should be approved by authorized personnel.
C. Sales journal entries should be reconciled to daily sales summaries.
D. Each sales invoice should be supported by a shipping document. - CORRECT ANSWER A.
Each shipment should be supported by a prenumbered sales invoice that is accounted for.
The size of a sample designed for dual-purpose testing should be
A. The larger of the samples that would otherwise have been designed for the two separate purposes.
B. The smaller of the samples that would otherwise have been designed for the two separate purposes.
C. The combined total of the samples that would otherwise have been designed for the two separate
purposes.
D. More than the larger of the samples that would otherwise have been designed for the two separate
purposes, but less than the combined total of the samples that would otherwise have been designed for
the two separate purposes. - CORRECT ANSWER A. The larger of the samples that would
otherwise have been designed for the two separate purposes.
An auditor, who, before the completion of the engagement, is requested to change the engagement to
one which provides a lower level of assurance, should consider the appropriateness of doing so. If the
auditor concludes that there is reasonable justification to change the engagement and if the audit work
performed complies with the PSAs applicable to the changed engagement, the report issued would be
that appropriate for the revised terms of engagement and would include reference to:
I. The original engagement.
II. Any procedures that may have been performed in the original engagement.
A. I only.
B. II only.
C. Both I and II.
,D. Neither I nor II. - CORRECT ANSWER D. Neither I nor II.
An entity installed antivirus software on all its personal computers. The software was designed to
prevent initial infections, stop replication attempts, detect infections after their occurrence, mark
affected system components, and remove viruses from infected components. The major risk in relying
on antivirus software is that it may
A. Consume too many system resources.
B. Interfere with system operations.
C. Not detect certain viruses.
D. Make software installation too complex. - CORRECT ANSWER C. Not detect certain
viruses.
Which of the following procedures relating to the examination of accounts payable could the auditor
delegate entirely to the client's employees?
A. Test footings in the accounts payable ledger.
B. Reconcile unpaid invoices to vendors' statements.
C. Prepare a schedule of accounts payable.
D. Mail confirmations for selected account balances. - CORRECT ANSWER C. Prepare a
schedule of accounts payable.
Which of the following procedures would an auditor most likely perform for year-end accounts
receivable confirmation when the auditor did not receive replies to second requests?
A. Review the cash receipts journal for the month prior to year-end.
B. Intensify the study of internal control concerning the revenue cycle.
C. Increase the assessed level of detection risk for the existence assertion.
D. Inspect the shipping records documenting the merchandise sold to the debtors. - CORRECT
ANSWER D. Inspect the shipping records documenting the merchandise sold to the debtors.
Each time an auditor draws a conclusion based on evidence from a sample, an additional risk,
sampling risk, is introduced. An example of sampling risk is
, A. Improperly applying a proper audit procedure to sample data.
B. Properly applying an improper audit procedure to sample data.
C. Projecting the results of sampling beyond the population tested.
D. Drawing an erroneous conclusion from sample data. - CORRECT ANSWER D. Drawing an
erroneous conclusion from sample data.
Which of the following questions would not appear in an internal control questionnaire relating to
cash disbursements?
A. Are all disbursements except for petty cash made by check?
B. Are imprinted and prenumbered checks used and is a check protection device used in printing the
check amount?
C. Is each check supported by an approved voucher?
D. Are prelistings made of all cash receipts? - CORRECT ANSWER D. Are prelistings made of
all cash receipts?
Which of the following observations, made during the preliminary survey of a local department store's
disbursement cycle, reflects a control strength?
A. Individual department managers use prenumbered forms to order merchandise from vendors.
B. The receiving department is given a copy of the purchase order complete with a description of
goods, quantity ordered, and extended price for all merchandise ordered.
C. The treasurer's office prepares checks for suppliers based on vouchers prepared by the accounts
payable department.
D. Individual department managers are responsible for the movement of merchandise from the
receiving dock to storage or sales areas as appropriate. - CORRECT ANSWER C. The
treasurer's office prepares checks for suppliers based on vouchers prepared by the accounts payable
department.
Which of the following statements is incorrect?
A. When inventory is material to the financial statements, the auditor should obtain sufficient
appropriate audit evidence regarding its existence and condition by attendance at physical inventory
count unless impracticable.
