Final Review Questions
Assume that the audit team notes the client has made a significant change in its product line which requires that new equipment be purchased. Which of the following would be of greatest concern to the auditor?
A. Inappropriate book value of new equipment.
B. Impaired value of new equipment.
C. Impaired value of old equipment.
D. Inappropriate depreciation calculation for new equipment.
Audit procedures should be proportional to which of the following?
The assessed Risks
Size of the Client
Size of the Firm
The Assessed misstatements
Which of the following assertions are usually the two most relevant assertions related to longlived assets?
A. Existence and Presentation
B. Completeness and Existence
C. Existence and Valuation
D. Valuation and Completeness
In a tour of a client's manufacturing facility, the auditor is most likely attempting to satisfy which of the following management assertions related to longlived assets?
D. Presentation and disclosure
Which one of the following factors is not an inherent risk associated with longlived assets?
A. Obsolescence of assets
B. Impairment of assets
C. Incomplete recording of disposals
D. Lack of physical controls over longlived assets
What is the primary reason for management's ability to easily overvalue inventory without rapid detection by auditors?
A. The limited volume of transactions in the inventory accounts
B. The auditor's assessment of inventory as a lowrisk area. C. Complexity in the valuation of inventory.
D. Consideration by the auditor of nonfinancial indicators of inventory fraud
Bar code scanning may best be utilized in the receiving process to accomplish which of the following?
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