Question 1. Which of the following is a substantive test, Test A or Test B? Test A:

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Question 1. Which of the following is a substantive test, Test A or Test B?

Test A: Select a sample of transactions form the Purchases Journal and verify that the goods had been received.

Test B: Select a sample of transactions form the Purchases Journal and verify that the corresponding Purchase Orders had been approved.

Answer: (Test A/ Test B) is a substantive test.

Question 2. Select the audit procedure that is least likely to be applied in a substantive test.

The audit procedure least likely to be used in a substantive test is (Analytical procedure/ Inquiry/ Inspection/ Observation).

Question 3. A dual-purpose test comprises both a substantive test of a balance and a substantive test of a transaction. (true/false).

Question 4.

An auditor can test the valuation of inventory by comparing: (A) the sales price of the inventory with (B) the carrying amount of the inventory plus the costs of selling the inventory.

(true/false).

Question 5. A negative Debtor Confirmation is one in which the debtor does not agree with balance recorded by the client. (true/false).

Question 6. An “out of period liability search” is performed in relation to the cut-off assertion. (true/ false).

Question 7.

When performing an alternative test when there is a non-response to a debtor’s confirmation, which method of evidence collection would you use?

Answer: The method of evidence collection is (sampling/ specific identification/ 100% testing).

Question 8. Which assertion is tested when the auditor recomputes the depreciation expense when auditing property, plant and equipment.

Answer: The assertion that is tested is (Accuracy, Valuation and allocation / Classification/ Completeness/ Existence/ Presentation/ Rights and Obligations).