Help! Didn't do so well the first attempt. I have until midnight on Friday to try again.

Quiz Note: It is recommended that you save your response as you complete each question. Question 1 (2 points) Which of the following statements best describes the concept of sampling risk? Question 1 options: The sample may not be representative of the population as a whole. An auditor may select inappropriate audit procedures when testing the sampled items. Errors in the sampled documents may not be recognized by the auditor. The client may not be able to produce the documents related to the sampled items. Question 2 (2 points) An auditor used statistical sampling when performing a substantive test of details during an audit. The results of the tests supported the conclusion that the account balance was materially misstated. The balance in the account was, in fact, not materially misstated. This is an example of the risk of Question 2 options: incorrect rejection incorrect acceptance assessing control risk too high assessing control risk too low. Question 3 (2 points) If all other factors remain unchanged in a test of controls, an increase in the tolerable error rate will have what effect on the sample size under statistical sampling? Question 3 options: Increase the sample size Decrease the sample size Have no effect on the sample size Question 4 (2 points) The expected deviation rate exceeds the tolerable deviation rate in a financial statement audit. The auditor would most likely Question 4 options: increase the sample size set control risk at maximum and not test the control test the control to determine the control risk Question 5 (2 points) The auditor selected 25 receiving reports to test for the receiving clerk's signature of approval. One of the receiving reports can not be found. The auditor should: Question 5 options: evaluate the sample based on the 24 tested reports treat the missing report as a deviation (i.e. assume the report was NOT properly approved). treat the missing report as if it was similar to the other tested reports. choose another receiving report as a replacement. Question 6 (10 points) Match the substantive audit procedure to the assertion being tested. (More than one audit procedure can be used to test the same assertion.) The procedures all relate to the sales cycle. Question 6 options: Select a sample of invoices issued during the last 5 days of the year and agree the invoices to the packing slip as to date, description, and quantity. Review the accounts receivable aging report and discuss balances over 90 days past due with the accounting manager. Select a sample invoices issued during the first 5 days after year end and agree the invoices to the packing slip as to date, description, and quantity. Review loan agreements to determine whether receivables are pledged as security. Obtain a listing of revenues (by customer) for the year. Determine whether sales to any customers represent more than 5% of total 1. Existence/Occurence. 2. Completeness 3. Valuation sales for the year. 4. Presentation/Disclosure 5. Rights/Obligations Question 7 (5 points) Which of the following steps should be performed by the auditor as part of the accounts receivable confirmation process? (Select all that apply.) Question 7 options: Select the customers to be confirmed. Prepare the confirmation letters. Sign the confirmation letters Mail the confirmations Receive the confirmation responses Question 8 (2 points) Which of the following customer responses to an accounts receivable confirmation would cause an auditor the most concern? (The balance sheet date is December 31.) Question 8 options: We sent the check on December 30th. We didn't receive the products until January 2nd. We returned the items on December 1st. The balance stated doesn't include the early payment discount we plan to take when we pay the bill on January 3rd. Question 9 (6 points) Match the question on the internal control questionnaire for the acquisition cycle to the appropriate assertion. Question 9 options: Are vendor invoices matched to purchase orders and receiving reports before being entered into the system? Are vendor statements reconciled to accounts payable ledgers? 1. Occurence/Existence 2. Completeness Are unmatched receiving reports reviewed periodically? 3. Valuation 4. Presentation/Disclosure Question 10 (2 points) Which of the following procedures would not be effective for testing accounts payable at 12/31, the balance sheet date? Question 10 options: Reviewing payments made to vendors in the first two weeks of January. Reviewing payments made to vendors in the last two weeks of December. Reviewing vendor invoices recorded in the first two weeks of January. Reviewing open purchase orders (purchase orders not yet matched to a vendor invoice). Question 11 (2 points) The balance in A/P at year end was reported by the client as $1,500,000. The auditor decided to send confirmations to vendors as follows: 1. Confirmations were sent to all vendors with balances greater than $50,000 for a total of $200,000. No misstatements were found. 2. Of the remaining $1,300,000 in A/P, the auditor selected 20 vendor balances (totaling $400,000) to confirm. Misstatements of $3,000 were found in the sampled population. Calculate the projected misstatement in A/P. (Use commas, no decimals, no $ sign.) Question 11 options: Question 12 (2 points) As part of the audit of property, plant, and equipment, the auditor selected a number of additions to review. One of the invoices selected was issued by the vendor for the cost to repair some factory equipment. Based solely on this test, the auditor can conclude that ____________. Question 12 options: Property, Plant, and Equipment is fairly stated. Property, Plant, and Equipment is overstated. Property, Plant, and Equipment is understated. Repairs expense is overstated. Question 13 (2 points) The audit client wrote a check two days before year end. The check was not recorded. This would most likely be discovered by the auditor when the ______. Question 13 options: check register for the last month of the year is reviewed cutoff bank statement is reconciled to the bank reconciliation bank confirmation is reviewd when the auditor performs a search for unrecorded liabilities. Question 14 (2 points) Substantive procedures for cash would not include: Question 14 options: Request a cutoff bank statement be mailed to the auditor. Prepare the bank reconciliation. Review interbank transfers made during the period ten business days before and ten days after year-end. Confirm the bank balance as of the balance sheet date with the bank. Question 15 (2 points) Which assertion is this audit procedure testing? Select a sample of items on the final inventory listing. Agree the unit price to a vendor invoice and clerically check the final costed amount. Question 15 options: Existence Completeness Valuation Rights and Obligations Presentation and Disclosure Question 16 (4 points) Match the audit procedure performed during the observation of physical inventory to the assertion being tested. Question 16 options: Trace a sample of items in the finished goods warehouse to the count sheet as to quantity and description. 1. Existence Trace a sample of items on the count sheet to the finished goods warehouse as to quantity and description. 2. Completeness 3. Valuation Question 17 (2 points) Substantive tests in the payroll cycle would most likely include all of the following procedures except: Question 17 options: Comparison of the ratio of payroll tax expense to salaries expense to prior years. Recalculation of accrued payroll liabilities. Tracing payments of federal and state payroll tax withholdings remitted in the subsequent period to the balance sheet amounts. Tracing all paychecks issued during the year to timesheets. Question 18 (2 points) Which of the following would not be considered a major risk in the payroll cycle to the auditor of a manufacturing company? Question 18 options: Payments are made to fictitious employees. Non-manufacturing labor is debited to Work In Process A new manufacturing company opens locally and offers higher salaries to factory workers. Payroll checks are distributed by the person responsible for creating the paychecks. Question 19 (10 points) Indicate whether the following statements are true or false. (HINT: To be true, it must always be true.) Question 19 options: Substantive analytical procedures could not be used in the audit or property, plant, and equipment. Misstatements found in populations tested 100% must be extrapolated to the total account balance. Statistical sampling is not required under generally accepted auditing standards. Comparing budgeted sales to actual sales (by product) may provide evidence of slow-moving or obsolete inventory Multiplying the balance in N/P at the balance sheet date by the client's borrowing rate 1. True and comparing that amount to interest expense would provide strong evidence that all debt was properly recorded. 2. False