Smartbook ch 5-2

To prove the arithmetical accuracy of the client's analyses and records, auditors make independent -----.

recalculations

Auditors use plausible relationships among financial statement data to gather audit evidence about the reasonableness of financial statement amounts when performing -----procedures.

analytical

Evaluations of financial statement information by a study of relationships among financial and nonfinancial data is the basis of ----- procedures.

analytical

Recalculations ______. Multiple select question. should always be done by the independent auditor without the involvement of specialists are used to prove the accuracy of client calculations such as earnings per share include making certain that accounting records agree with the financial statements

are used to prove the accuracy of client calculations such as earnings per share include making certain that accounting records agree with the financial statements

Completed confirmations should be sent directly to the ______. Multiple choice question. client audit committee auditor board of directors

auditor

Comparing the price on an invoice to that on an approved price list is an example of the audit procedure of ______. Multiple choice question. reperformance observation recalculation inspection

reperformance

The review of changes in an account balance over time is called ---- ----.

trend analysis

Inspection of assets is the best way to determine ownership, valuation, and condition of the assets.

false

Substantive procedures include analytical procedures and tests of details that are part of the auditors' ----- ---- procedures

further audit

Watching a process or procedure being performed by others is the definition of ______. Multiple choice question. reperformance observation inspection analytics

observation

Watching a process or procedure being performed by others is the definition of----

observation.

Comparing the price on an invoice to that on an approved price list is an example of the audit procedure of ------.

reperformance

Confirmations are generally effective at providing evidence for the ______ assertion. Multiple choice question. completeness existence valuation

existence

Categories of traditional financial ratios include ______ ratios. Multiple select question. activity leverage longevity performance

activity leverage

Inspections of tangible assets provide high-quality evidence as to the ----- assertion.

existence

When developing expectations for analytical procedures ______. Multiple select question. industry averages should be avoided whenever possible separate relationships may be computed for each division or product line prior year financial statements may be used client forecasts should not be used because the data is not verifiable dollar amounts, quantities, ratios, or percentages may be used

-separate relationships may be computed for each division or product line -prior year financial statements may be used -dollar amounts, quantities, ratios, or percentages may be used

test of account balance

Confirmation of accounts receivable balance

test of disclosure

Test of property, plant, and equipment footnote

test of class of transaction

Tests of inventory purchases to determine if properly accounted for

The audit risk model is a function of ______ risk. Multiple select question. detection financial statement control inherent

detection control inherent

During an audit, client oral inquiries ______. Multiple choice question. may be made of both officers and employees should only be directed to management may be made of any employee but must be followed up in writing should only be directed toward the audit committee

may be made of both officers and employees

The return envelope sent with confirmations should be addressed to the ______. Multiple choice question. client auditor's office auditor at the client's address

auditor's office

The representation letter should be dated the same as the date of the ______. Multiple choice question. first day of the audit engagement letter auditor's report lawyer's letter

auditor's report

Comparisons with similar firms at a given point in time is the basis of ______ analysis. Multiple choice question. vertical cross-sectional regression horizontal

cross-sectional

Audit evidence gathered from oral or written inquiries made by the auditor can include ______. written representations from company personnel written representations from outside parties oral representations from auditors oral representations from company personnel

written representations from company personnel written representations from outside parties oral representations from company personnel