SOLVED

Learning Objective 13-2 1) In order to promote audit efficiency the auditor considers cost in selecting audit tests to perform. Which of the following audit tests would be the most costly? A) Analytical Procedures B) Risk Assessment Procedures C) Tests of Controls D) Tests of Details of Balances A) indicates a financial statement misstatement. B) indicates that a financial statement misstatement may be likely. C) indicates that the financial statements are misstated. D) indicates that an adverse opinion is warrarnted on the Audit of Internal Control. 3) If no material differences are found using analytical procedures and the auditor concludes that misstatements are not likely to have occurred: A) other substantive tests may be reduced. B) it will be necessary to increase the tests of balances. C) it will not be necessary to perform tests of balances. D) it will be necessary to increase the tests of transactions. 4) Which of the following audit tests is usually the most costly to perform? A) Analytical procedures B) Tests of controls C) Tests of balances D) Substantive tests of transactions 5) An increased extent of tests of controls is most likely to occur when: A) it is a first-year audit. B) the auditor is doing a “fraud audit.” C) controls are effective and the preliminary control risk assessment is low. D) controls are ineffective and the preliminary control risk assessment is high. 6) When an auditor believes that analytical procedures indicate a reasonable possibility of misstatement, the auditor usually would: A) Perform additional tests of controls Decide to modify tests of details of balances Yes Yes B) Perform additional tests of controls Decide to modify tests of details of balances No No C) Perform additional tests of controls Decide to modify tests of details of balances Yes No D) Perform additional tests of controls Decide to modify tests of details of balances No Yes 7) If the results of the tests of controls, substantive tests of transactions, and analytical procedures are not consistent with the predictions, tests of details of balances will be: A) eliminated. B) increased. C) unaffected. D) changed. 8) The auditor would design which of the following audit tests to detect possible monetary errors in the financial statements? A) Control tests B) Analytical procedures C) Risk assessment procedures D) Tests of operating effectives of controls over revenue and cash 9) The reliance the auditor places on substantive tests in relation to the reliance placed on internal control varies in a relationship that is ordinarily: A) parallel. B) inverse. C) direct. D) equal. 10)Â A deficiency uncovered in the audit of internal control is explained by which of the following in relation to a financial statement misstatement? A) the amount of the misstatement B) the likelihood of the misstatement C) the amount, likelihood, and classification of the misstatement D) the amount and the classification of the misstatement