Please answer all

11. Consider the following statements:

I. Conceptually, the auditor will do enough audit work in an

account to discover misstatements which individually, or

in total exceed the amount of materiality considered of

the financial statements taken as a whole.

II. Tolerable Misstatement is the amount of planning

materiality that is allocated to an account or class of

transactions.

a. I is true; II is true.

b. I is true; II is false.

c. I is false; II is true.

d. I is false; II is false.

12. Consider the following statements:

I. Analytical procedures can be used in the preliminary

phase of an audit to suggest areas, or accounts which

should receive more attention during the audit.

II. If one is looking for The lack of expected fluctuations,

then one would tend to believe that the current years

results will look similar to the past years results.

a. I is true; II is true.

b. I is true; II is false.

c. I is false; II is true.

d. I is false; II is false.

13. In class we discussed the following example:

Year 3 Year 2 Year 1

Unaudited

Current ratio 5 3 3

In the beginning stage of an auditor, the above ratio might suggest to the auditor which of the following:

a. The companys financial picture has improved.

b. Some current assets might be UNDERstated.

c. Some current liabilities might be OVERstated.

d. Some current liabilities might be UNDERstated

14. The balance in the building account is being audited for year 2.

The account was audited last year and the auditor agreed the

beginning balance for year 2 to the previous year. As discussed

in class, the auditor will likely:

a. Test the Beginning Balance, Test Additions, and Deductions

from the account.

b. Test the Beginning balance and test the Ending Balance of the

account.

c. Test Additions and Deductions from the account.

d. Test Additions, Deductions and the Ending Balance of the

account.