LONG QUIZ
1ST PERIOD
NAME ____________________________________
ACC 139 SET A
PART I. TRUE OR FALSE
Write TRUE if the statement is TRUE, otherwise, write FALSE
_____________1. The auditor should conduct an audit in accordance with Philippine
Standards on Auditing.
_____________2. In order to retain public confidence in the credibility of the auditors’
work, auditors’ work, auditors must adhere to standards of ethical conduct that embody
and demonstrate integrity, objectivity, and concern for the public rather than self-
interest
_____________3. When the auditor believes that material error or fraud exists, he/she
should request the management to revise the financial statements. Otherwise, the auditor
will express a qualified opinion or adverse opinion.
_____________4. Auditors can be classified as external auditors and internal auditors
according to their affiliation with the entity being examined.
_____________5. The auditor is responsible for the identification an disclosure of related
parties and transactions with such parties.
_____________6. Gathering evidence and minimizing costs are equally important
considerations that affect the approach the auditor selects.
_____________7. Sufficient appropriate evidence must be accumulated to meet the
auditor’s professional responsibility.
_____________8. When auditor uses tracing as an audit procedure for tests of
transactions, the auditor is primarily concerned with completeness.
_____________9. Materiality is a matter of professional judgment and necessarily involves
quantitative factors (amount of the item in relation to the financial statements) and
qualitative factors (the nature of misstatement)
_____________10. Fair presentation of financial statements is an implicit part of the
auditor’s responsibility.
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1ST PERIOD
PART II. MULTIPLE CHOICE
Encircle the best answer on each item
1. Professional scepticism dictates that when management makes a statement to the
auditors, the auditors should
a. Require that the statement be out in writing
b. Disregard the statement because it ranks low of the evidence quality scale
c. Corroborate the evidence with other supporting documentation whenever
possible.
d. Believe on the statement in order to maintain the professional client-
auditor relationship
2. An audit of financial statement is conducted to determine if the
a. Organization is operating efficiently and effectively
b. Auditee is following specific procedures are rules set down by some higher
authority
c. Overall financial statements are stated in accordance with the applicable
financial reporting framework
d. Client’s internal control is functioning as intended
3. Most of the independent auditor’s work in formulating an opinion on financial
statements consists of
a. Obtaining and examining evidence
b. Examining cash transactions
c. Comparing recorded accountability with assets
d. Studying and evaluating internal control
4. In financial statement audits, the audit process should be conducted in accordance
with
a. Audit program
b. Philippine Standards on Auditing
c. Philippine Accounting Standards
d. Philippine Financial Reporting Standards
5. Which of the following types of audit uses laws and regulations as its criteria?
a. Operational audit
b. Financial statement Audit
c. Compliance Audit
d. Performance Audit
6. Which of the following has the primary responsibility for the fairness of the
representations made in the financial statements?
a. Client’s management
b. Audit Committee
c. Independent auditor
d. Board of Accountancy
7. Audit standards requires an auditor to:
a. Perform procedures that are designed to detect all instances of fraud
b. Provide reasonable assurance that the financial statements are not
materially misstated
c. Issue an unmodified opinion only when the auditor is satisfied that no
instances of fraud have occurred
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d. Design the audit program to meet financial statement users’ expectations
concerning fraud
8. The auditor is not liable to his client for
a. Negligence
b. Fraud
c. Dishonesty
d. Errors in application of judgment
9. Which of the following management assertions is not associated with transaction-
related audit objectives?
a. Occurrence
b. Classification and understandability
c. Accuracy
d. Completeness
10. An assertion that transactions are recorded In the proper accounting period is:
a. Classification
b. Accuracy
c. Occurrence
d. Cut-off
11. The auditor is determining that the recorded sales are for the amount of goods
shipped are correctly billed and recorded. The auditor is gathering evidence about
which transaction related audit objective?
a. Existence
b. Completeness
c. Accuracy
d. Cut-off
12. When the auditor examines the client’s documents and records to substantiate
information on the financial statements, it is commonly referred as
a. Inquiry
b. Confirmation
c. Vouching
d. Physical examination
13. Traditionally, confirmations are used to verify
a. Individual transactions between organizations, such as sales transactions
b. Bank balances and accounts receivables
c. Fixed asset additions
d. All three of the above
14. Inherent risk is _______ related to detection risk and ________ related to the
amount of audit evidence
a. Directly, inversely
b. Directly, directly
c. Inversely, inversely
d. Inversely, directly
15. Inherent risk and control risk
a. Are inversely related to each other
b. Are inversely related to detection risk
c. Are directly related to detection risk
d. Are directly related to audit risk
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16. If an auditor established a relatively high level of materiality, then the auditor will:
a. Accumulate more evidence than if a lower level had been set
b. Accumulate less evidence than if a lower level had been set
c. Accumulate approximately the same evidence as would be the case were
materiality lower
d. Accumulate an undetermined amount of evidence
17. An intentional act by one or more individuals among management, employees, or
third parties which results in misrepresentation of financial statements refers to
a. Error
b. Noncompliance
c. Fraud
d. Illegal acts
18. The factor which distinguishes an error from fraud is
a. Materiality
b. Intent
c. Whether it is peso amount or a process
d. Whether it is a caused by the auditor or the client
19. Professional scepticism requires auditors to possess a ______________ mind.
a. Introspective
b. Questioning
c. Intelligent
d. Unbelieving
20. Management assertions are:
a. Directly related to the financial reporting framework used by the company
b. Stated in the footnotes to the financial statements
c. Explicitly expressed representations about the company’s financial
condition
d. Provided to the auditor in the assertions letter, but are not disclosed on the
financial statements
21. Which of the following does not relate to balances at period end?
a. Existence
b. Occurrence
c. Valuation and allocation
d. Rights and obligation
22. The auditor is determining that the recorded sales or the amount of goods shipped
are correctly billed and recorded. The auditor is gathering evidence about which
transaction related audit objective?
a. Existence
b. Completeness
c. Accuracy
d. Cut-off
23. The level of assurance provided by an auditor of detecting a material misstatement
is referred to as:
a. Reasonable assurance
b. Moderate assurance
c. Absolute assurance
d. Negative assurance
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24. This consists of checking the mathematical accuracy of the documents or records
a. Reperformance
b. Recalculation
c. Confirmation
d. Inspection
25. The purpose of an engagement letter is to:
a. Document the CPA firm’s responsibility to external users of the audited
financial statements
b. Document the terms of the engagement
c. Notify the audit staff of an upcoming engagement so that personnel
scheduling can be facilitated
d. Emphasize management’s responsibility for approving the audit program
26. Engagement letters
a. May either be oral or written
b. Must be in writing
c. Must be written and notarized
d. Must be written if the client is regulated by Securities and Exchange
Commission
PART III. IDENTIFICATION
Write your answer in CAPITAL LETTERS
3 TYPES OF RISKS IN AN AUDIT RISK MODEL
1.________________________________
2.________________________________
3.________________________________
4 TYPES OF AUDITOR’S OPINION
4.________________________________
5.________________________________
6.________________________________
7.__________________________________
4 BALANCE SHEET ASSERTIONS
8.__________________________________
9.__________________________________
10._________________________________
11._________________________________
5 INCOME STATEMENT ASSERTIONS
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12._________________________________
13._________________________________
14.__________________________________
15.__________________________________
16.__________________________________
