MCQS

1 The dependent variable in regression analysis is:

a the item to be predicted or the account being audited.

b normally identified as an external factor.

c not required for all applications of regression analysis.

d the item known to be the predictor.

2

When testing the operating effectiveness of controls pertaining to the function of the recording of sales, the auditor may vouch recorded sales to supporting documents. The vouching of recorded sales to supporting documents pertains to the audit objective of

a existence or occurrence.

b rights and obligations.

c accuracy, valuation, and allocation.

d all of the above.

3 An auditor has been performing an audit on ABC Company for the past five years. During the current year audit, what procedure is the auditor likely to perform to verify securities purchased in the prior fiscal year?

a Inquire of legal counsel as to the date of purchase

b Verify certificate number and name of owner on supporting documentation

c Recalculate the balance in the investment account

d Compare details to previous years working papers

4

Which check could not be carried out for securities held by a client?

a check against records in the investment register.

b check of paper certificate of legal title for securities held in listed companies.

c check with the bank of securities held in safety deposit boxes.

d check with confirmation for securities held by outsiders.

5 If an auditor finds an error in the current years financial statements, the error

a Will be added to a working paper where the aggregate effect of all errors will be considered.

b Will be ignored if the error is unintentional.

c Must be corrected by making an entry in the accounting records.

d Will be considered for this years audit and ignored in any future audits.