Auditing and Assurance Services CH 2
A. - (correct Answer) - 2.26 Which of the following categories of principles is most closely related to
gathering audit evidence?
a. Performance.
b. Reasonable assurance.
c. Reporting.
d. Responsibilities.
D. - (correct Answer) - 2.27 Which of the following is not related to ethical requirements of auditors?
a. Due care.
b. Independence in appearance.
c. Independence in fact.
d. Professional judgment.
B. - (correct Answer) - 2.28 One of an accounting firm's basic objectives is to provide professional
services that conform to professional standards. Reasonable assurance of achieving this objective can be
obtained by following
a. Generally accepted auditing standards.
b. Standards within a system of quality control.
c. Generally accepted accounting principles.
d. International auditing standards.
C. - (correct Answer) - 2.29 Which of the following best demonstrates the concept of professional
skepticism?
a. Relying more extensively on external evidence rather than internal evidence.
b. Focusing on items that have a more significant quantitative effect on the entity's financial statements.
c. Critically assessing verbal evidence received from the entity's management.
d. Evaluating potential financial interests held by auditors in the client.
A. - (correct Answer) - 2.30 The primary purpose for obtaining an understanding of the entity's
environment (including its internal control) in a financial statement audit is
a. To determine the nature, timing, and extent of substantive procedures to be performed.
, b. To make consulting suggestions to the entity's management.
c. To obtain direct sufficient appropriate audit evidence to afford a reasonable basis for an opinion on
the financial statements.
d. To determine whether the entity has changed any accounting principles.
B. - (correct Answer) - 2.31 Ordinarily, what source of evidence should least affect audit conclusions?
a. External documentary evidence.
b. Inquiry of management.
c. Documentation prepared by the audit team.
d. Inquiry of entity legal counsel.
D. - (correct Answer) - 2.32 The most reliable evidence regarding the existence of newly-acquired
computer equipment is
a. Inquiry of management.
b. Documentation prepared externally.
c. Evaluation of the client's procedures.
d. Physical observation.
D. - (correct Answer) - 2.33 Which of the following procedures would provide the most reliable audit
evidence?
a. Inquiries of the client's internal audit staff.
b. Inspection of prenumbered client purchase orders filed in the vouchers payable department.
c. Inspection of vendor sales invoices received from client personnel.
d. Inspection of bank statements obtained directly from the client's financial institution.
C. - (correct Answer) - 2.34 Breaux & Co. CPAs require that all audit documentation indicate the identity
of the preparer and the reviewer. This procedure provides evidence relating to which of the following?
a. Independence.
b. Adequate competence and capabilities.
c. Adequate planning and supervision.
d. Gathering sufficient appropriate evidence.
D. - (correct Answer) - 2.35 Which of the following concepts is least related to the standard of due care?
a. Independence in fact.
A. - (correct Answer) - 2.26 Which of the following categories of principles is most closely related to
gathering audit evidence?
a. Performance.
b. Reasonable assurance.
c. Reporting.
d. Responsibilities.
D. - (correct Answer) - 2.27 Which of the following is not related to ethical requirements of auditors?
a. Due care.
b. Independence in appearance.
c. Independence in fact.
d. Professional judgment.
B. - (correct Answer) - 2.28 One of an accounting firm's basic objectives is to provide professional
services that conform to professional standards. Reasonable assurance of achieving this objective can be
obtained by following
a. Generally accepted auditing standards.
b. Standards within a system of quality control.
c. Generally accepted accounting principles.
d. International auditing standards.
C. - (correct Answer) - 2.29 Which of the following best demonstrates the concept of professional
skepticism?
a. Relying more extensively on external evidence rather than internal evidence.
b. Focusing on items that have a more significant quantitative effect on the entity's financial statements.
c. Critically assessing verbal evidence received from the entity's management.
d. Evaluating potential financial interests held by auditors in the client.
A. - (correct Answer) - 2.30 The primary purpose for obtaining an understanding of the entity's
environment (including its internal control) in a financial statement audit is
a. To determine the nature, timing, and extent of substantive procedures to be performed.
, b. To make consulting suggestions to the entity's management.
c. To obtain direct sufficient appropriate audit evidence to afford a reasonable basis for an opinion on
the financial statements.
d. To determine whether the entity has changed any accounting principles.
B. - (correct Answer) - 2.31 Ordinarily, what source of evidence should least affect audit conclusions?
a. External documentary evidence.
b. Inquiry of management.
c. Documentation prepared by the audit team.
d. Inquiry of entity legal counsel.
D. - (correct Answer) - 2.32 The most reliable evidence regarding the existence of newly-acquired
computer equipment is
a. Inquiry of management.
b. Documentation prepared externally.
c. Evaluation of the client's procedures.
d. Physical observation.
D. - (correct Answer) - 2.33 Which of the following procedures would provide the most reliable audit
evidence?
a. Inquiries of the client's internal audit staff.
b. Inspection of prenumbered client purchase orders filed in the vouchers payable department.
c. Inspection of vendor sales invoices received from client personnel.
d. Inspection of bank statements obtained directly from the client's financial institution.
C. - (correct Answer) - 2.34 Breaux & Co. CPAs require that all audit documentation indicate the identity
of the preparer and the reviewer. This procedure provides evidence relating to which of the following?
a. Independence.
b. Adequate competence and capabilities.
c. Adequate planning and supervision.
d. Gathering sufficient appropriate evidence.
D. - (correct Answer) - 2.35 Which of the following concepts is least related to the standard of due care?
a. Independence in fact.
